Abstract

Elections aggregate the preferences of voters into a collective decision. Before any vote is cast, though, the preferences of a different group of people come into play. Modern political campaigns need money to mobilize support, pay for political advertising, and fund ground operations. Since political campaigns in the US are primarily financed by voluntary individual political contributions, the preferences and decisions of individual contributors become central to the democratic process. We use a rich dataset on the choices and individual characteristics of millions of potential donors to quantify how ideological and non-ideological candidates’ characteristics affect donors’ preferences and behavior, and to understand how donors’ preferences shape electoral competition. For this purpose, we first recover measures of policy positions for incumbents and challengers scaling the corpus of candidates’ public statements during the campaign trail. Second, we disentangle donor and voter preferences for ideology and valence by combining the variation in donors’ individual characteristics and choices with aggregate electoral returns. In particular, we model candidates as bundles of characteristics, including exogenous observable valence (e.g., gender, education), unobserved valence (e.g., skill, charisma), campaign spending and position taking (both considered endogenous, and possibly correlated with observed and unobserved candidate characteristics). Finally, we quantify the indirect effect of contributions on politicians’ policy choices by estimating a model of electoral competition in which candidates’ policy positions affect both voters’ preferences as well as campaign spending via the supply of individual contributions. Overall, our analysis allows us to quantify how well voters are represented by politicians relative to contributors.