Political ambition, not donor polarization, drives agenda divergence

The political landscape in the United States has seen increasing polarization among legislators and donors in recent decades, as illustrated by campaign finance data since the 1980s.

This trend motivates a theoretical model of policy formation, campaign contributions, and electoral competition.

In the canonical version of this model, two political candidates, primarily motivated by winning office, commit to policy agendas.

Lobby groups, with differing policy preferences, then contribute to campaigns, influencing uninformed voters.

The model demonstrates that despite donor polarization, candidates' agendas converge.

This occurs because tailoring policy to extreme contributors increases the opposing candidate's contributions more than one's own, incentivizing moderation to improve relative campaign chest size.

The paper extends its benchmark model by introducing a 'political job ladder,' where candidates value the absolute level of campaign contributions, not just their relative impact on winning.

This preference emerges naturally from a two-period model where first-period campaign spending affects the candidate's probability of running for higher office.

Empirical evidence supports this, showing that fundraising receipts robustly increase the probability of U.S. Representatives running for Senate: a doubling of funds raises the promotion probability by about 1 percentage point from a baseline of 3 percent.

This extension generates divergence of candidates' agendas in equilibrium, aligning with observations that increased contribution limits lead to more polarized candidates.

The model also predicts that caps on campaign contributions would lower polarization.