Beyond Money: How Special Interest Groups Influence Policy Choices

Abstract

Scholars have long recognized two classes of special interest group (SIG) expenditures: inside lobbying, which is intended to influence the content of a bill; and outside lobbying, which is intended to influence the likelihood a bill is enacted into law. This paper juxtaposes both lobbying activities within a single model. Policy choices are a function of the decision-maker's assessment of SIGs' willingness to engage in outside lobbying. Importantly, inside lobbying expenditures do not always reflect SIGs' outside lobbying capacities and therefore cannot adequately measure SIG influence. Empirical studies which exclusively consider inside lobbying expenditures -- as nearly all existing tests do -- are likely to underestimate both the extent and strength of SIG influence. The small impact of inside lobbying expenditures often documented in the empirical literature is thus not inconsistent with the widely held belief that SIGs bias the political process in their favor.