DEBT IN POLITICAL CAMPAIGNS: US evidence of indebted politicians pursuing the interests of their funders

Debt is a significant source of funding in US political campaigns, with almost half of all campaigns relying on some form of debt. Consistent with ‘votes-for-money’ arrangements, indebted politicians vote significantly more often for the benefit of interest groups that fund their re-election campaigns compared with debt-free political candidates.

These are among the findings of research by Alexei Ovtchinnikov and Philip Valta, to be presented at the annual congress of the European Economic Association in Rotterdam in August 2020.

Their study is the first to provide large sample empirical evidence on the preponderance of debt in US political campaigns and on the voting decisions of indebted politicians. It uncovers an unexplored role of debt financing and supports the hypothesis that debt creates legislative distortions.

The authors construct a novel and comprehensive dataset that contains detailed information on the sources of campaign funds for all political campaigns for the US House of Representatives and the Senate over the period 1983 to 2014.

In the first part of the analysis, they show that debt is a major source of funding of US political campaigns. Almost half of all campaigns (46.75%) rely on some form of debt, and, conditional on borrowing, campaigns borrow almost a third of total raised funds. Most campaign debt comes in the form of personal loans that candidates make to their own campaigns, with eight percent of campaigns relying on outside loans. 

In the second part of the analysis, the authors relate candidates’ debt financing to their voting behaviour on labour legislation in Congress. The results show that indebted politicians make voting decisions that are significantly different from those of their debt-free counterparts.

Debt-free politicians exchange one additional labour vote for $41,960 in labour contributions, while indebted politicians exchange one vote for only $24,123, which is a 42.51 percent discount. Stated in another way, the results imply that the same amount of labour contributions is associated with almost twice as many labour votes for indebted politicians compared with their debt-free counterparts. 

Their research demonstrates that the presence of debt in political campaigns is a crucial element in understanding legislators’ choices. It shows that indebted politicians are particularly vulnerable to de facto political power of different constituencies, and that opportunistic special interest groups may exploit their legislative power.

Overall, the research is a first step in analysing how debt-financing decisions affect incentive conflicts in politics and illustrate an unintended consequence of debt financing. 


The working paper is available at: 

Contact details:

Alexei Ovtchinnikov, Associate Professor of Finance at HEC Paris




Philip Valta, Professor of Finance at University of Bern



Tel: +41 31 631 37 12