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Academic Earmarks and the Returns to Lobbying

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  • De Figueiredo, John M.
  • Silverman, Brian S.

Abstract

Despite a large literature on lobbying and information transmission by interest groups, no prior study has measured returns to lobbying. In this paper, we statistically estimate the returns to lobbying by universities for educational earmarks (which now represent 10 percent of federal funding of university research). The returns to lobbying approximate zero for universities not represented by a member of the Senate Appropriations Committee (SAC) or House Appropriations Committee (HAC). However, the average lobbying university with representation on the SAC receives an average return to one dollar of lobbying of $11-$17; lobbying universities with representation on the HAC obtain $20-$36 for each dollar spent. Moreover, we cannot reject the hypothesis that lobbying universities with SAC or HAC representation set the marginal benefit of lobbying equal to its marginal cost, although the large majority of universities with representation on the HAC and SAC do not lobby, and thus do not take advantage of their representation in Congress. On average, 45 percent of universities are predicted to choose the optimal level of lobbying. In addition to addressing questions about the federal funding of university research, we also discuss the impact of our results for the structure of government.

Suggested Citation

  • De Figueiredo, John M. & Silverman, Brian S., 2002. "Academic Earmarks and the Returns to Lobbying," Working papers 4245-02, Massachusetts Institute of Technology (MIT), Sloan School of Management.
    • Handle: RePEc:mit:sloanp:667
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    Cited by:

    1. Brach, Ann & wachs, Martin, 2005. "Earmarking in the U.S. Department of Transportation Research Programs," Institute of Transportation Studies, Research Reports, Working Papers, Proceedings qt9vf8844t, Institute of Transportation Studies, UC Berkeley.
    2. Jordi Blanes i Vidal & Mirko Draca & Christian Fons-Rosen, 2012. "Revolving Door Lobbyists," American Economic Review, American Economic Association, vol. 102(7), pages 3731-3748, December.
    3. Gerald A. Carlino & Robert M. Hunt, 2009. "What explains the quantity and quality of local inventive activity?," Working Papers 09-12, Federal Reserve Bank of Philadelphia.
    4. Matthias Dahm & Amihai Glazer, 2012. "How An Agenda Setter Induces Legislators to Adopt Policies They Oppose," Economics Working Paper from Condorcet Center for political Economy at CREM-CNRS 2012-11-ccr, Condorcet Center for political Economy.
    5. Jens GroЯer & Ernesto Reuben & Agnieszka Tymula, 2010. "Tacit Lobbying Agreements: An Experimental Study," Working Paper Series in Economics 50, University of Cologne, Department of Economics.
    6. De Figueiredo, John M. & De Figueiredo, Rui J. P. Jr., 2002. "Managerial Decision-Making in Non-Market Environments: A Survey Experiment," Working papers 4246-02, Massachusetts Institute of Technology (MIT), Sloan School of Management.
    7. John M. de Figueiredo & Charles M. Cameron, 2006. "Endogenous Cost Lobbying: Theory and Evidence," Hi-Stat Discussion Paper Series d05-156, Institute of Economic Research, Hitotsubashi University.
    8. Eran Binenbaum, 2005. "Grants, Contracts and the Division of Labor in Academic Research," Centre for International Economic Studies Working Papers 2005-10, University of Adelaide, Centre for International Economic Studies.
    9. John M. de Figueiredo, 2004. "The Timing, Intensity, and Composition of Interest Group Lobbying: An Analysis of Structural Policy Windows in the States," NBER Working Papers 10588, National Bureau of Economic Research, Inc.
    10. Brach, Ann & Wachs, Martin, 2005. "Earmarking in the US Department of Transportation Research Programs," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(6), pages 501-521, July.
    11. Bryan Engelhardt & Justin Svec, 2012. "Political Contributions and Insurance," Working Papers 1204, College of the Holy Cross, Department of Economics.
    12. Ehrenberg, R.G.Ronald G., 2004. "Econometric studies of higher education," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 19-37.
    13. Huq, Tahsin Imtiazul & Hassan, M.Kabir & Houston, Reza, 2022. "The effects of firm political contributions on earmarks and subsequent firm performance," Research in International Business and Finance, Elsevier, vol. 62(C).
    14. Bombardini, Matilde & Trebbi, Francesco, 2012. "Competition and political organization: Together or alone in lobbying for trade policy?," Journal of International Economics, Elsevier, vol. 87(1), pages 18-26.
    15. Silke Friedrich, 2010. "Measuring Interest Group Activity," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 8(4), pages 37-46, 01.
    16. John de Figueiredo, "undated". "The Timing, Intensity, and Composition of Interest Group Lobbying: An Analysis of Structural Policy Windows in the States," American Law & Economics Association Annual Meetings 1082, American Law & Economics Association.
    17. Bonardi, Jean-Philippe & Holburn, Guy & Vanden Bergh, Rick, 2006. "Nonmarket performance: Evidence from U.S. electric utilities," MPRA Paper 14437, University Library of Munich, Germany.
    18. A Abigail Payne, 2002. "Do US Congressional earmarks increase research output at universities?," Science and Public Policy, Oxford University Press, vol. 29(5), pages 314-330, October.
    19. John M. de Figueiredo, 2011. "Committee Jurisdiction, Congressional Behavior and Policy Outcomes," NBER Working Papers 17171, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    Returns to Lobbying; Federal Funding of University; University Lobbying;
    All these keywords.

    JEL classification:

    • K0 - Law and Economics - - General
    • H1 - Public Economics - - Structure and Scope of Government

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