Monday, December 08, 2008

Experience Goods....or Bads?

False advertising and experience goods: The case of political services in
the U.S. Senate

Franklin Mixon, Rand Ressler & Troy Gibson
Public Choice, January 2009, Pages 83-95

This study uses the voter-shopping construct to analyze signaling of moderateness in the U.S. Senate. We compare legislator-provided signals (advertising) - such as membership in the U.S. Senate's Centrist Coalition - with actual voting histories in order to characterize these types of advertising cues as sincere or insincere. Following recent research indicating that moderate legislators receive greater financial support, we test whether or not Political Action Committees (PACs) are willing to support financially those who send false signals of moderateness. Our results show that the mean level of real PAC contributions garnered by non-moderate Democrats who send false signals exceeds that of the non-moderate Democrats who do not do so by $182,078. This figure is about 74% of mean level of real PAC contributions for those non-moderate Democrats who do not send false signals.


SSFC said...

I suspect they're missing a variable or two.

If we were discussing congressional as opposed to senatorial races, suppose Candidate Schuler (we'll call him S) is in a battleground district, while Candidate Price (we'll call him P) is in a safe Democratic district. It is to S's advantage, whether centrist or not, to play centrist. Playing centrist offers no advantage to P on the other hand, as he'll win in any case. From the standpoint of donors, leaving aside committee assignments, chairs, and seniority (important variables not mentioned in the study abstract), it stands to reason that a dollar donated to S carries greater potential return to a committed Democrat than a dollar donated to P, in that the dollar donated to S is more likely to sway the balance in the House, and thus to produce a Democrat in the majority, while a dollar donated to P is thrown away, as it changes nothing.

I suspect the same is true of the Senate. A dollar donated to a swing state senatorial candidate, who is more likely to run and advertise centrist whether that's his/her actual stance or not, produces greater return than a dollar donated to a Ted Kennedy, who is senator for life and can therefore be counted on as a mathematical constant. Similarly, the Democratic candidate in Mississippi can run as liberal a candidacy as he/she wishes, and let it all hang out at no cost because he/she never had a chance in the first place. The reason the Democratic candidate in Mississippi gets no money isn't that the candidate is running as a liberal, or a centrist. It's that the Democrats couldn't win a Senate seat in Mississippi if they nominated Barry Goldwater with an endorsement from Jesus Christ.

Angus said...

Why is it that the authors know the signal is false but the poor dumb stupid PACs don't?