Goodliffe on the real effect of campaign ‘war chests’

In line with CCP’s analysis that the promotion of more voices results in a richer political process, we’re expanding our Academic Advisory Board by inviting scholars from diverse background to contribute to the discussion.

Along these lines, we are privileged to welcome to our Board Jay Goodliffe, an Associate Professor in the Department of Political Science at Brigham Young University. In addition to his teaching duties, Goodliffe is an Associate Chair in the Department of Political Science and a Research Fellow at BYU’s Center for the Study of Elections and Democracy. He has authored numerous articles and several book chapters on his research interests, which include congressional campaigns and elections, interest groups, and political methodology.

Much negative conjecture exists about so-called “war chests,” a term used frequently to denote money saved by a candidate from one election to be used for the next election. Although much is spoken about them, the remarks of those doing the criticizing indicate a misunderstanding of the true function and varied effects of war chests-as both deterrent forces and saving mechanisms. Fortunately, in an article published last year in an edition of the Quarterly Journal of Political Science, entitled “Campaign Fund-raising and Spending for Deterrence and Savings,” Goodliffe explores the deterrence and savings rationales underlying war chests, shedding some major light on the oft-mischaracterized concept.

In the article, Goodliffe presents a brief discussion of existing empirical work on war chests before discussing related models, and ultimately detailing the results of his model and its implications on the war chests debate. As critics of war chests cite their function as a deterrent to challengers, previous empirical studies have focused largely on this alleged effect with conflicting results. Accordingly, Goodliffe explores the relationship between the assumed deterrence function and overlooked savings rationale in this paper.

To accomplish this, Goodliffe utilizes a model of fundraising in repeated elections, where funds are raised to deter the entry of strong challengers as well as to increase the probability of winning through campaign spending. His use of a two-election model allows for the creation of a war chest because an incumbent saves money from fundraising efforts in the first election for use in the second election, and obtains results consistent with previous empirical testing. This alternative model is helpful in explaining why war chests appear to deter in some circumstances but not in others, a significant development in reconciling the contrasting conclusions obtained from previous studies. More importantly, these findings unmask the savings behavior function of war chests. For stronger incumbents, a war chest is a byproduct of the efforts to distinguish themselves from weaker incumbents: an endeavor undertaken to deter high quality challengers from entering future races. Accordingly, a war chest is initially created for deterrence and eventually becomes savings for future elections.

Although intuition may suggest that incumbents use war chests solely to deter strong electoral challengers, Goodliffe’s empirical work has rejected this notion, accompanied by an emerging theory regarding a savings rationale inherent in war chests. Use of his repeated elections model permits examination of both deterrence and savings behavior and illustrates that the intuitive deterrence effect can hold simultaneously with the savings effect, casting uncertainty on the notion that war chests are used solely for deterrence. Goodliffe’s work is valuable in questioning the merits of existing models, whose setup ignores the savings effect, and ultimately, his article rejects the chorus of opposition to war chests by providing a much less controversial explanation for their existence.

Goodliffe takes a descriptive approach to this issue (he doesn’t suggest potential policy changes to perhaps mitigate the “war chest” deterrent effect on challengers). CCP would suggest that raising contributions limits would be an effective remedy for decreasing the deterrent effect (however minor).

Goodliffe’s article, “Campaign Fund-raising and Spending for Deterrence and Savings,” can be found here.

The Center for Competitive Politics is now the Institute for Free Speech.