Candidates, Money, Votes and Reverse Causality

Political pundits often err discussing the role of money in politics arguing that money buys elections for candidates when the opposite is true, good candidates win elections and that attracts money.  In an otherwise excellent article David Paul Kuhn (“Will Romney's Strengths Prove Moot Against Obama?”) makes this error writing

Mitt Romney is winning the GOP race for two reasons: big money and weak competition. That should distress Republicans…In the general election, Republicans will face a more practiced, more disciplined and equally financed opponent. Gingrich should be the easy part. Yet it will remain hard. Gingrich is not going away. On money and performance, we have seen how one Republican after another can lose the race. Romney still has to prove he can win it.

Research by Steven Levitt convinces me that the candidate is the important issue and not the money.  Levitt and Dubner describe Levitt’s research in Freakonomics: A Rogue Economist Explores the Hidden Side of Everything.

…picture two candidates, one intrinsically appealing and the other not so.  The appealing candidate raises much more money and wins easily.  But was it the money that won him the votes, or was it his appeal that won the votes and the money?

That’s a crucial question but a very hard one to answer.  Voter appeal, after all, isn’t easy to quantify.  How can it be measured?

It can’t, really—except in one special case.  The key is to measure a candidate against…himself.  That is, Candidate A ran against Candidate B in two consecutive elections but in each case spent different amounts of money. Then, with the candidates’ appeal more or less constant, we could measure the money’s impact.

As it turns out, the same two candidates run against each other in consecutive elections all the time—indeed, in nearly a thousand U.S. congressional races since 1972.  What do the numbers have to say about such cases?

Here’s the surprise: the amount of money spent by the candidates hardly matters at all.  A winning candidate can cut his spending in half and lose only 1 percent of the vote.  Meanwhile, a losing candidate who doubles his spending can expect to shift the vote in his favor by the same 1 percent.  What really matters for a political candidate is not how much you spend; what matters is who you are.