Mitt Romney won big in New Hampshire, but his opponents are vowing to push on in South Carolina. Which means stepping up their pleas for cash. In an e-mail to supporters, Rick Santorum wrote:
We must show real progress tonight and redouble our efforts … That’s why my campaign launched the “Game On” Moneybomb, and why we need your help right now. As you already know, we are facing serious and well-funded opposition for the nomination.
That’s the kind of language that confirms one of the biggest truisms in politics: money buys elections.
But how true is that truism?
That’s the question Kai Ryssdal and I tackle in our latest Marketplace podcast. (Download/subscribe at iTunes, get the RSS feed, listen live via the media player above, or read the transcript.)
In a paper that tried to isolate the effect of spending in campaigns, here’s what Steve Levitt found:
LEVITT: When a candidate doubled their spending, holding everything else constant, they only got an extra one percent of the popular vote. It’s the same if you cut your spending in half, you only lose one percent of the popular vote. So we’re talking about really large swings in campaign spending with almost trivial changes in the vote.
What Levitt’s study suggests is that money doesn’t necessarily cause a candidate to win — but, rather, that the kind of candidate who’s attractive to voters also ends up attracting a lot of money. So winning an election and raising money do go together, just as rain and umbrellas go together. But umbrellas don’t cause the rain. And it doesn’t seem as if money really causes electoral victories either, at least not nearly to the extent that the conventional wisdom says. For every well-funded candidate who seems to confirm that money buys elections (paging Michael Bloomberg), you can find counterexamples like Meg Whitman, Linda McMahon, Steve Forbes, and Tom Golisano.
And take a look at the Iowa caucuses last week. Rick Perry was the top spender, buying $4.3 million worth of ads — which got him only 10 percent of the vote. Santorum, meanwhile, spent only $30,000 on ads (the least of any candidate) and practically tied Romney — who spent $1.5 million this time around on Iowa ads, versus $10 million in 2008.
In this podcast, you’ll also hear from one former big-spending presidential candidate who’s now convinced that money isn’t what matters most: Rudy Giuliani.
GIULIANI: I tell candidates, it’s always better to be the candidate with the most money, but you can win without it.

Here is the link to the podcast
http://www.marketplace.org/topics/business/freakonomics-radio