Self-Funding of Political Campaigns

Abstract

Candidate self-funding, in particular self-loans, is a significant source of funding of political campaigns. Self-funding clusters among nonincumbent campaigns, republican campaigns, and more expensive campaigns. Self-funded campaigns raise less money from individuals and special interests and also spend less. Self-funders are wealthier on average and run in more competitive elections. The analysis of self-funders’ legislative decisions shows that self-funders’ votes, especially those of republicans, are significantly more sensitive to contributions from special interests that are affected by the votes. The results highlight the importance of considering politicians’ self-funding choices in analyzing voting behavior and the value of political activism. This paper was accepted by Gustavo Manso, finance. Supplemental Material: Data and the online appendices are available at https://doi.org/10.1287/mnsc.2022.4404 .