Political Campaigns as Rent-Seeking Games: Take the Money and Run

Abstract

In the 1980s, the practice of converting campaign contributions into personal income on retirement was curtailed by the Federal Elections Commission (FEC), but an exemption allowed some representatives to continue this practice. Conse quently, a natural experiment was created in which congressional candidates faced different sets of rules. By identifying candidates who could keep excess campaign funds, the authors were able to empirically measure the relevance of wealth maximization in political campaign decisions. The evidence of the 1980s suggests that candidates are concerned with more than simply winning elections. Specifically, candidates who qualified for the FEC's exemption raised more money and spent smaller portions of those contributions on their campaigns. This results in a sizable lump-sum transfer payment on retirement.