| Abstract: | This paper develops and tests a model of relative political campaign spending in an election formulated within a capital theory framework. Probability of election is treated as a function of the relative political capital stocks of the candidates, and campaign expenditure is viewed as the mechanism by which candidates optimally adjust their political capital stocks. If contributors are risk-neutral, then all factors that increase a candidate's initial political capital stock tend to decrease his relative campaign expenditures, while all factors that increase the value of the office to the candidate tend to increase his relative campaign expenditures. However, if contributors are risk-averse, then the former effect is theoretically indeterminate. Empirically, a candidate is more likely to outspend his opponent if he is an incumbent, a member of the weaker political party, and the younger candidate. |
