Paying the Rent

Kevin Lewis

November 18, 2011

The Political Ecology of Opinion in Big-Donor Neighborhoods

Brittany Bramlett, James Gimpel & Frances Lee
Political Behavior, December 2011, Pages 565-600

Major campaign donors are highly concentrated geographically. A relative handful of neighborhoods accounts for the bulk of all money contributed to political campaigns. Public opinion in these elite neighborhoods is very different from that in the country as a whole and in low-donor areas. On a number of prominent political issues, the prevailing viewpoint in high-donor neighborhoods can be characterized as cosmopolitan and libertarian, rather than populist or moralistic. Merging Federal Election Commission contribution data with three recent large-scale national surveys, we find that these opinion differences are not solely the result of big-donor areas' high concentration of wealthy and educated individuals. Instead, these neighborhoods have a distinctive political ecology that likely reinforces and intensifies biases in opinion. Given that these locales are the origin for the lion's share of campaign donations, they may steer the national political agenda in unrepresentative directions.


On the perpetuation of ignorance: System dependence, system justification, and the motivated avoidance of sociopolitical information

Steven Shepherd & Aaron Kay
Journal of Personality and Social Psychology, forthcoming

How do people cope when they feel uniformed or unable to understand important social issues, such as the environment, energy concerns, or the economy? Do they seek out information, or do they simply ignore the threatening issue at hand? One would intuitively expect that a lack of knowledge would motivate an increased, unbiased search for information, thereby facilitating participation and engagement in these issues - especially when they are consequential, pressing, and self-relevant. However, there appears to be a discrepancy between the importance/self-relevance of social issues and people's willingness to engage with and learn about them. Leveraging the literature on system justification theory (Jost & Banaji, 1994), the authors hypothesized that, rather than motivating an increased search for information, a lack of knowledge about a specific sociopolitical issue will (a) foster feelings of dependence on the government, which will (b) increase system justification and government trust, which will (c) increase desires to avoid learning about the relevant issue when information is negative or when information valence is unknown. In other words, the authors suggest that ignorance - as a function of the system justifying tendencies it may activate - may, ironically, breed more ignorance. In the contexts of energy, environmental, and economic issues, the authors present 5 studies that (a) provide evidence for this specific psychological chain (i.e., ignorance about an issue → dependence → government trust → avoidance of information about that issue); (b) shed light on the role of threat and motivation in driving the second and third links in this chain; and (c) illustrate the unfortunate consequences of this process for individual action in those contexts that may need it most.


Politicizing Agency Spending Authority: Lessons from a Bush-era Scandal

Sanford Gordon
American Political Science Review, November 2011, Pages 717-734

When can presidents direct bureaucrats to allocate government expenditures for electoral purposes? To address this question, I exploit a scandal concerning the General Services Administration (GSA), an agency that contracts with private vendors to provide supplies and real estate to other agencies. Shortly after Republican losses in 2006, a White House deputy gave a presentation to GSA political appointees identifying potentially vulnerable congressional districts. I find that vendors in prioritized Republican districts experienced unusually large new contract actions from the GSA's Public Buildings Service following the presentation relative to unmentioned districts, a discrepancy that disappeared once the Washington Post broke the story. Contracts supervised by the agency's Federal Acquisition Service, by contrast, were largely unresponsive to the briefing and media scrutiny. My findings suggest that the extent to which executives succeed in politicizing discretionary allocation decisions depends upon key features of the implementing agency's tasks and its informational environment.


Bribery or just desserts? Evidence on the influence of Congressional reproductive policy voting patterns on PAC contributions from exogenous variation in the sex mix of legislator offspring

Dalton Conley & Brian McCabe
Social Science Research, forthcoming

Evidence on the relationship between political contributions and legislators' voting behavior is marred by concerns about endogeneity in the estimation process. Using a legislator's offspring sex mix as a truly exogenous variable, we employ an instrumental variable estimation procedure to predict the effect of voting behavior on political contributions. Following previous research, we find that a legislator's proportion daughters has a significant effect on voting behavior for women's issues, as measured by score in the "Congressional Record on Choice" issued by NARAL Pro-Choice America. In the second stage, we make a unique contribution by demonstrating a significant impact of exogenous voting behavior on PAC contributions, lending further credibility to the hypothesis that Political Action Committees respond to legislators' voting patterns by "rewarding" political candidates that vote in line with the positions of the PAC, rather than affecting those same votes - at least in this high-profile policy domain.


Negative Lobbying and Policy Outcomes

Amy McKay
American Politics Research, forthcoming

What explains policy outcomes? Using a data set containing the actions and assessments of 776 lobbyists working closely on 77 policy proposals, combined with newly collected data on each proposal, I show that the intensity of lobbying against a proposal is a powerful predictor of the likelihood that the proposal is adopted in Congress or a federal agency. This negative lobbying is more effective than positive lobbying: it takes 3.5 lobbyists working for a new proposal to counteract the effect of just one lobbyist against it. Negative lobbying is a more important predictor of the policy outcome than the level of conflict, the preference of the majority of lobbyists, and differences in interest group resources. Several institutional factors - presidential support for the measure, congressional polarization, and whether the proposal was initiated by a federal agency - are found to affect policy outcomes, but only presidential support matters more than negative lobbying.


Live Free or Bribe: On the Causal Dynamics between Economic Freedom and Corruption in U.S. States

Nicholas Apergis, Oguzhan Dincer & James Payne
European Journal of Political Economy, forthcoming

We investigate the relationship between economic freedom and corruption using data from U.S. states covering almost a quarter of a century. Our study advances the existing literature on several fronts. First, instead of using subjective cross-country corruption indices assembled by various investment risk services, we use a more objective measure of corruption: the number of government officials convicted in a state for crimes related to corruption. Second, unlike previous studies, we exploit both time series and cross-sectional variation in the data in the estimation of a panel error correction model. The panel error correction model results show that in the long-run economic freedom, per capita income, and education have a negative and statistically significant impact on corruption whereas income inequality has a positive and statistically significant impact. The causality tests associated with the panel error correction model reveals bidirectional causality between economic freedom and corruption in both the short-run and long-run.


Does the size of the legislature affect the size of government? Evidence from two natural experiments

Per Pettersson-Lidbom
Journal of Public Economics, forthcoming

This paper makes use of regression discontinuity designs to estimate the effect of the number of legislators on the size of government. The results indicate a negative effect, i.e., the larger the size of the legislature the smaller is the size of government. This runs counter to conventional wisdom. One potential explanation is that more legislators can better control a budget maximizing bureaucracy. I present evidence that is consistent with the proposed mechanism.


Intelligence and corruption

Niklas Potrafke
Economics Letters, January 2012, Pages 109-112

This study finds that countries with high-IQ populations enjoy less corruption. I propose that this is because intelligent people have longer time horizons.


The Dynamics of Firm Lobbying

William Kerr, William Lincoln & Prachi Mishra
NBER Working Paper, November 2011

We study the determinants of the dynamics of firm lobbying behavior using a panel data set covering 1998-2006. Our data exhibit three striking facts: (i) few firms lobby, (ii) lobbying status is strongly associated with firm size, and (iii) lobbying status is highly persistent over time. Estimating a model of a firm's decision to engage in lobbying, we find significant evidence that up-front costs associated with entering the political process help explain all three facts. We then exploit a natural experiment in the expiration in legislation surrounding the H-1B visa cap for high-skilled immigrant workers to study how these costs affect firms' responses to policy changes. We find that companies primarily adjusted on the intensive margin: the firms that began to lobby for immigration were those who were sensitive to H-1B policy changes and who were already advocating for other issues, rather than firms that became involved in lobbying anew. For a firm already lobbying, the response is determined by the importance of the issue to the firm's business rather than the scale of the firm's prior lobbying efforts. These results support the existence of significant barriers to entry in the lobbying process.


Newspapers and Parties: How Advertising Revenues Created an Independent Press

Maria Petrova
American Political Science Review, November 2011, Pages 790-808

Media freedom strongly inhibits corruption and promotes good governance, but what leads to media freedom? Do economic development and higher advertising revenues tend to make media outlets independent of political groups' influence? Using data on nineteenth-century American newspapers, I show that places with higher advertising revenues were likelier to have newspapers that were independent of political parties. Similar results hold when local advertising rates are instrumented by regulations on outdoor advertising and newspaper distribution. In addition, newly created newspapers were more likely to enter the market as independents in places with higher advertising rates. I also exploit the precise timing of major changes in advertising rates to identify how advertising revenues affected the entry of new newspapers. Finally, I demonstrate that economic development, and concomitant higher advertising revenue, is not the only reason that an independent press expands; political factors also played a role.


Saving newspapers with public grants - The effects of press subsidies on the provision of journalistic quality

Martin Leroch & Christian Wellbrock
Information Economics and Policy, December 2011, Pages 281-286

Many European governments subsidize their newspapers with the intention to guaranteeing high journalistic quality. Since journalistic quality is not defined by consumer preferences, increasing will not necessarily lead to benefits for all consumers. Based on this idea, the demand for a regional newspaper monopolist is modeled and the profit maximizing level of journalistic quality is analysed. We find that frequently used sales subsidies may be counter-productive as they can lead the newspaper to reduce journalistic quality.


Financing Direct Democracy: Revisiting the Research on Campaign Spending and Citizen Initiatives

John de Figueiredo, Chang Ho Ji & Thad Kousser
Journal of Law, Economics, & Organization, October 2011, Pages 485-514

The conventional view in the direct democracy literature is that spending against a measure is more effective than spending in favor of a measure, but the empirical results underlying this conclusion have been questioned by recent research. We argue that the conventional finding is driven by the endogenous nature of campaign spending: initiative proponents spend more to support their ballot measure when, without that spending, their ballot measure is more likely to fail. We address this endogeneity by using an instrumental variables approach to analyze a comprehensive data set of ballot propositions in California from 1976 to 2004. We find that both support and opposition spending on citizen initiatives have strong, statistically significant, and countervailing effects. We confirm this finding by looking at time series data from early polling on a subset of these measures. Both analyses show that spending in favor of citizen initiatives substantially increases their chances of passage, just as opposition spending decreases this likelihood.


Searching for Good Policies

Steven Callander
American Political Science Review, November 2011, Pages 643-662

Policymaking is hard. Policymakers typically have imperfect information about which policies produce which outcomes, and they are left with little choice but to fumble their way through the policy space via a trial-and-error process. This raises a question at the heart of democracy: Do democratic systems identify good policies? To answer this question I introduce a novel model of policymaking in complex environments. I show that good policies are often but not always found and I identify the possibility of policymaking getting stuck at outcomes that are arbitrarily bad. Notably, policy stickiness occurs in the model even in the absence of institutional constraints. This raises the question of how institutions and the political environment impact experimentation and learning. I show how a simple political friction - uncertainty over voter preferences - interacts with political competition and policy uncertainty in a subtle way that, surprisingly, improves the quality of policymaking over time.


Assessing the Importance of Financial and Human Capital for Interest Group Sector Strength across American Communities

Maryann Barakso, Jessica Gerrity & Brian Schaffner
British Journal of Political Science, July 2011, Pages 557-580

One of the most profound changes in the interest group sector over the last fifty years is interest groups' increasing need to attract financial donors in order to assure long-term sustainability. Groups' growing propensity to attract ‘chequebook' members is thought to compromise their ability to foster the personal involvement of individuals in their communities. Yet we know very little about the consequences of these dynamics for the strength of the interest group sector in American communities. This widespread macro-level analysis of the interest group sector indicates that human capital is more important than financial capital for the strength of a community's interest group sector. Financially disadvantaged communities may still enjoy the benefits of a strong interest group sector provided they have a citizenry equipped with time to donate.


The Influence of Lobbying Activity in State Legislatures: Evidence from Wisconsin

Nathan Grasse & Brianne Heidbreder
Legislative Studies Quarterly, November 2011, Pages 567-589

This study attempts to assess the degree of influence interest groups can exert on the state policy process, specifically via their lobbying activities. The analysis uses data from the 2005-06 Wisconsin Legislative Session to assess the association between lobbying activity and legislative outcomes in one state legislature. The study finds a direct association between lobbying activities and bill outcomes, while also exploring the potential influences of both key political actors and public attention. Public attention is found to reduce the effects of lobbying efforts, suggesting that lobbying is most effective when focused on less salient issues.


The Media's Role in America's Exceptional Politics of Inequality: Framing the Bush Tax Cuts of 2001 and 2003

Carole Bell & Robert Entman
International Journal of Press/Politics, October 2011, Pages 548-572

This study extends Hacker and Pierson's important research on the politics of inequality by illuminating the critical role of news media in facilitating the public's acquiescence to government policies that failed to accord with their interests and values. Although benefits were heavily concentrated at the very top of the income and wealth distributions, majorities of Americans appeared to support the tax cuts, and just as important, oppositional public opinion was muted. An innovative content analysis of national television news coverage informed by the concepts of particularistic versus collective benefits reveals the interests and sources represented, and subtle ways media framing favored George W. Bush's tax proposals of 2001 and 2003. The authors find that media framing did not provide citizens with the information necessary for balanced assessment of either the effects on their own individual economic interests, or of impacts on widely shared, collective (i.e., sociotropic) values. Instead, by framing the tax cuts' putative collective benefits in terms of economic growth while neglecting the likelihood of greater inequality, and by deemphasizing the skewed particularistic benefits, broadcast coverage diminished citizens' ability to deliberate effectively over taxation policy. As a result, television news shaped an environment favorable to tax policies that exacerbated economic inequality in the United States and rendered America an outlier in income distribution among wealthy democracies.


Special Interests, Regulatory Quality, and the Pesticides Overload

Christopher Marcoux & Johannes Urpelainen
Review of Policy Research, November 2011, Pages 585-612

Pesticides overuse is a serious threat to ecosystems and wildlife, human health, and agricultural sustainability. So far, however, social scientists have not produced systematic evidence on the political-economic determinants of pesticides overuse. We argue that the agrochemical industry, as a profit-motivated interest group, will only mobilize politically to avoid reductions in pesticides use when regulatory institutions are potentially capable of correcting a market failure. If regulatory institutions are weakened by corruption or other factors, pesticides overuse occurs with or without the influence of the agrochemical industry. We test this interactive theory systematically against quantitative data on pesticides use in 24 Organisation for Economic Co-operation and Development countries, 1991-2003. Using corruption and other indicators to capture bureaucratic quality, we find substantively large and statistically robust interactive effects. The agrochemical industry is a crucial determinant of pesticides use in nations with low corruption, whereas the agrochemical industry has no effect on pesticides use under corrupt regulatory institutions. Troublingly, these results imply that reduced corruption may not improve actual regulatory effectiveness unless political institutions can somehow constrain the influence of special interests.


Does financial development reduce corruption?

Yener Altunbaş & John Thornton
Economics Letters, forthcoming

We estimate the impact of bank credit to the private sector on corruption using indicators of a country's legal origin as instrumental variables to assess causality. We find that bank credit to the private sector reduces corruption, with the result robust to instrumenting for bank credit and for many different controls.


Accountability in Government and Regulatory Policies: Theory and Evidence

Carmine Guerriero
Journal of Comparative Economics, forthcoming

A key market institution is the degree of accountability to which the officials involved in regulation are exposed. While elected officials strive for re-election, appointed ones are career-concerned. Provided that the effort exerted to uncover the firm's unknown cost is sufficiently effective in swaying votes, elected officials produce more information than appointed ones do. As a result, when the demand is inelastic, appointment induces wider allocative distortions and higher profits which, in turn, yield stronger incentives to invest. Hence, appointment will prevail on election when investment inducement is sufficiently relevant and shareholders are sufficiently more powerful than consumers. Data on electricity rates and costs, and the methods of selecting regulators and appellate judges for a panel of forty-seven U.S. states confirm these predictions.


The Politics of Ex Parte Lobbying: Pre-Proposal Agenda Building and Blocking during Agency Rulemaking

Susan Webb Yackee
Journal of Public Administration Research and Theory, forthcoming

Scholars generally agree that interest groups are active and at times influential during the notice and comment period of regulatory policymaking (or "rulemaking"). But current research often ignores the agenda setting that may take place during the pre-proposal stage of rulemaking. During proposal development, interest groups may lobby to: (1) influence the content of proposed regulations or (2) block items from the regulatory agenda altogether. This article focuses on ex parte lobbying - "off the public record" conversations in which lobbyists share policy and political information with regulators - during the pre-proposal stage of rulemaking. I assess the importance of ex parte influence with data from a content analysis of government documents drawn from seven federal government agencies and a telephone survey of interested parties. Overall, the findings provide the first empirical confirmation that "off the record" lobbying can, and at times, does matter to regulatory content changes during a stage of the American policymaking process that is often overlooked by scholars and the public: the pre-proposal stage of agency rulemaking.


Institutions and Casinos on American Indian Reservations: An Empirical Analysis of the Location of Indian Casinos

Anthony Cookson
Journal of Law and Economics, November 2010, Pages 651-687

This paper empirically investigates the institutional determinants of whether a tribal government invests in a casino. I find that the presence of Indian casinos is strongly related to plausibly exogenous variation in reservations' legal and political institutions. Tribal governments that can negotiate gaming compacts with multiple state governments, because tribal lands span state borders, had more than twice the estimated probability (.77 versus .32) of operating an Indian casino in 1999. Tribal governments of reservations where contracts are adjudicated in state courts, rather than tribal courts, have more than twice the estimated probability (.76 versus .34) of investing in an Indian casino, ceteris paribus. These findings suggest that states' political pressures and predictable judiciaries affect incentives to invest in casinos. This study contributes, more generally, to the empirical literature on the effects of institutions by providing new evidence that low-cost contracting is important for taking advantage of substantial investment opportunities.


The Price of Pay to Play in Securities Class Actions

Stephen Choi, Drew Johnson-Skinner & A.C. Pritchard
Journal of Empirical Legal Studies, December 2011, Pages 650-681

We study the effect of campaign contributions to lead plaintiffs - "pay to play" - on the level of attorney fees in securities class actions. We find that state pension funds generally pay lower attorney fees when they serve as lead plaintiffs in securities class actions than do individual investors serving in that capacity, and larger funds negotiate for lower fees. This differential disappears, however, when we control for campaign contributions made to officials with influence over state pension funds. This effect is most pronounced when we focus on state pension funds that receive the largest campaign contributions and that associate repeatedly as lead plaintiff with a single plaintiff's attorney firm. Thus, pay to play appears to increase agency costs borne by shareholders in securities class actions, undermining one of Congress's principal goals in adopting the Private Securities Litigation Reform Act.


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