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Is it better for lobbyists to be smart or well-connected?

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Although our modern lives present many irreducible questions -- nature vs. nurture, liberty vs. security, funny vs. good-looking -- a recent paper suggests an answer to the perennial question of whether it’s better to be smart or well-connected, at least if you’re a lobbyist.

Whether lobbyists’ main role is the providing of access or expertise to politicians is the topic of a paper entitled “Is It Whom You Know or What You Know? An Empirical Assessment of the Lobbying Process.” The authors evaluated lobbying registration records, FEC reports, committee assignments, and lobbyists background information to reach a stark conclusion:

[L]obbyists appear to systematically switch issues as the politicians they were previously connected to switch committee assignments, hence following people they know rather than sticking to issues. We also find evidence that lobbyists that have issue expertise earn a premium, but we uncover that such a premium for lobbyists that have connections to many politicians and Members of Congress is considerably larger.

In other words, being well-connected is financially rewarded at a much greater level than possessing expertise. And lobbyists will abandon their areas of expertise in order to maintain personal connections to their former colleagues.

The authors speculate that “the price tag attached to lobbyists services suggest that they bring to the table a complementary resource, perhaps reputation, credibility or political savvy, in the transmission of information.” It is no surprise that people rely on their social networks to make decisions.

How much is it worth to lobbyists when congress relies on social networks over expert networks? The paper “Revolving Door Lobbyists” suggests an answer:

[W]e find that lobbyists with past working experience in the office of a US Senator suffer a 24% drop in revenue -around $177,000- when their ex-employers leaves office...

Consistent with the notion that lobbyists sell access to powerful elected officials, the drop in revenue increases with the seniority of and committee assignments power held by the Senator immediately prior to leaving office. For lobbyists connected to US Representatives we find similar if weaker effects.

The authors findings illustrate the forces that affect staffers career incentives. “A large portion of what makes revolving door lobbyists particularly attractive is perishable has the implication that staffers may have relatively short careers. Once a connection to a powerful Senator has been established, a staffer may want to move into lobbying and cash in this unique asset while it is still valuable.”

Along those lines, my research into staff turnover indicates that House hill staffers are young, with an average age of 31, suffer from a high turnover rate, and senior staff are paid significantly less than their private sector counterparts. Congressional staff are also likely overwhelmed by their responsibilities. Moreover, expert networks within Congress that could support policymaking -- including the legislative support agencies -- have been significantly weakened over the last 25 years.

When faced with overwhelming and complicated tasks, it is unsurprising that staff rely upon assistance from their former colleagues. Those lobbying efforts help determine the legislative agenda, although the true extent to which this happens is difficult to know.

Even with the 2006 lobbying reforms, we still cannot see the nitty-gritty of how lobbying works. It’s difficult to track the role of individual lobbyists, and many people who regularly lobby congress are not required to report their roles at all. If we wish to truly understand the influence ecosystem, and to change the incentives underlying policymaking, we need more transparency. Sunlight's suggestions on lobbying reform are available here.