Strategic Complementarities between Campaign Donations and Lobbying

• In Event: Campaign Contributions

Abstract

Although campaign donations are widely considered as integral to gaining and maintaining access to legislators, scholars sharply disagree on when interest groups target politicians and whether such political investments indeed change subsequent legislative behavior. We offer extensive empirical evidence for direct causal relationships between campaign donations made by special interest groups and (1) their subsequent lobbying activities as well as (2) legislative activities of the U.S. Representatives and Senators who received campaign donations from them. We leverage more than 75 million lobbying reports and campaign contribution filings since 1999, merged at the level of the special interest groups and legislators. To estimate the causal effect of campaign donations on legislative activities, we use the difference-in-differences estimator combined with matching methods for panel data, by comparing interest groups who make a first-time donation to a politician against a set of comparable firms with an identical donation history with no donation to the specific politician. We find that first-time donations result in an 11% increase in the probability that the targeted politician introduces legislation that is lobbied by the donating firm. Furthermore, we find that the effects are highly transient in that the strategic links between campaign donations and lobbying are concentrated only within a narrow concurrent time period. Our findings challenge the common perception of campaign donations as a long-term investment adopted by special interest groups to influence policy-making in U.S. legislative politics.

Authors

• In Song Kim, Massachusetts Institute of Technology

• Jan Stuckatz, Humboldt University Berlin

• Lukas Wolters, Massachusetts Institute of Technology