US Presidential elections are not only a lengthy but an expensive affair. Millions are spent as campaign funds in this battle for the white house. Time and again, the importance of campaign funding and donations in the success of a candidate has been emphasized. Often a causal relationship is implied between campaign finance and political success, but does such a relationship exist?

Money features in the election process because massive funds are required to spend on Advertising. Of the money raised in a Presidential campaign, most of it is spent on advertising and marketing the candidate (other expenses include logistics, travel, salaries etc). While money may not decide the winner, it was observed in the previous election that campaign funds were important for winning the party primaries. In the 2016 election, both Hillary Clinton and Donald Trump raised more money than their fellow candidates. Actively participating in primaries and campaigns requires money especially because it is a rather long and grueling process. Cory Booker (Democrat) after dropping out of this year’s presidential race said in a statement to New York Times, “Our campaign has reached the point where we need more money to scale up and continue building a campaign that can win — money we don’t have”. 

This need for money arises because advertising is expensive. The very system of a democratic election demands popularity and visibility from candidates. To get the word out on a country-wide scale in an efficient and attractive method is certainly a task, which is why most candidates come equipped with a war chest. Powerful ideas only do good in a democracy as long as the people know what those ideas are. Thus, the fundamental principles of democracy in conjunction with the existence of paid advertising force any individual hoping to win the election to have the dough ready.

Statistics say that in more than 90% of the races, top-spending candidates win (for the 2000-2016 cycles). However, this does not imply a causal relationship between money and political success. It certainly implies correlation, but causation cannot be determined because of issues of omitted variable biases and reverse causality. In the case of reverse causality, it is possible that we have our directions mixed up – candidates with higher chances of winning are able to raise more money and end up spending more. There can be omitted variables like the charm of the candidate; charming candidates can convince people to donate and voters to vote for them. 

Campaign funds and political success have sort of a cyclic relationship. Once a candidate has established himself/herself and gained some popularity, they will begin receiving donations that allow them to spend money on advertising to boost their popularity that further attracts donations. Everyone loves to bet on the winning horse. Hence, even though this is a very simplified model, it is prevalent in the way people choose to donate. In many cases, campaign funds and political success tend to fuel each other. 

This election season reinforces the lack of causality in money and political success. Democratic candidate Micheal Bloomberg spent 935 million US dollars in his campaign before dropping out on 4th of March, 2020. Had the causal relationship between money and success existed, then certainly Bloomberg was there in the race to stay. The current front-runner for the Democratic nomination, Joe Biden, raced to the top against the cash crunch of his campaign in February. By the end of February, Joe Biden was the 6th highest spender in the Democratic race. Towards the end of February, he was trying to conserve as much cash as possible. Despite the low spending, the candidate performed exceedingly well in the South Carolina Primary and on Super Tuesday putting him straight to the top in the climb for nominations. Even now, his spending is much lesser than Bernie Sanders, his opponent in the race. 

It is clear that money and political success do not have a causal relationship. It seems money can only aid success, not cause it. There is a correlation between the two; money is an important ingredient for success as seen in the number of campaigns that fail due to lack of money. But if anything, the current Democratic nomination race has shown the limited role money plays in a Presidential election. 

Advaita Singh is a first year student of Ashoka University pursuing her major in Economics.