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Review of Grossman and Helpman’s Special Interest Politics

INTEREST GROUPS are ubiquitous in U.S. politics and in the political systems of most nations. In some countries, interest groups are closely aligned with political par- ties and exercise influence through those parties. In some countries, members repre- sent their interest groups by holding offices in government. In the United States, interest groups typically are not identified with par- ties—although their members may predomi- nately vote for one party—and do not repre- sent their members directly in government. Instead, U.S. interest groups generally serve their members from outside government. Expenditures on lobbying in the United States reported to the federal government totaled $1.45 billion in 1999, according to the Center for Responsive Politics (www.opensecrets.com). In addition, lobby- ing is conducted by many who are not re- quired to report their activities and expendi- tures: individuals, business executives, labor leaders, and association members. Interest groups also make campaign contributions. In the year-2000 election cycle, political action committees (PACs) contributed $259.8 million. Soft-money contributions by interest groups and individuals totaled nearly $500 million. Both lobbying and election cam- paigns are amply funded by interest groups.

In Special Interest Politics, Gene Gross- man and Elhanan Helpman study how spe- cial interest groups influence political out- comes to benefit their members. The title of the book is fitting, but understates the con- tribution of the authors. They take interest groups seriously by considering a range of theories and supporting evidence about interest-group activity. Their book, however, is much more than a thoughtful study of the political strategies of special interest groups (SIGs). It provides insights into how to study interest-group politics and provides a set of methods for that study. Although the authors present a number of standard models, they also present much that is new. The reader gains a multitude of results, tools, models, and new research ideas. The result is an out- standing book full of insight, useful methods, and perspective.

The book is intended for political econo- mists and graduate students, as well as econ- omists working in other fields who seek to add political forces to their work. The focus is positive throughout, although some of the analysis identifies Pareto improvements from political activities such as lobbying. The authors present “tools for analyzing the interaction between voters, interest groups, and politicians.” They seek to “shed light on the mechanisms by which SIG activities af- fect policy outcomes” and to “portray the key tensions and conflicts” rather than ex- plore how behavior varies with institutional details. The theory is made accessible to those outside the field through detailed dis- cussions of the incentives facing interest groups and officeholders. The approach is theoretical but with an emphasis on intuition and understanding rather than on formali- ties and generality.

The focus on how and why SIGs have in- fluence allows the authors to avoid the stum- bling blocks that occupy the attention of many political scientists and political econo- mists who study the behavior of public of- ficeholders and candidates for those offices. For example, political economists who study electoral competition often work to escape the Downsian incentives that lead to the convergence of party positions. Grossman and Helpman focus instead on interest- group influence. When there is conver- gence, they ask to what extent the conver- gent positions reflect the interests of SIGs—i.e., how the political strategies of the interest groups influence the common position.

The book is not oriented toward empirical applications or testing, but the models pro- vide a wealth of falsifiable predictions. Testing predictions of models with private information can be a challenge, since the in- formation of players is generally not observ- able. In many of the models analyzed by Grossman and Helpman, however, testing can focus on the relation between prefer- ences and policies. For example, when some members of SIGs are imperfectly informed about the policies of parties, the parties cater to the preferences of the SIG with the greater number of better-informed mem- bers, and poorly informed voters are ig- nored. Consequently, those SIGs that ex- pend resources informing and mobilizing their members should, other things equal, have more influence when there is uncer- tainty about party positions.

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