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Is It Whom You Know or What You Know? An Empirical Assessment of the Lobbying Process

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  • Marianne Bertrand
  • Matilde Bombardini
  • Francesco Trebbi

Abstract

What do lobbyists do? Some believe that lobbyists’ main role is to provide issue-specific information and expertise to congressmen to help guide the law-making process. Others believe that lobbyists mainly provide the firms and other special interests they represent with access to politicians in their “circle of influence” and that this access is the be-all and end-all of how lobbyists affect the lawmaking process. This paper combines a descriptive analysis with more targeted testing to get inside the black box of the lobbying process and inform our understanding of the relative importance of these two views of lobbying. We exploit multiple sources of data covering the period 1999 to 2008, including: federal lobbying registration from the Senate Office of Public Records, Federal Election Commission reports, committee and subcommittee assignments for the 106th to 110th Congresses, and background information on individual lobbyists. A pure issue expertise view of lobbying does not fit the data well. Instead, maintaining connections to politicians appears central to what lobbyists do. In particular, we find that whom lobbyists are connected to (through political campaign donations) directly affects what they work on. More importantly, lobbyists appear to systematically switch issues as the politicians they were previously connected to switch committee assignments, hence following people they know rather than sticking to issues. We also find evidence that lobbyists that have issue expertise earn a premium, but we uncover that such a premium for lobbyists that have connections to many politicians and Members of Congress is considerably larger.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16765.

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Date of creation: Feb 2011
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Publication status: published as “Is It Whom You Know Or What You Know? An Empirical Assessment of the Lobbying Process” (joint with Matilde Bombardini and Francesco Trebbi), forthcoming, American Economic Review.
Handle: RePEc:nbr:nberwo:16765

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References

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  1. Tim Besley & Ian Preston, 2006. "Electoral bias and policy choice: theory and evidence," IFS Working Papers, Institute for Fiscal Studies W06/03, Institute for Fiscal Studies.
  2. Jordi Blanes i Vidal & Mirko Draca & Christian Fons-Rosen, 2010. "Revolving Door Lobbyists," CEP Discussion Papers, Centre for Economic Performance, LSE dp0993, Centre for Economic Performance, LSE.
  3. Austen-Smith, David & Banks, Jeffrey S., 2002. "Costly signaling and cheap talk in models of political influence," European Journal of Political Economy, Elsevier, Elsevier, vol. 18(2), pages 263-280, June.
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Cited by:
  1. Della Vigna, Stefano & Durante, Ruben & Knight, Brian & La Ferrara, Eliana, 2014. "Market-based Lobbying: Evidence from Advertising Spending in Italy," CEPR Discussion Papers, C.E.P.R. Discussion Papers 9813, C.E.P.R. Discussion Papers.
  2. Martin Gregor, 2011. "Corporate lobbying: A review of the recent literature," Working Papers IES, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies 2011/32, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Nov 2011.
  3. John M. de Figueiredo & Brian Kelleher Richter, 2013. "Advancing the Empirical Research on Lobbying," NBER Working Papers 19698, National Bureau of Economic Research, Inc.
  4. Cameron K Murray, 2014. "Resolving rent-seeking puzzles: A model of political influence via social signals," Discussion Papers Series 528, School of Economics, University of Queensland, Australia.
  5. Luigi Zingales, 2011. "Comment on "A Fistful of Dollars: Lobbying and the Financial Crisis"," NBER Chapters, in: NBER Macroeconomics Annual 2011, Volume 26, pages 236-243 National Bureau of Economic Research, Inc.
  6. Thomas Groll & Christopher J. Ellis, 2013. "Dynamic Commercial Lobbying," CESifo Working Paper Series 4114, CESifo Group Munich.
  7. Yan Leung Cheung & P. Raghavendra Rau & Aris Stouraitis, 2012. "How much do firms pay as bribes and what benefits do they get? Evidence from corruption cases worldwide," NBER Working Papers 17981, National Bureau of Economic Research, Inc.
  8. Murray, Cameron K., 2012. "Markets in political influence: rent-seeking, networks and groups," MPRA Paper 42070, University Library of Munich, Germany.
  9. Igan, Deniz & Mishra, Prachi, 2011. "Three's company: Wall Street, Capitol Hill, and K Street," MPRA Paper 44220, University Library of Munich, Germany, revised Aug 2012.
  10. Groll, Thomas & Ellis, Christopher J., 2012. "A Simple Model of the Commercial Lobbying Industry," MPRA Paper 36168, University Library of Munich, Germany.
  11. William R. Kerr & William F. Lincoln & Prachi Mishra, 2011. "The Dynamics of Firm Lobbying," NBER Working Papers 17577, National Bureau of Economic Research, Inc.
  12. Daron Acemoglu & Simon Johnson & Amir Kermani & James Kwak & Todd Mitton, 2013. "The Value of Connections in Turbulent Times: Evidence from the United States," NBER Working Papers 19701, National Bureau of Economic Research, Inc.
  13. Simon Luechinger & Christoph Moser, 2012. "The Value of the Revolving Door: Political Appointees and the Stock Market," CESifo Working Paper Series 3921, CESifo Group Munich.
  14. Bombardini, Matilde & Trebbi, Francesco, 2012. "Competition and political organization: Together or alone in lobbying for trade policy?," Journal of International Economics, Elsevier, Elsevier, vol. 87(1), pages 18-26.
  15. Jordi Blanes i Vidal & Mirko Draca & Christian Fons-Rosen, 2012. "Revolving Door Lobbyists," American Economic Review, American Economic Association, American Economic Association, vol. 102(7), pages 3731-48, December.
  16. Jin-Hyuk Kim, 2013. "Determinants of post-congressional lobbying employment," Economics of Governance, Springer, Springer, vol. 14(2), pages 107-126, May.

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