Essays in Special Interest Politics
- Author(s): Maheshri, Vikram
- Advisor(s): Roland, Gerard
- et al.
In the following three essays, I explore how organized political interests behave, interact with each other, and affect public policies. As special interest groups in the United States have proliferated both in number and size over the past several decades, policymakers have responded with a mixture of public consternation and private acceptance. American voters overwhelmingly disapprove of the activities of special interest groups, but observers have been unable to articulate convincingly the effects of these activities on legislative practices and social welfare. I fill in this gap.
In my first essay, I consider the effects in Congress of competition between interest groups over public policy. I model the interactions of rival interest groups and legislators as a dual form of competition over both the substance of legislation -- that is, the legislative agenda -- and legislators' votes on legislation. This is, at it's heart, a model of congressional committee behavior. The unique prediction of this model is that interest groups may intentionally spend money to have legislation introduced that is known to have no prospect of being passed. Such interest groups are motivated by the inability to shape policy in a more favorable direction and the desire to protect a sufficiently palatable status quo. This result is attractive in light of the fact that roughly 90% of legislation fails passage. I then go on to provide empirical evidence in support of this prediction using an original, large and highly detailed dataset consisting of all pieces of legislation introduced into Congress over a twenty year period. I estimate that interest groups attempt to suppress roughly 56% of legislation that is introduced in the House of Representatives and 69% of legislation that is introduced into the Senate. Furthermore, I provide evidence that groups may suppress legislation by obfuscating the linguistic content of bills.
In my second essay, I consider the effects of competition within interest groups on the direction of redistributive policies. Individuals and firms form interest groups as a means of pooling resources and overcoming free riding in order to shape favorable public policies. However, the objectives of interest groups and their constituents do not perfectly align. In particular, interest groups tend to be more farsighted than their constituents. This asymmetry of objectives generates an agency problem that may manifest itself in the persistence of inefficient public policies. That is, interest groups may be directed by their relatively shortsighted constitutents to oppose efficient policy reforms. In the long run, this agency problem is exacerbated by the responses of interest groups to free riding. I provide suggestive econometric evidence from the United States in support of this argument.
In my third essay, I consider the implications of the very function of an interest groups: providing a means to aggregate the preferences of a motivated but potentially heterogeneous constituency. I begin by noting a very strong empirical regularity in lobbying activity in the United States. In nearly every industry, the distribution of lobbying expenditures follows a power law. This regularity is not predicted by standard models of interest group behavior. Instead, I provide a heuristic explanation for the empirical finding. If interest group expenditure decisions are made in response to periodic signals and are determined by a constituency that continuously updates its preferences according to a simple heuristic, then we should expect to see the distribution of lobbying expenditures follow a power law. I provide additional simulation evidence in support of this claim.