Does Money Matter for Electability? Lesson Learned From the 2014 Legislative Election in Indonesia

Abstract

Reform toward open-list elections in Indonesia has transformed the nature of campaigning to become more personalized. This has raised questions regarding the role of money in elections and calls for stricter campaign finance regulation. However, the merits of limits on campaign finance depend on whether and how campaign finance affects incumbents and challengers differently. Literature on this issue has produced ambiguous results, with only few studies conducted in a developing country democracy. This study estimates the effect of campaign money, along with other factors including list position and incumbency status, on the probability of a candidate being elected in the 2014 legislative election in Indonesia. Our econometric estimations confirm that campaign money effectively raises the probability of candidates being elected. The probability of getting elected will increase up to approximately 5 percentage points for each additional IDR 100 million of campaign money. Campaign money is positive and significant for both incumbents and challengers, with the magnitude being bigger for incumbents. However, the effect of diminishing returns of campaign money is slightly stronger for incumbents. Since raising additional campaign funding benefits incumbents more than it does for challengers, this study suggests the enforcement of campaign spending limits to create a more level playing field in Indonesia’s legislative elections.