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

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.

Determinants of post-congressional lobbying employment

“…Importantly, members who opted to retire were much more likely to join the association than members who lost re-election bids or sought higher o¢ ce. 5 In this paper, the e¤ect of tenure is positive only for the retiring group and not for the voted-out group. As Herrick and Nixon pointed out, Borders and Dockery's sample is not a random sample; it is based on anecdotes and case studies, which also su¤er from selection or survivorship bias.…”

“…2 2 There are a couple of recent studies that look at the value of political connections to incumbent politicians from the standpoint of lobbyists (see, e.g., Blanes i Vidal et al and Bertrand et al 2011). The di¤erence is that this paper focuses on the Congress-to-lobbying revolving door, whereas these two papers do not distinguish between the professional lobbyists and congressmen-turned-lobbyists.…”

Testing an Informational Theory of Legislation: Evidence from the U.S. House of Representatives

“…3 More generally, a large and growing literature in economics examines strategic communication with costless messages (starting with Crawford and Sobel (1982); standardly referred to as cheap talk), delegating decision-making to an informed agent (starting with Holmstrom (1977)), and the trade-offs between delegating decision-power to a biased expert versus retaining the rights to make the decision and communicating with the expert (see for example Aghion and Tirole (1997) and Dessein (2002)). However, as pointed out in a recent paper by Bertrand et al (2011), the literature has not provided substantial evidence supporting the relevance of these theoretical models, either in the legislative or other contexts. 4 The findings of the information theory literature on procedural rule selection and committee selection are presented in a unified framework in a recent paper by Ambrus et al (2011b), from now on referred to as AAKT.…”

Who walks through the revolving door? Examining the lobbying activity of former members of Congress

“…LaPira and Thomas (2014) find that revolvers tend to have clients from a more diverse set of economic sectors than nonrevolvers, which -given the extensive network of personal and professional connections which come from working in Congress -suggests that they are hired primarily for access rather than policy expertise. Bertrand et al (2011) argue that lobbying is driven more by personal connections than by expertise, although lobbyists themselves argue that their personal connections are less important than their substantive knowledge (Salisbury et al 1989;Heinz et al 1997). Indeed, access and expertise are not mutually exclusive -lobbying firms may be motivated by either consideration or both when hiring a revolver.…”