The Incumbent Spending Puzzle

Objective This article seeks to explain the puzzle of why incumbents spend so much on campaigns despite most research finding that their spending has almost no effect on voters. Methods The article uses ordinary least squares, instrumental variables, and fixed-effects regression to estimate the impact of incumbent spending on election outcomes. The estimation includes an interaction term between incumbent and challenger spending to allow the effect of incumbent spending to depend on the level of challenger spending. Results The estimation provides strong evidence that spending by the incumbent has a larger positive impact on votes received the more money the challenger spends. Conclusion Campaign spending by incumbents is most valuable in the races where the incumbent faces a serious challenge. Raising large sums of money to be used in close races is thus a rational choice by incumbents.

Should Countries Engage in a Race to the Bottom? The Effect of Social Spending on FDI

This paper examines the effect of social spending in developing countries on foreign direct investment (FDI). Existing studies on the race to the bottom in social services attempt to discern the extent to which FDI affects social expenditure. However, it remains an open question whether FDI is actually attracted to lower spending levels. We find no indication that FDI is repelled by social spending; indeed there is strong evidence that investment is associated with greater programmatic emphases on health and education. These findings have important implications for leaders seeking to attract investment and for those attempting to expand social programs.

Public Attitudes Toward Social Spending in the United States: The Differences Between Direct Spending and Tax Expenditures

This paper uses a survey experiment to examine differences in public attitudes toward 'direct' and 'indirect' government spending. Federal social welfare spending in the USA has two components: the federal government spends money to directly provide social benefits to citizens, and also indirectly subsidizes the private provision of social benefits through tax expenditures. Though benefits provided through tax expenditures are considered spending for budgetary purposes, they differ from direct spending in several ways: in the mechanisms through which benefits are delivered to citizens, in how they distribute wealth across the income spectrum, and in the visibility of their policy consequences to the mass public. We develop and test a model explaining how these differences will affect public attitudes toward spending conducted through direct and indirect means. We find that support for otherwise identical social programs is generally higher when such programs are portrayed as being delivered through tax expenditures than when they are portrayed as being delivered by direct spending. In addition, support for tax expenditure programs which redistribute wealth upward drops when citizens are provided information about the redistributive effects. Both of these results are conditioned by partisanship, with the opinions of Republicans more sensitive to the mechanism through which benefits are delivered, and the opinions of Democrats more sensitive to information about their redistributive effects.