Why do we care about Iowa and New Hampshire?

On January 20, 1977 Jimmy Carter took the oath of office to become the 39^th President of the United States.  However, when Carter—a one-term governor from Georgia—announced his bid for the presidency on December 12, 1974, very few Americans had any idea who he was.  The Atlanta Constitution (now The Atlanta Journal-Constitution), Carter’s hometown newspaper, ran a story after Carter’s entrance into the race entitled, “Jimmy Who?”  Despite the fact that very few people knew who he was and there were 11 other candidates already in the race, Carter threw his hat into the ring, traveled to 40 different states and stopped in more than 250 cities across the country.  He put more effort into campaigning in Iowa than any of the other candidates in the race and ended up finishing at the top of the pack with 27% of the vote.  He used this surprise victory to propel him to victory in New Hampshire and ultimately the nomination.  Jimmy Carter thus demonstrated the importance of Iowa and New Hampshire in the nominating process.  Winning early helps candidates building momentum—or “Big Mo” according to George H. W. Bush—which helps candidates demonstrate viability and electability to potential voters. 

Jimmy Carter greets voters at the Iowa State Fair in 1976.
http://www.usatoday.com/story/news/politics/elections/2016/01/29/iowa-caucuses-history-jimmy-carter-julian-zelizer/79426692/

Gary Hart was in his second term in the U.S. Senate when he decided to throw his hat in the ring for the 1984 Democratic nomination.  Hart was polling around 1% in national polls, falling behind well-known Democrats Walter Mondale, John Glenn, and Jesse Jackson.  To combat his low approval numbers, Hart hit the ground in New Hampshire, making multiple stops and conducting various canvassing events throughout the entire state.  Hart managed to win 16% of the vote in Iowa, losing to Mondale by 33%.  However, two weeks later, Hart defeated Mondale by 10% in New Hampshire thanks to his ground game in the state.  Hart ultimately lost the nomination race, while Carter was able to win.  Nonetheless, New Hampshire made Hart a viable candidate, with him and Mondale volleying wins back and forth until June.  Without Hart’s surprise win in New Hampshire, Mondale likely would have wrapped up the nomination very quickly. 

Gary Hart celebrates his New Hampshire primary win in 1984.
https://www.bostonglobe.com/news/politics/2016/02/05/gary-hart-campaign-yankee-thrift-saved-day/KCqdyFoDNxaz7rtemukNDN/story.html

So, what is it about Iowa and New Hampshire that help us select our presidents?  Surprise victors generally end up looking more viable and electable than many voters originally thought.  These surprise winners are also rewarded with more media attention and more donations, helping them compete more strongly in upcoming contests.  While Iowa and New Hampshire are not perfect predictors for who the eventual nominee will be, they help candidates make a name for themselves, especially if that candidate is not well known to begin with.