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on September 3, 2003
Gene M. Grossman and Elhanan Helpman astutely note "in their new book "Special Interest Politics" that "special-interest groups" (SIGs) admit of no easy definition. Grossman and Helpman sensibly adopt a definition with some empirical referents. An organization is something we can look for, and an identifiable group is a collection of individuals who resemble one another in some important respect, not just a collection of people with enough shared beliefs to have the potential to share goals and act on them."
"For Grossman and Helpman, "membership" in a group is defined functionally. Members of a group are those people whose preferences are taken into account by the leader(s) of the group. So, the main question they raise is: How do SIGs change the policymaking process? Do lobbyists improve or distort the process by providing information? The largest question is also the most difficult: How and why does money affect the policy process? What form of regulation of campaign finance, if any, would constitute an improvement over the present system?"
To capture the intricacies of group competition, Grossman and Helpman draw on nearly one hundred years of hindsight and a very precise model. "Their main results offer both some standard conclusions and some more surprising ones."
"First, SIGs can distort the process, sometimes dramatically, compared to what happens in a full-information world. Because that world is not the world of modern politics, however, it is not clear that this "distortion" should be a focus for policy."
"Second, the effects of lobbying may be counterintuitive. If two well-organized groups contest a policy, the information provided by lobbyists may result in a "distortion" that actually improves policy by moving it closer to the full-information ideal, in contrast to what happens in a world in which lobbying is outlawed. Further, lobbying organizations themselves may be made worse off by the availability of a lobbying strategy. More precisely, if members of interest groups must pay the lobbying costs and the net result is worse for them, they might well prefer an equilibrium where lobbying was outlawed. Something close to an "invisible hand" result may be lurking here: lobbyists pay to provide information that improves the quality of legislative debate and choice because competition forces them to participate to avoid and even worse outcome."
"Some of the other interesting discussions involve "access fees" for legislators, the information content of lobbyists who bias is known, and the value of grassroots lobbying of voters by interest groups (through direct contact)."

"The depth and scope of the literature Grossman and Helpman review and the range of topics they consider in this book are impressive. Much of the exposition is accessible, although the meat of the work is in the model developed in chapters 4-10. Grossman and Helpman's book may be the most ambitious and successful work on interest group politics in the past decade."
-From "The Independent Review," Spring 2003
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