Why Is There So Little Money in U.S. Politics?

Summary

Published in the Journal of Economic Perspectives 17(1), Winter 2003 (pp. 105–130), by Stephen Ansolabehere, John M. de Figueiredo and James M. Snyder Jr. (then MIT), this survey is the standard reference for Tullock's paradox — the observation that measured rent-seeking expenditure is startlingly small relative to the rents supposedly being fought over. The wiki carries it as a challenge source for rent-seeking drags economic growth.

The Paradox

"Considering the value of public policies at stake and the reputed influence of campaign contributors in policymaking, Gordon Tullock (1972) asked, why is there so little money in U.S. politics?" The numbers are stark: "Candidates, parties and organizations raised and spent $3 billion in the 2000 national elections. However, total federal government spending in 2000 equaled $2 trillion." If policy rents were being bought and dissipated in the way simple rent-seeking models suggest, spending should be orders of magnitude higher.

The Authors' Reading

Reviewing the empirical literature, the authors find little support for the investment model of political money: most contributions come from individuals in small amounts, PAC giving is weakly correlated with legislative behaviour once ideology and constituency are controlled for, and (fn. 12) "There is surprisingly little evidence that lobbying influences policies." Their alternative: "campaign contributing should not be viewed as an investment, but rather as a form of consumption— or, in the language of politics, participation."

What It Does and Does Not Challenge

• It challenges claims that rent-seeking visibly consumes vast resources through lobbying and campaign spending, and any argument that infers large social costs directly from political money flows.
• It does not directly test the Murphy–Shleifer–Vishny talent-allocation channel, in which the cost of rent-seeking is the occupational choices of talented people and the innovation forgone — costs that never show up as lobbying expenditure. Nor does it show policy rents are small; low spending with large rents may instead imply very high returns to the rent-seeking that does occur (which is its own puzzle for the field).

See Also

• Rent-seeking drags economic growth — the outcome page this challenges
• Rent-Seeking
• Why Is Rent-Seeking So Costly to Growth? (MSV 1993)
• Mapping Modern Economic Rents

Sources

1. Stephen Ansolabehere, John M. de Figueiredo & James M. Snyder Jr. (2003), "Why Is There So Little Money in U.S. Politics?" Journal of Economic Perspectives 17(1), 105–130. DOI (open access) · mirror PDF — used for all quotes and findings on this page (B-claims; quotes verified against the published text, accessed 2026-07-10).