Campaign Spending and Incumbency: An Alternative Simultaneous Equations Approach

Abstract

This paper estimates the effects of incumbent spending and challenger spending in U.S. House elections in the 1970s and 1980s. The paper employs FIML simultaneous equations analysis involving instrumental variables as vote predictors, and zero-covariance restrictions for the vote-spending disturbances. This procedure allows the estimation of spending effects given plausible assumptions about the effects of unobserved causes of the vote on candidate spending. The results are that incumbent spending matters even with only modest amounts of simultaneity. Evidence is presented to suggest that the effectiveness of new incumbent spending declines with seniority but accumulates to the incumbent's long-term advantage.

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