The latest news on this front comes from a really interesting post at Election Law Blog written by the widely-respected election expert Richard Pildes discussing some recent research. Here is his intro:
This is a new article by Michael Barber, which further confirms what we’ve known about which donors support the ideological more extreme candidates and which support more moderates. I’ve written about these issues and what we know empirically about them in Participation and Polarization.
Here is the paper’s abstract:
This article demonstrates that limits on campaign contributions—which alter a candidate’s ability to raise money from certain types of donors—affect the ideologies of legislators in office. Using an original data set of campaign contribution limits in some US states over the last 20 years, I exploit variation across and within states over time to show that higher individual contributions lead to the selection of more polarized legislators, while higher limits on contributions from political action committees (PACs) lead to the selection of more moderate legislators.
Individual donors prefer to support ideologically extreme candidates while access-seeking PACs tend to support more moderate candidates. Thus, institutional changes that limit the availability of money affect the types of candidates who would normally fund-raise from these two main sources of campaign funds. These results show that the connection between donors and candidates is an important part of the story of the polarization of American politics.