(Andrew Harrer/Bloomberg)

Public funding of elections — that is, relying on tax revenue more than private donations to fund candidate campaigns — is a popular campaign finance reform proposal, if one that many Americans don’t fully embrace.  Public funding is often thought to free candidates from the burden of fundraising and reduce the influence of wealthy donors and special interests.  That all sounds good.  Who likes “special interests,” after all?

Now, new research shows that public funding has an unexpected consequence: increased polarization.  That is, public funding makes it harder, not easier, to elect moderate candidates.

That is the conclusion of political scientist Andrew Hall.  He focuses on state legislative elections and compares trends in the five states that implemented robust public funding programs — Arizona, Connecticut, Maine, Minnesota, and Wisconsin — to trends in other states.  Here is what he finds:

  • As intended, public funding reduces the financial advantage of incumbents.
  • As intended, public funding reduces the incumbents’ margin of victory.  That is, it makes elections more competitive.
  • Not intended: public financing makes polarization in the state legislature worse.

Below is a graph showing the distribution of ideology (“NP scores”) in legislatures in states that implemented public financing (the “treated” states) and those that did not (the “control” states).  The first group of states became more polarized after the implementation of public financing.  But no such change occurred during this time in the states that didn’t implement public financing.

Graph by Andrew Hall

In a more elaborate statistical analysis, Hall examines the gap between Republican and Democratic legislators representing similar districts.  In a polarized legislature, a Republican and a Democrat will tend to vote in very different ways even though they represent essentially the same constituents.  Hall finds that public financing increases this gap between the parties by 30 percent.

Why does public financing appear to have this effect?  Hall argues that public financing weakens the influence of a maligned, but moderating, force in elections: access-oriented interest groups.  Public financing reduces the funding supplied by these groups by over $20,000 per race, on average.  The problem is that these groups give relatively little to ideologically extreme legislators and much more to moderates.  Individual donors, however, have no such preference.

This leads to a broader point about campaign finance and polarization.  Much of the debate over campaign finance is based on distinctions between “good” donors and “bad” donors.  Good donors are taxpayers, in a public financing system.  Or, in a privately funded system, good donors are ordinary citizens, sometimes called “small donors.”  Bad donors are political party organizations, wealthy people, political action committees, and interest groups.

The problem is that if you want to reduce polarization, this way of thinking about donors gets things exactly backward.  Small donors are a polarizing influence, as Adam Bonica has shown.  Meanwhile, wealthy people tend to be a moderating influence.  The same is true of many political action committees and interest groups.  The same is true of political party organizations, as Brian Schaffner and Ray La Raja argue in this post.

That’s not to say that there aren’t good reasons to favor public financing or small donors.  But favoring those things may also mean living with the trade-off: a more polarized, and probably less functional, politics.

Note: For a response, see this follow-up post by Seth Masket and Michael Miller.