Legislative Context, Legislator Quality and Campaign Contributions

Legislative Context, Legislator Quality and Campaign Contributions We introduce a simple theoretical model of the relationship between the campaign contributions a legislator receives from a PAC and the amount of “service” the legislator provides to the PAC, a key assumption being that the marginal cost of service decreases as the quality of the legislator increases. Optimal solution of the constrained optimization problem that each PAC faces in allocating its campaign contributions among legislators implies a conditional two-limit tobit model for the relationship between contributions and aspects of the quality of each legislator. The constraints arise because PAC contributions must be positive but no greater than a legally limiting value and because each PAC’s budget for contributions is finite. We extend the tobit model to support pooling data from several similar PACs. We estimate the empirical model using data from the U.S. House of Representatives. The fact that optimal PAC behavior implies censoring suggests that it is usually inappropriate to aggregate contributions from different PACs; but pooling can work well. We introduce a model of PACs’ portfolio choices that explains how PACs allocate their campaign finance resources among House members. The key formal innovation in our approach is that we derive an empirical model of PAC campaign contributions directly from an explicit model of optimizing behavior subject to price and budget constraints, given each PAC’s judgment of the quality of each legislator. The result is a particular form of a two-limit tobit model. We propose a method by which data from different PACs that are assumed to be similar in their appraisals of legislators’ quality may be pooled to estimate the effects that observed attributes of quality have on contributions. The pooling method is compatible with our model of optimizing behavior by each PAC, in a way that a method based on aggregating contributions data from the PACs would not be. We use our pooling method to analyze contributions to House incumbents during the 1991–92 House campaign period by a collection of telecommunications company PACs. In representing contributions as conditional on institutional attributes of each legislator (such as committee memberships) and on selected aspects of the election in each legislator’s district, our approach to measuring each legislator’s quality is similar to models used in numerous other studies (e.g., Gopoian, Smith and Smith 1984; Grier and Munger 1991, 1993; McCarty and Rothenberg 1996, 2000; Milyo 1997; Poole and Romer 1985; Stratmann 1998). An innovation in our data specifications is that we use information about legislators’ subcommittee memberships and chairmanships in a systematic way to augment the usual collection of simple dummy variables that represent committee memberships. Our model is based on the idea that each PAC uses its campaign contributions to purchase some amount of what we call “service” from each legislator. The PAC maximizes the total amount of service it receives from all legislators, subject to a budget constraint and to a legally determined upper bound on the size of each contribution (necessarily nonnegative) given to each legislator. The PAC may pay nothing to a legislator and hence receive no service. We intend the concept of service that we have in mind to be at once comprehensive and elemental. It is intended to be a composite of expectations a PAC has for actions a legislator may take to do such things as vote in a way the PAC would like, provide access, perform district service, intervene with an executive agency or state-level government or political actors, and so forth. We do not intend to suggest that the relationship between PACs and legislators is based on a strict—or even a weak—quid pro quo. A contribution increases the PAC’s expectation that something good for the PAC will be forthcoming from the legislator who receives the contribution. The increased expectation may reflect an increase in the probability with which the PAC believes a favorable discrete action will occur, an increase in the value of some event the probability of which does not change, or a continuous increase in the value or amount of some continuous process. We do not distinguish among these or other possible interpretations of the service the PAC’s contribution is buying.1 We do not model strategic interaction between PACs and legislators, nor among PACs. We treat each PAC as acting independently of every other PAC, while legislators are reduced to reaction functions. We recognize that such an approach may be subject to numerous and serious limitations. Our justification is the thought that the very general optimizing model we use may apply as a kind of final constraint on a PAC’s contributions in a wide array of strategic contexts. We do not know yet whether that idea will ultimately be supportable. We also say nothing about the timing of a PAC’s contributions. All of a PAC’s contributions to House members are considered to be decided simultaneously and paid at once. With service being conceived in such a broad way, we do not expect it to be observable. But one of our primary goals is to obtain an empirical model that it is feasible to estimate and test. This implies that we are implicitly assuming risk neutrality for all interpretations that involve a PAC’s buying bundles of uncertain events.