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Committee assignments, constituent preferences, and campaign contributions.


The familiar economic model of regulation as developed by Stigler [1971!, Peltzman [1976! and Becker [1983!, posits an essentially frictionless market process for regulatory policy formation, in which a single regulator/legislator chooses policy to maximize net support from competing groups. In this paper we extend the supply side of this model by considering the effect of legislative institutions and unorganized constituent preferences on the ability of incumbents in the House of Representatives to serve specific interest groups. We then test this formulation by examining the recent history of interest group campaign contributions to these legislators.

Our theoretical model concentrates on how a legislator allocates time between serving specific interest groups outside his district and serving his constituency. We do not model interest group decisions directly, assuming simply that they purchase their desired amount of service from the lowest cost suppliers. Our model sorts legislators by the supply price at which they can serve a particular group. This price depends on the preferences of the voters in the legislators' district and the productivity of the legislator in producing policy service for each group. (1) The empirical section tests the model by examining the pattern of interest group campaign contributions to House incumbents from 1978 through 1984.

Our regression analysis tends to confirm both implications of the theory. First, the pattern of campaign contributions from specific interest groups to legislators is shaped by the division of substantive legislative and regulatory jurisdictions represented by the system of House standing committees. Second, voter preferences influence the pattern of contributions by affecting the supply price at which a legislator can offer policy to interest groups. Legislators with sympathetic or indifferent constituencies are able to offer a lower price, and are therefore able to attract larger sums, than those with hostile constituencies.

These results are important for two reasons. First, the influence of Congressional institutions such as committees on policy is not widely accepted. While several studies (Faith, Levins, and Tollison [1982! Weingast and Moran [1983! Weingast [1984! Grier [1989! and Robert [1990!) have documented the effects of changes in a particular committee on policies under its jurisdiction, this work considers the jurisdiction of only a single committee in each case. (2) By examining the linkages between Congressional committees and political action committees (PACs), we investigate whether interest groups act as if committees have power. Second, while the Chicago model of regulation emphasizes (correctly, in our view) that policy is the result of vote maximizing calculations and the incremental balancing nature of any equilibrium, the model is imprecise about which sets of preferences are most important in determining the levels of policy or the size of changes in policies. Focusing on committees promotes a parsimonious specification of both the political players (members of the relevant committee, rather than the entire Congress), and the pivotal voters (committee members' constituencies more than the nation) determining specific policy outcomes.

The paper is organized as follows: section I reviews some issues on the nature and sources of committee influence in the U.S. Congress. The second section incorporates committee assignments into a theory of decision-making by interest-group/investors. Sections III and IV describe our data and estimation technique and present the empirical results. The fifth and final section discusses some implications and conclusions of this research.


Legislators differ substantively by virtue of their committee assignments. Committees in Congress, and particularly in the House of Representatives, possess disproportionate power over the policy areas in their respective jurisdictions, have the right to hold hearings, and recommend budget allocations for the bureaus in their jurisdiction (Goodwin [1970! Niskanen [1971! Fenno [1973!). Committee members have two important legislative or parliamentary functions. The first is agenda-setting: committee members substantially control the content and timing of legislation that goes to the floor for consideration. It is relatively easy, in informal and mostly consensual mark-up sessions, to amend bills. Once a bill has been sent to the floor, exactly the same substantive change requires a formal vote and a far greater commitment of time and parliamentary skill (Smith and Deering [1984! Hall [1987!). The second power of committee members is gate-keeping, or the capacity to prevent legislation even from being considered by the rest of the legislature, even if a majority would favor the bill if it could only be brought to a vote (Denzau and MacKay [1983! Shepsle and Weingast [1984!). Committee members also dominate the conference committees appointed to resolve inter-chamber differences on bills (Shepsle and Weingast [1987!).

The importance of committee power for interest group politics becomes apparent when we consider the nature of the constituencies behind legislative committee members. Individual House districts are generally not representative cross-sections of the nation. Individual districts are often homogeneous, so that a single overriding issue dominates electoral politics. Not surprisingly, legislators from such districts gravitate to the committee that has jurisdiction over this overriding issue. The historical prevalence of farm district legislators on the Agriculture committee, union district legislators on the Education and Labor committee, urban legislators on Banking, Finance and Urban Affairs, and western legislators on Interior is well known (Fenno [1973! Shepsle [1978! Smith and Deering [1984!).

Committee power may well affect the terms of the transactions between legislators and interest groups, if not the actual observed outcomes. For example, suppose Senator Smoke from North Carolina chairs the committee (Agriculture) that determines tobacco price supports. If the perceived social cost of subsidizing cigarette production rises because of national concern over the health costs of smoking, this increased cost will not easily be translated into policy change. The cost shift does not directly enter the Senator's vote-maximizing calculus if most of his constituent's livelihoods depend on tobacco products. Voters from other states can't vote against Senator Smoke. No one can pay him enough in contributions to change his stance because he can't change it and still get reelected, no matter how much money he spends campaigning. Prospective opponents who advertise his support of tobacco win him more votes, not fewer. The only option remaining is the daunting task of organizing a House majority sufficiently strong to roll the committee. In sum, the preferences of (even numerous) outsiders do not receive nearly as much weight as strongly held desires of Committee members' constituents.

Of course, both formal and informal procedures can be used to mitigate the committee-constituency dominance on a given issue. (3) Informally, vote trading can occur. However, when the legislator is serving an interest group with a subsidy that also benefits his geographic constituency, the cost of persuading him to change this policy may well be prohibitive. Alternatively, congressional majorities can use such arcane parliamentary tactics as the "discharge petition" to pry legislation out of a recalcitrant committee (Goodwin [1970, 215-21!). Though the discharge petition requires only a simple majority of the floor vote to force the committee to relinquish control of the bill, this weapon is virtually never used. Instead, the majority generally defers to the committee, and reciprocity across committee jurisdictions appears to be the rule in the House of Representatives (Weingast [1979! Niou and Ordeshook [1985! Collie [1988!).

We present below a model of legislator behavior where committee assignment and constituent interest affect politicians' ability to serve an interest group. We then test this model by estimating political action committee contribution equations for incumbent house members from 1978-1984. We find that committee assignments and the preferences of district voters are significant components of the supply price of a legislator's services (and hence, the amount of political action committee contributions he receives).

The novel implication of our model is the prediction that committees whose jurisdictions are most relevant to the policy interest of a group may still not receive contributions unless separate account is taken of the preferences of the voters those

committee members represent. Previous work has either considered the simple relationship between contributor interest and committee jurisdiction (Munger [1989!) or investigated whether some committees attracted more resources from all sources (Poole and Romer [1985!). (4)


The model in this section derives from Denzau and Munger [1986!, with the innovation that committee assignment is an explicit parameter in the policy production function of incumbent legislators. (5) There are three sets of agents: legislators, who seek to maximize the percentage of vote they receive in the next election (6) voters, who respond to their perception of the policy activities of the incumbent in their geographic district by voting for or against him (7) and interest groups, who allocate their funds among candidates in the form of campaign contributions, each seeking to influence policy to the group's own economic benefit.

A legislator is assumed to allocate his effort among n + 1 possible policies in such a way as to maximize his total vote, subject to the constraint that ([[summation!.sub.i.E.sub.i! + [E.sub.u!)

E, where E is the total quantity of the candidate's effort, and that of his staff, available. [E.sub.u! is effort devoted to serving voters (the unorganized group) through casework [E.sub.i! is effort devoted to providing more of policy i. More concisely, the legislator's problem is to

(1) maximize V([P.sub.u!([E.sub.u!), [P.sub.1!([E.sub.1!, [C.sub.1!), ...,

[P.sub.n!([E.sub.n!, [C.sub.n!), R) subject to [[summation!.sub.i.E.sub.i! [is less than or equal to! E.

The V(*) function denotes voters' preferences for casework and the legislator's effort in each of the n separate policy dimensions ([P.sub.i!). Voting is influenced as well by campaign resources (R) spent to advertise the legislator's activities. The productivity of the legislator's effort [E.sub.i! is determined partly by whether he sits on the committee ([C.sub.i!) with legislative and regulatory jurisdiction over that policy dimension (that is, [C.sub.i! corresponds to [P.sub.i!). (8)

(2) [Mathematical Expression Omitted!

Campaign resources are accumulated by the candidates as follows:

(3) R = [[summation!.sub.i.R.sub.I!([P.sub.i!).

Campaign resources available to the candidate are the sum of contributions of all interest groups made in response to the candidate's policy position, based on the goals of the interest groups embodied in the separable demand functions ([R.sub.i!([P.sub.i!)).

The first-order conditions of the constrained maximization (letting primes denote derivatives, superscripts denote partial derivatives, n = 2 and holding committee membership constant) are

(4) [Mathematical Expression Omitted!

where [lambda! is the shadow price of effort. (9)

Because [P.sub.i!([E.sub.i!, [C.sub.i!) is a production function, [dP.sub.i!/[dE.sub.i! is the marginal productivity of the legislator's effort. Given the assumption that committee membership ([C.sub.i! = 1) increases productivyt over policy within its jurisdiction, we need to define the marginal product of committe membership

(5) [Mathematical Expression Omitted!

Taken together, equations (5) and (2) imply committee membership raises both the average and marginal productivity of the legislator's effort.

This difference in productivity has an immediate implication for the supply price for policy which (in expanded notation) is

(6) [Mathematical Expression Omitted!

The implication is that [R.sub.i!'([P.sub.i! ([E.sub.i!,[C.sub.i! = 1))

[R.sub.i!'([P.sub.i!([E.sub.i!,[C.sub.i! = 0)): a legislator on the appropriate committee can provide policies desired by interest group i at a lower price. The price difference follows from equation (5): marginal productivity (d[P.sub.i!/d[E.sub.i!) is larger when the legislator sits on [C.sub.i!, and ([dP.sub.i!/[dE.sub.i!) is in the denominator of a positive, term, so committee membership lowers the cost of providing service to group i, ceteris paribus.

An interest group's contributions to legislators will be inversely related to the costs each legislator faces in producing policy for the group. Three major determinants of these costs are the marginal productivity of a legislator's effort, the electoral impact of the legislator's effort on behalf of the interest group, and the value to the legislator of an additional dollar of campaign money. Marginal products differ across legislators according to their power to affect the origin and progress of legislation, measured in our analysis by seniority and committee assignment. Electoral impact depends on the preferences of the legislator's constituency, which we measure by the legislator's party and voting record. (We use the Chamber of Commerce Vote Index to measure voting record). (10) Finally we proxy the legislator's valuation of campaign funds by the margin of victory in the previous election.

The model has refutable empirical implications. First, the partial derivatives of committee assignment, party and voting record with respect to contributions should vary across different interest groups. Second, these effects should vary predictably. Legislators on committees with jurisdictions matching the economic interest of the contributing groups and legislators with constituencies less opposed to the contributing group'sl policies will each attract more funds from that group. The first prediction implies that regression equations explaining the contributions received by incumbent congressmen from different interest groups will have significantly different coefficients. The results do not allow the analysis to be performed on one large pooled equation. The second result allows us to predict which committees and constituencies will be significant attractors of campaign funds from specific interest groups. These predictions are presented and explained below.

A. An interest group contributes more total campaign dollars to a candidate on a committee with regulatory and legislative jurisdiction over that interest group's activities, because the legislator can offer a lower unit price for the service than an identical legislator not on the committee. Notice that this is not an elasticity argument but a comparison across legislators for the same service, as depicted in Figure 1. Purchasers of legislative services pay the lower price for all units of service (panel a) unit at the margin the noncommittee member becomes competitive (panel b). Of course, if the supply cost advantage of committee members is sufficiently large, noncommittee members receive nothing. But for any prevailing price the total revenue of committee members is larger.

Within committees not all members possess equal capacity to influence legislation. Rather, power is generally awarded based on seniority: the most senior member of the majority party on the committee is chair, with the next most senior a virtual certainty to succeed him. (11) Seniority also represents experience, tactical parliamentary skills, and political savvy. For all these reasons, senior legislator are likely to receive more funds.

B. Legislators differ from one another in roll-call voting behavior over their career. To the extent that interest groups recognize that a legislator's voting record is an indication of his constituent's preferences, this record may be used to choose among legislators. Since [V.sup.i! (the direct reaction of voters to provision of policy i) is in the numerator of a negative term, we know legislators whose voters favor or are indifferent to [P.sub.i! can offer a lower price than legislators whose voters oppose [P.sub.i!. Legislators with sympathetic or indifferent constituencies receive more contributions from group i than those with hostile constituencies.

C. A legislator in a close race devotes more time and staff resources to serving interest groups because of his need for funds. Conversely, a legislator who is unopposed, or in an easy race, can devote significantly less of the resources he controls to serving interest groups. In the context of equation (6), this means
[[lambda!.sub.close! [[lambda!.sub.easy! because
[E.sub.close! [E.sub.easy!. Because

[lambda! appears in the numerator of the positive term in the supply price, we predict legislators in close races will serve interest groups more intensively, and attract more funds than those in easy races.


To determine the validity of these propositions, we obtained data on contributions by political action committees, and the identities of the candidates receiving the contributions, from the "non-party political action committees" records of the Federal Election Commission. These data include all contributions made by non-party political action committees for the 1977-78, 1979-80, 1981-82, and 1983-84 election cycles, a total of nearly 346,000 observations. Deleting contributions to non-incumbents, we merged these contribution data with the characteristics of the candidate receiving the contributions. The data on candidate characteristics came from the Congressional Quarterly Weekly. The specific variable definitions can be found in the data appendix.

We illustrate the relative magnitudes of contributions made by political action committees in each of the Federal Election Commission's "Special Interest Group" classes in Table I, which allows comparisons of one class to another over time. In every case, there is a substantial increase in teh total quantity of real (1978 dollars) contributions from 1978 to 1984. The largest absolute and relative increase ($7.5 million) came from corporations, which gave $11.2 million in 1984, an increase of more than 200 percent over the 1978 figure of $3.67 million. Each of the other political action committee categories (unions, trade associations, and cooperatives) approximately doubled their real contributions over the 1978-84 period. The total amount contributed by all four Special Interest Group classes increased by 123 percent to nearly $31 million for 1984. This money was distributed among the 410 incumbents running in 1984, for an average real total contribution of $75,434. For purposes of a rough comparison, the average total spending of House incumbents in 1984 was $240,000 (also in 1978 dollars), so non-party political action committee contributions are less than one-third the total. (12) Our concern, however, is not the levels of influence political action committees obtain. Rather, we seek to map out the patterns and sources of contributions induced by legislators' characteristics.


We begin this section with a discussion of the rationales for the predicted effects of committee membership for various interest groups.

Corporations. Corporations seek out legislators who are Republicans and have high Chamber of Commerce Vote Index ratings (that is, whose voters allow, and even encourage, their representative to charge a low price for serving business). The most important committee jurisdictions predicted for corporations are Energy and Commerce (economic regulation), Banking, Finance and Urban Affairs (interest rates and financial regulation) and Ways and Means (tax policy).

Trade Associations. Typically, trade association committees are political action and committees associated with unconcentrated industries (Munger [1988!). Trade associations are substitutes for political action committees organized by individual firms. Agriculture and food processing are two important industries that maintain a variety of trade associations. This group should behave in the same way as corporations, with the addition of the Agriculture Committee as a significant attractor of group funds.

Cooperatives. Cooperatives are a heterogeneous "group," except that a disproportionate number of cooperatives represent the dairy industry. The only committee predicted to be of importance is the Agriculture Committee. Given cooperatives' general business affiliation, we otherwise expect a pattern on the voting preference variables similar to corporations and trade associations.

Labor Unions. Unions are generally adversaries to business concerns. We expect unions to seek legislators whose voters are sympathetic that is, Democrats with low Chamber of Commerce Vote Index scores. The most important committees for unions are expected to be Education and Labor along with Post office, the committee with jurisdictions over the most highly unionized government sector.

Negative Cross Contributions. As we have defined the dimensions of political conflict, each interest group is concerned with a particular dimension, and its interests may conflict with those of a representative's geographic constituency. In fact, some interests (for our purposes the best examples are corporations and unions) are largely adversarial. In this case the empirical predictions of the model are that some committees whose members routinely serve one group will receive below-average contributions from that group's adversary. For example, Education and Labor is strongly associated with service to unions. Its jurisdiction (particularly labor law) is of interest to corporations, but we predict Education and Labor will receive below-average corporate contributions. Service to one group precludes service to another in an opportunity cost sense, given the constraint on total representative and staff effort. Education and Labor members serve unions, because they tend to come from largely blue-collar, heavily unionized districts. (13) As a result, we predict a pattern of negative and significant coefficients for committees with relevant jurisdictions but systematic support for that group's interest adversary.

The data available to test our model are necessarily truncated at zero. This mass point at zero in the distribution of political action committee contributions biases ordinary least squares estimates. Yet we have much more information than would be used by a purely qualitative estimation procedure such as LOGIT or ORBIT. The appropriate tecnique in this case is TOBIT. (14) This method estimates a non-linear, maximum-likelihood probability model and then uses the first partial derivatives of the likelihood function to generate linear regression coefficients that can be used to predict levels of contributions. The equation we estimate is

(7) [Mathematical Expression Omitted!

The dependent variable [Contribution.sub.ij! is the sum of interest group i's contributions to legislator J, given J's attributes and committee assignments k. Interest groups are (1) labor unions, (2) corporations, (3) trade associations and (4) cooperatives. We have included the dummy variable Freshman to account for the phenomenon noted by Edelman [1988! that first term legislators get extra political action committee monies. The explanation, borne out by her empirical analysis, is that freshman do not have an established voting record, and (in our parlance) have on average a lower supply price for policy because of their electoral insecurity as new members.

Given that our data cover four elections and four types of interest groups, we have a two-fold estimation problem. First, our theory predicts that coefficients differ across interest groups. Second, coefficients will likely vary across time because of the enormous expansion in both the number of PACs and the quantity of resources they disburse to House campaigns.

We first investigate inter-group stability, then turn to intertemporal stability. to test whether interest groups behave differently when faced with the same legislator, we first estimate our equation on all 6116 observations allowing all coefficients to shift across the four interest groups. We then restrict all groups to have the same coefficients. This allows a likelihood ratio test of the null hypothesis that interest groups behave identically in allocating campaign funds. This null is rejected at the .01 level, confirming the first and crudest prediction of our model. (15) Below we present regressions for individual interest groups, testing our predictions on what factors influence specific interest groups and allowing for changes in the coefficients over time.

Table II contains the results for corporate political action committees. The first column is equation (7) estimated on 1978-80 data, the second on 1983-84 data. A chi-square test of the hypothesis that hte coefficients are the same indicate that they are significantly different across time. Interestingly, the biggest coefficient changes are on variables we predict to be important. The coefficients on Democrat, Chamber of Commerce Vote Index (CCVS), Energy and Commerce, and the Ways and Means committees [(*1)Committee.sub.kj! each more than double in the second half of the sample.

Consider first the non-committee variables. Freshman do receive significantly more corporate contributions, through the significance level is only 0.10 in the second equation, and seniority has a small but positive and significant effect in both halves of the sample. The coefficient for 1982-84 indicates that each two-year term increases contributions by $722. Previous margin of victory is also significant in both halves of the sample, with the 1982-84 coefficient indicating each percentage point of margin reduces contributions by about $180.

The variables measuring constituent preference strongly support our model. The coefficient on Democrat changes from -$2237 to $-4922 over the sample while the effect of voting record nearly triples. In 1982-84, the contribution-maximizing Chamber of Commerce Vote index score is 72.6, which produces $33,700 in corporate contributions. In 1978-80, this score would be associated with about $13,600 in corporate political action committee money. (16)

The committee results are mixed, but mainly support our model. Of the three committees predicted to be positive and significant, Energy and Commerce is positive and significant in both halves of the sample with the coefficient rising from $6700 to about $16,000. Ways and Means is also highly significant in both regressions with the coefficient increasing from $7800 to $20,000. The coefficients on the Banking committee are positive but not significant. The secondary prediction of significantly lower contributions to Education and Labor and the Post Office committees is partly supported. Education and Labor is negative in both regressions though the significance level is only 0.10, and Post Office is negative and significant (0.05) in the second half of the sample. Of the other seventeen committees, Public Works and Transportation is positive and significant in both halves of the sample while Appropriations and Budget are positive and significant in the second half. (17) It is important to note that the two committees with the largest effects (by an order of magnitude) are the ones predicted by our model: Energy and Commerce, and Ways and Means. Further, none of the committee coefficients is significant with the "wrong" sign.

Results for trade association political action committees are given in Table III. Again, a chi-square test shows that the two regressions are significantly different, indicating that the coefficients are changing over time. Hence, Freshman is positive and significant in both samples, Seniority is positive but significant only in the 1982-84 data, and Democrat and previous election margin are both negative and significant. The effect of a pro-business voting record (Chamber of Commerce Vote Index) is positive, significant and increasing over time. A score of fifty produces $12,600 in trade association contributions in the first half of the sample and $19,850 in the second.

We predict four committees to be positive attractors of trade association funds: Agriculture, Banking, Energy, and Commerce, and Ways and Means. Here these committees are positive and significant (0.01) in each equation, with the coefficients on all but Banking increasing notably over time. For example, the effect of being on the Agriculture committee rises from $4100 to $8900 over our sample. The secondary prediction of lower contributions to Education and Labor and Post Office is also mainly supported three of the four coefficients are negative and significant at the 0.05 level. Of the other sixteen committees, Public Works/Transportation is again positive and significant in both halves of the sample, while Foreign Affairs turns up negative and significant. Again the three most important committees are ones predicted by our model: Agriculture, Energy and Commerc, and Ways and Means.

Labor political action committees are analyzed in Table IV. Again the equation does not pool over the two sub-samples, so we report and compare the two equations. The results here differ dramatically from the previous interest groups' equations. Freshman is positive and significant only in the second half of the sample, though there it is much larger than the coefficient for corporate or trade association political action committees. There is no positive effect of seniority on Labor contributions, though the previous victory margin is negative and significant as above.

The constituent preference variables in this labor political action committee equation have the opposite effect from those in the business regressions, as our model predicts. Democrat is a large positive and significant attrator of union political action committee money with a coefficient of $17,944 in the first half of the sample and $14,397 in the second. Pro-business voting lowers union contributions and the effect becomes are strongly negative over time. The 1978-80 coefficient on Chamber of Commerce Vote Index is -$266, the 1982-84 coefficient, -$410. (18)

Turning to committees, we predicted that Education and Labor and Post Office would be positive and significant, which they are in both regressions. However, the coefficients do not increase over time here as they did above. The effect of a seat on Education and Labor on labor political action committee contributions is $6645 in the first half and $6465 in the second half of the sample. Our secondary prediction of lower contributions to committees favored by corporations is not supported at all in these data. In fact Energy and Commerce is positive and significant in the first half of the sample and Banking is positive and significant in the second. Of the other seventeen committees, Public Works/Transportation is positive and significant again in both regressions.

Finally, Table V contains the results for cooperatives. This is a diverse "group" of political action committees, preponderantly dairy cooperatives but also containing

a variety of other interests. Our only real prediction here is that the Agriculture committee will attract cooperative funds. As above, coefficients of the model significantly differ over the two halves of the sample. Cooperatives give more to Democrats and pro-business voting legislators, and Agriculture is the dominant committee by an order of magnitude. Of the other twenty-one committees, Public Works/Transportation and Ways and Means are positive and significant in both halves of the sample.

Several of these results deserve further elaboration. Earlier, we demonstrated that the various special interest group classifications of the Federal Election Commission do not "pool," and that interest groups behave differently rather than acting as a monolith. We can go further: no two groups pool, implying that the Federal Election Commission distinctions are empirically justified. This is not to say that further subdivision is not appropriate, but the data are appropriately grouped as far as the groupings go.

An important question remains: does the overall average level of political action committee contributions differ across legistrators? We can use our estimate to make predictions about whether or not there are legislative characteristics that create greater total contributions from the political action committees in our sample. (1) A Democrat with five terms of service, a seat on the Education and Labor Committee, and a Chamber of Commerce vote index of 30 (one standard deviation below the mean): the total contributions we predict are $96,956, with 54.4 percent coming from union political action committees. (2) A Republican, also with five terms of service, with a seat on Energy and Commerce and a Chamber of Commerce vote index of 70: total contributions are $120,515, with only 12.8 percent coming from union political action committees. (3) A five-term Democrat, with a seat on Ways and Means and a moderate stance of 50 on the Chamber of Commerce vote index: $137,410 (27.6 percent from union political action committees). This is the maximum contribution-attracting set of characteristics for a five-term legislator, according to our model.

Clearly, these differences across candidates are not nearly as striking as the differences in allocational patterns across political action committee types. Interest groups target particular candidates, with particular sets of characteristics, in making contribution choices. (19) But the total contributions received by any one candidate are similar to the amount received by any other, as was first demonstrated by Poole and Romer [1985!. Our model provides insight into the sources of support more than the overall influence of any one group.


Our model extends the now-familiar Chicago model of regulation backward into Congress, the institutional setting in which fundamental regulatory policy decisions are made. After modifying the model to account directly for the increased policy productivity associated with committee membership, we demonstrate the following three implications of the model. First, legislators on a committee with legislative and regulatory jurisdiction over an interest group posses an institutional asset, the return to which is disproportionate contributions from that interest group. Second, legislators differ in the set of interest groups they will (or electorally, can) service. Third, the electoral need of the legislator for campaign contributions (measured by the expected closeness of the upcoming race) increases his willingness to serve interest groups. A legislator needs a majority of votes only in his own district, so the strongly felt preferences of district voters affect the price at which a legislator will supply policy to an interest group.

These implications of the model are largely confirmed by regression analysis for four consecutive Congressional election cycles (1977-84). We find that four broad categories of interest group political action committees (corporations, union, cooperatives, and trade associations) exhibit striking differences in contribution patterns. Most important, this pattern conforms to the predictions of our model. The pattern of campaign contributions is partly explained by the partition of legislative and regulatory jurisdictions represented by the committee system. But the set of preferences of voters in distinct geographic districts whose representatives serve on those committees also affects the supply price of policy, and we find that voter preferences affect the pattern of contributions as well.

Our results point to a different view that has usually arisen from the Chicago approach. The Stigler-Peltzman-Becker model (particularly Becker's variant) appears to have accepted and applied Coase's [1960! insight that if transactions costs can be overcome to Pareto-dominated policies can be maintained in equilibrium. We believe this conclusion is too optimistic, particularly if it depends on enforceable bargaining and subsequent compensation.

The structure of the committee system creates small, enduring subsets of legislators with considerable power within their jurisdictions, who do not represent the nation as a whole, but depend for their electoral survival on voters in a small (and perhaps decidedly unrepresentative) geographic district. The interests of the district may diverge either from those of the larger set of voters, or from those of resource-rich groups whose interests transcend district boundaries, but the representative will not easily be persuaded to look outside. He can be persuaded to do so only through (1) a vote trading or log-rolling exchange where he sacrifices his district's interest on one dimension to serve it better on another, or (2) contributions of resources to undo the electoral damage he has wrought, through advertising and campaigning.

Vote trades may be unenforceable. Legislators are risk-averse in contradicting their districts' interest (if only out of fear that an effective opponent will make it impossible for any amount of advertising to make voters forget). In both cases, the transactions costs that inhere in credibly pledging to compensate a given legislator, even if the goal is clearly Pareto superior, may be formidable. Too little is known about legislative institutions for us to conclude with Becker that inefficiencies can always be bargained away. Weingast and Marshall [1988, 138-139! point out the problems of ignoring the institutional details of this bargaining process:

Because current legislators typically cannot bind a future legislative session, problems of enforcement over time are critically important for understanding legislatures and cannot be assumed away.... In the face of uncertainty over the future status of today's bargain, therefore, legislators will devise institutions for long-term durability of agreements that ensure the flow of benefits beyond this session of the legislature.

Our results indicate that the committee system, the legislative institution most fully developed and able to enforce such agreements among legislators (or equivalently, the heterogeneous voter groups they represent), is recognized by, and affects the actions of, interest groups.

This work can be extended in two interesting ways. First, we want to divide these interest groups more precisely, matching specific industries with committees and even specific sub-committees. At a more disaggregated level, the interests of specific industries and the associated union may be more coincident then adversarial. For example, Chrysler Corporation and the United Auto Workers may differ on many things, but they are likely to work quite closely in seeking protective trade barriers against imported autos. Second, we can model and test the determinants of the level of contributions by particular interest groups. In this paper interest groups simply "purchase" an exogenously given amount of legislative service as cheaply as possible. We would like to be able to show how that amount is determined over time and across groups.


Productivity Variables

SENIORITY: the number of years the incumbent has served in the House of Representatives.

COMMITTEE DUMMIES: twenty-two dummy variables, one for each of the standing committees of the House, with a value of one indicating membership zero otherwise. In order to determine which committees were "relevant" for particular interest groups some judgment was required. Following Munger [1989!, the jurisdictions of committees were matched to interests of potential contributors using the jurisdiction descriptions in the Congressional Directory [1982! and the Rules of the House of Representatives.

Closeness of Race

MARGIN IN PREVIOUS RACE: the race prior to the present election provides a signal of the candidate's weakness, as noted by Jacobson [1985!. Thus, following Mayhew [1974!, Poole and Romer [1985!, and Grier and Munger [1986! we use the closeness of race t-1 as a prospective measure of the anticipated closeness of race t.

Preferences of Constituents

CHAMBER OF COMMERCE VOTE SCORE: The Chamber of Commerce of the United States calculates an index of support for "business issues," ranging from 0 (no support) to 100 (strong support). We include this measure of voting record because it includes some purely ideological issues found in ADA, ACA, and other commonly used indices. (ADA is Americans for Democratic Action, ACA is Americans for Constitutional Action.) To the extent that the legislator acts as his voters' agent, this variable proxies for voter preferences and reflects district support or opposition to interest group policy requests. Finally, there are good reasons to believe that the relationship between the Chamber of Commerce Vote Index and contributions is not linear. First, the Chamber of Commerce Vote Index is truncated at 0 and 100 second, Denzau and Munger [1986, 98! assert that "extreme" legislators may receive fewer contributions from contributors near the middle of the preference distribution, so that the effect is nonlinear. The logic is that it does not pay to contribute either to those most oppose (who couldn't be swayed) or most in favor (who would have to be paid not to vote in the desired manner). To allow for this possibility we include both a Chamber of Commerce Vote Index and a Chamber of Commerce Vote Index. (2)

PARTY: dummy variable with a value of one if the candidate is a Democrat.

Contributions by Special Interest Group Class

The Federal Election Commission classifies political action committees by special interest group. We aggregated total contributions to each legislator by special interest group class. For example, CORPORATIONS: Total amount received by each candidate from political action committees identifying themselves as "Corporate." The other sources of contributions are: TRADE ASSOCIATIONS, COOPERATIVES, and LABOR UNIONS.

(*) Department of Economics, George Mason University, and Department of Political Science, University of North Carolina. The authors express their thanks to Thomas Borcherding, John Carter, Tyler Cowen, Arthur Denzau, Rodney Fort, William Keech, Brian Roberts, Thomas Romer, Gary Torrent, Thomas Willett, and several anonymous referees for helpful comments. Any errors or shortcomings that remain are our responsibility.

(1.) Modeling fluctuations in contributions by interest groups over time is clearly an important task that we hope to undertake in the future. An important start is Rothenberg [1988!, who models the decision by group members both to join and to remain in groups. Also, the preferences of voters are ambiguous given the lack of a single winning platform in most multidimensional policy spaces. When we refer to constituent preference, we have in mind Fenno's notion of an electoral constituency the voters counted on by the legislator for electoral support. Below we will assume that the party affiliation and voting record of a legislator contains some relevant information about the preferences of his core electoral support group. For specific and insightful analyses into the time allocation of legislators given these and other factors see Hall [1987!.

(2.) Moe [1987! and Muris [1986! argue that even this narrowly focused approach misses important details, such as agency power to resist Congress, and other actors' (e.g., the executive) power to influence agency action. A further dissenting view, Krehbiel [1990!, has implications that extend beyond the present discussion. His analysis indicates that committee members are not "preference outliers" as measured by general roll-call voting data. Finally, Grier, Munger, and Torrent [1990! show that the model we advance here does not apply well to the Senate.

(3.) This argument, of course, turns on the applicability of the Coase [1960! theorem, which implies that the initial allocation of property rights may influence the wealth of the parties to a transaction, but not the allocation of output or, in this case, policy.

(4.) Poole and Romer [1985! find a pattern of contributions by interest groups quite similar to the results we report, but (correctly) assert the overall insignificance of committee assignments.

(5.) The Denzau/Munger model itself extends a substantial theoretical literature on interest group activities. See, for example, Ben-Zion and Eytan [1974! Welch [1974! Crain and Tollison [1976! Peltzman [1976! Hinich [1977! Becker [1983! Wright [1985!, and Lindsay and Maloney [1988!.

(6.) An alternative specification of the objective of legislators might be to "satisfice," or win with some probability. However, as Mayhew [1974! demonstrates, in any election except the last the percentage vote the incumbent receives determines the quality of the challenger he must face in the next race. We do not take a dynamic perspective here, but believe vote maximization is the most accurate objective function for legislators who hope to remain in office an indeterminate number of times.

(7.) Denzau and Munger use a vote function for the incumbent legislator that assumes the challenger plays his best response to every policy choice of the incumbent. We adopt the same assumption here and do not consider the challenger separately. For an empirical investigation of the decision to contribute to challengers, see Poole, Romer, and Rosenthal [1987! and Eismeir and Pollock [1988!.

(8.) For a discussion of the reasons committees provide policy power to their members, see Fenno, [1973! Shepsle [1978! Denzau and Mackay [1983! Shepsle and Weingast [1987! Gilligan and Krehbiel [1988a! Weingast and Marshall [1988! and Munger [1988!. For evidence that such power is in fact exercised, see Weingast and Moran [1983! Weingast [1984! Grier [1989! and Gilligan and Krehbiel [1988b!.

(9.) For the importance of the electoral resources allocation decision, and the implicit constrained optimization problem Congressmen face, see Fenno [1978!, especially page 38, and Hall [1987!.

(10.) If voting on roll-calls were the primary service legislators provided, this use of voting indices as a measure of voter preferences would introduce simultaneity bias. But votes do not appear to be affected by contributions (Chappell [1982! MacArthur and Marks [1988! Weilhite [1988! and Grenzke [1989!). Further, there appear to be substantive reasons to believe voting indices do represent constituent, rather than legislator, preferences (Dougan and Munger [1989!).

(11.) Roberts [1990! demonstrates quite clearly that financial markets recognize and take account of the seniority system and the queue it creates for the chairmanship.

(12.) We include only the four major types of nonparty political action committees, leaving out the category of corporations without stock, which routinely made contributions to individuals (and in total) orders of magnitude less than the other categories. Nearly half of total spending comes from party political action committees (local and national), or from personal sources, including the candidates' own pockets (see FEC Reports on Financial Activity, 1977-78, 1979-80, 1981-82, 1983-84, Final Report US Senate and House Campaigns.

(13.) Further, if voters value consistency (i.e., punish variance) as suggested by Austen-Smith [1987!, our model has not fully captured the constraints on legislator behavior. But if such constraints exist they represent an additional reason why serving two groups with inconsistent goals is difficult.

(14.) For a detailed discussion of the problems of truncated data and the properties of TOBIT estimation, see Tobin [1958!, or MacDonald and Moffitt [1980!.

(15.) The value of the calculated chi-square is 231.47, compared to a critical value (at 0.01) of 158.95.

(16.) The contribution-maximizing Chamber of Commerce Vote Score in 1978-80 for corporations is 100 percent, because the estimated coeffient on Chamber of Commerce Vote [Score.sup.2! is small and insignificant, indicating a monotonic relationship. We believe, however, the 1982-84 result of non-linearity is a more accurate description, particularly of the current relationship. In the corporate and trade association equations, voting record is significantly non-linear only in the second half of the sample. Constraining Chamber of Commerce Vote Score to enter these regressions linearly does not affect the reported results.

(17.) Ex post, the significance of Public Works is hardly surprising, and a careful rereading of their formal jurisdiction in the Rules of the House of Representatives could justify its inclusion as one of the predicted positive committees. However, because we did not identify it as one of the predicted positive committees ex ante, we simply not here its significance.

(18.) In these equations there is no hint of a nonlinear effect of Chamber of Commerce Vote Score on labor contributions. When the squared term is included it is negative, and both it and the linear term are insignificant. We simply use the linear specification reported in the table.

(190.) We further checked for interaction effects between committee assignment and party and seniority. Using only the committees we predicted would be significant, we find no consistent evidence that party or seniority affect the value of a committee assignment to political action committees. The only strong result is that Labor given significantly more to Democratic members of the Education and Labor committee than to Republican members.


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Title Annotation:relationship between pressure groups and legislators and the variance of campaign contributions
Author:Grier, Kevin B.; Munger, Michael C.
Publication:Economic Inquiry
Date:Jan 1, 1991
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