Social media and political contributions: The impact of new technology on political competition

• Authors: Maria Petrova.
• Management Science
• Business Economics

Political campaigns are among the most sophisticated marketing exercises in the United States. As part of their marketing communication strategy, an increasing number of politicians adopt social media to inform their constituencies. This study documents the returns from adopting a new technology, namely Twitter, for politicians running for Congress by focusing on the change in campaign contributions received. We compare weekly donations received just before and just after a politician opens a Twitter account in regions with high and low levels of Twitter penetration, controlling for politician-month fixed effects. Specifically, over the course of a political campaign, we estimate that the differential effect of opening a Twitter account in regions with high versus low levels of Twitter penetration amounts to an increase of 0.7%-2% in donations for all politicians and 1%-3.1% for new politicians who were never elected to Congress before. In contrast, the effect of joining Twitter for experienced politicians remains negligibly small. We find some evidence consistent with the explanation that the effect is driven by new information about the candidates; for example, the effect is primarily driven by new donors rather than past donors, by candidates without Facebook accounts, and by tweeting more informatively. Overall, our findings imply that social media can intensify political competition by lowering the costs of disseminating information for new entrants to their constituents and thus may reduce the barriers to enter politics.