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Connections Trump Expertise For Federal Lobbyists, Chicago Booth Study Finds

March 23, 2011

When it comes to lobbying, it’s not what you know, but who you know that matters, according to new research by Marianne Bertrand, a professor of economics at the University of Chicago Booth School of Business and two co-authors at the University of British Columbia.

Using 1999-2008 data, the researchers found that federal lobbyists in the U.S. tend to work on the same issues as the politicians they know, and will follow a politician when he or she gets reassigned to a new congressional committee. The research also showed that clients tend to pay more for lobbyists who are well connected.

“There are two broad views of lobbyists out there,” said Bertrand, the Chris P. Dialynas Professor of Economics and Neubauer Family Faculty Fellow at Chicago Booth. “One view is that they are experts that help inform the lawmaking process; another view is that they are well-connected individuals that can exert influence on lawmakers. We were interested in assessing the relevance of those two views.”

“Our findings are hard to reconcile with the view that what makes lobbyists valuable is their expertise on specific issues,” Bertrand said. “Connections appear to be an integral part of what lobbyists bring to the table, and what makes them valuable.”

Federal lobbying has grown dramatically over the past decade and is now a $3.5 billion a year industry. “A lobbyist working on health issues who is connected to a politician assigned to the Health Committee is likely to start working on finance issues if that politician is re-assigned to the Committee on Finance,” said Matilde Bombardini, a professor at the University of British Columbia who worked on the study. The third researcher was Francesco Trebbi, also from UBC.

The researchers looked at lobbying reports filed with the Senate Office of Public Records. These reports are filed every six months and name the lobby firm, the client or organization hiring the lobbyists and the names of the individual lobbyists working on that contract.

Bertrand, Bombardini and Trebbi also created a measure of expertise for lobbyists by monitoring how much time they spend on an issue and the range of topics they work on. The researchers were then able to classify a lobbyist as “expert” or “well-connected.”

They then used the lobbying reports to monitor how much a client pays a lobbying firm to work on one case. Looking at the average compensation for a single case, lobbying firms were paid four percent more if they had an expert lobbyist working on the case. But teams with a well-connected lobbyist were paid eight percent above the average, twice as high as having an expert.