War Chests as Precautionary Savings

Abstract

I present a model of campaign spending and saving in repeated elections which yields empirical implications on the creation of war chests. As previous studies disagree whether war chests deter potential challengers from running against incumbents, I present an alternative model that intentionally excludes deterrence as a motivation and formalizes under what circumstances (if any) a war chest would be created for savings. The model predicts that an incumbent creates a war chest when she faces a weaker challenger, i.e. as precautionary savings for future elections. The model yields several other predictions of incumbent fund-raising, spending, and saving behavior. Using incumbents from 1982-1998 U.S. House elections, I find strong empirical support for the predictions of the model.

When Do War Chests Deter?

“…Extending the model (intuitively) to a range of challenger qualities, the higher the quality of challenger in the previous election is, the smaller the war chest for the current election will be. This prediction is confirmed by Ansolabehere and Snyder (2000) and Goodliffe (2004).…”

“…3 Milyo (2001: 122) presents data that suggest 'that incumbents build up a stock of savings in order to smooth their fund-raising efforts over time'. And Goodliffe (2004) presents and tests a model where war chests are created as precautionary savings. To capture the idea of accidents or savings, I later alter the model to allow challenger strength to be determined exogenously, rather than by the challenger herself.…”

Representative Communication: Web Site Interactivity and Distributional Path Dependence in the U.S. Congress

“…First, freshmen members typically have worse committee assignments and less seniority, making it more difficult for them to engage in constituency service and to direct funding to projects in the district (Cox & Morgenstern, 1993;King, 1991). Second, Goodliffe (2004) finds that the longer a member is in office, the larger her or his campaign warchest, and that the larger the warchest, the lower the quality of the challenger (see also Epstein & Zemsky, 1995;Levitt & Wolfram, 1997). Butler (2009, p. 127) notes that freshman incumbents are 25 percentage points more likely to face a quality challenger than more senior incumbents.…”

The Impact of State Legislative Term Limits on the Competitiveness of Congressional Elections

“…Following Jacobson and Kernell (1983) and many others (e.g., Carson, 2005;Carson, Engstrom, & Roberts, 2005;Hetherington, Larson, & Gobletti, 2003;Van Dunk, 1997), we code an individual as a quality challenger if he or she either held public office at the time of the election. As Goodliffe (2004) discusses in greater detail, although the dichotomous measure is somewhat imprecise, more nuanced measures of challenger quality (see Canon, 1990;Krasno, 1994;Krasno & Green, 1988) come at significant cost while, at best, resulting in only a marginal improvement in results. 7 We divide quality challengers into two groups: state legislators and all other candidates with elective office experience.…”