The Effect of Electoral Competition on Candidate Selection: Evidence from India

• In Event: Elections, Party Systems, and Representation in India

Abstract

This paper presents empirical evidence on the causal effect of electoral competition on the political selection of candidates by parties in Indian state-level elections. Much as market competition between firms can raise consumer welfare, so too can electoral competition raise voter welfare by creating incentives for political parties to select high-quality candidates to run in elections (Wittman 1995). However, identifying the effect of competition is challenging due to reverse causality: politician actions before an election determine the competitiveness of a race. To overcome this challenge, I propose two empirical strategies: first, a first-order differences model with fixed effects, and second, a shift-share instrument that exploits aggregate shifts in political parties' popularity over time. Unlike the traditional shift-share, these aggregate shifts affect electoral competition across constituencies non-monotonically: a positive shift in a party's popularity decreases competition in the party's stronghold and increases competition where voters prefer the opposition. The instrument relies on this non-monotonicity for identification. Using data on Indian state elections (2008 - 2023), I find that parties respond strategically to competition prior to an election by selecting wealthier candidates and reallocating resources to swing constituencies. Further disaggregation of the data on the basis of party-level incumbency reveals that being incumbent over two consecutive elections positively and significantly leads to an increase in the selection of self-financing and wealthier candidates in districts with higher competition. The opposite holds true for the parties in opposition during these terms. Moreover, competitive constituencies are observed to experience an increase in night light density in comparison to their less competitive counterparts. I test whether candidates elected to these competitive constituencies also improve the latter's economic outcomes. I find no statistical evidence - either through a moral hazard or a selection channel - that politicians elected to these competitive constituencies cause an improvement in their economic condition. Taken together, the paper sheds light on two crucial aspects of political competition: (a) the supply-side dynamics of electoral competition by studying the strategic considerations parties take in nominating political candidates in multi-party, first-past-the-post (FPTP) electoral systems, and (b) the consequence of that strategy on the governance outcomes for such constituencies -- although competition may necessitate a change in the party's strategy to undertake costly decisions, it does not lead to improved economic outcomes.

Author

• Shiladitya Kumar, University of Houston