Lobbyists as Gatekeepers: Theory and Evidence

• In Event: Agents In the Politics Industry

Abstract

Lobbyists play a crucial role in the lobbying process, but the value that they bring to both clients and politicians remains poorly understood. We develop a model in which a lobbyist's value derives from his ability to selectively screen which clients he brings to a politician, thereby earning the politician's trust and preferential treatment for his clients. Lobbyists face a dilemma, as their ability to screen also increases their value to special interests, and the prices they can charge. A lobbyist's profit motive undermines his ability to solve this dilemma, but an interest in policy outcomes---due either to a political ideology or a personal connection---enhances it, which paradoxically increases his profits.

We find that the model predictions of lobbyists' representation are supported by the observed contact patterns from our dataset of more than 5,000 lobbying contacts made to members of Congress and their staffers by 219 unique lobbyists on behalf of foreign governments during the 110th--111th Congresses. We find that the more aligned is a lobbyist-politician pair, the more likely that pair has at least one contact (or is active) during the period of study. Focusing on active lobbyist-politician pairs only, we find that the more aligned is a pair, the less clients the lobbyist bring to the politician. Specifically, we find that a decrease in the CF score difference between a lobbyist and a politician is associated with a decrease in the number of clients for whom the lobbyist makes a phone call to or has a meeting with the politician or her staffer (conditioning on politician fixed effects and lobbying firm attributes). We also document that if a politician maintains an active relationship with two observationally similar lobbyists, except that one previously worked for Congress or the executive branch and the other did not, the former tends to represent fewer clients and to contact her less frequently.

These novel findings run counter to the popular notion of lobbyists as “hired guns” who use their access while it lasts. Our theory, on the other hand, provides a coherent explanation for why the “coveted” lobbyists---who have access to a politician, share similar political preferences, and enjoy a high market premium for their services---can be more restrained than other lobbyists.

Our paper makes two main contributions. Theoretically, we provide a model of lobbying where lobbyists are independent intermediaries between politicians and special interest groups (SIGs), and the provision and value of lobbyists' intermediary services are endogenously determined. We explain the equilibrium mechanism through which lobbyists obtain access to politicians and sell it to interest groups. In doing so, we present new predictions on the relationship between (i) the extent to which a lobbyist is aligned with a politician, (ii) the lobbyist's representation of a SIG to that politician, and (iii) the lobbying fees and profits. The model allows lobbyists to establish their credibility with politicians without relying on repeated interactions. This feature is closely related to existing empirical results that emphasize the importance of lobbyists' ideologies, policy expertise, and connections to politicians in generating revenues.

To our knowledge, we provide the first systematic empirical evidence on the allocation of politicians' access using a large database of contact records. Although studying access has been a central issue in the literature on lobbying, the dearth of contact data has been an important empirical challenge, and existing studies have relied on interviews with lobbyists to measure access. We address the challenge by building a lobbyist-politician level database on contacts from the FARA reports and augmenting it with information on lobbyists' career histories, party affiliations, and campaign contributions from various sources. A unique advantage of our dataset is that we study not only which lobbyist has access to which politician, but also the extent to which lobbyists with access utilize it. We document that greater ideological alignment between a lobbyist and a politician predicts that the pair will have contact during the period of study (2007--2010); but conditional on having any contact, the more ideologically aligned the pair is, the fewer contacts and the smaller the number of clients.

Authors

• Alexander Victor Hirsch, California Institute of Technology

• Karam Kang, Carnegie Mellon University

• Brendan Pablo Montagnes, Emory University

• Hye Young You, New York University