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Business and Politics

Editor-in-Chief: Aggarwal, Vinod K.


SCImago Journal Rank (SJR) 2015: 0.384
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Volume 16, Issue 2 (Aug 2014)

Issues

All politics is local, but lobbying is federal and local: the validity of LDA data

Austin C. Clemens
Published Online: 2014-01-17 | DOI: https://doi.org/10.1515/bap-2013-0017

Abstract

The Lobbying and Disclosure Act of 1995 requires lobbyists to disclose information about their lobbying activities. The resulting data is used by the website OpenSecrets.org (run by the Center for Responsive Politics) to give snapshot pictures of the amount of lobbying groups do. The same data has also been used by scholars to measure the impact of lobbying and to evaluate rent-seeking expenditures by firms. Unfortunately, users of the data are unaware of a reporting option for organizations under the LDA that has consequences for the validity of the data. LDA data does not accurately reflect the amount of money that an organization has spent trying to influence federal law because organizations may choose a reporting requirement under which they must also disclose the amount of money they spent to influence state laws. In this article I analyze the implications of this fact. I begin with a discussion of the problem’s scope and then show how it misleads scholars.

References

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About the article

Corresponding author: Austin C. Clemens, Public Policy Research Institute, Texas A&M, 5576 TAMU, College Station, TX 77843, USA, Tel.: +(979)862-1305, e-mail:


Published Online: 2014-01-17

Published in Print: 2014-08-01


According to Lexis-Nexis, CRP received about 1600 mentions in US newspapers and wires in 2012.

OpenSecrets.org (N.d.).

In the past, LDA reports were not available in an easily machine-readable format, and an enormous amount of work was necessary to aggregate figures from LDA reports. CRP very nearly had a monopoly on the aggregate data until recently, since starting a new effort to aggregate the data would have been fantastically time consuming. The Senate now makes XML files available that contain most of the same information as the CRP files. The CRP files do include certain fields created entirely by the CRP as, for example, a catcode that is based on the US government’s standard industrial classification (SIC) code for each group in the data.

Both of these figures were altered by the Honest Leadership and Open Government Act of 2007. LDA reports prior to 2008 require reporting of expenditures exceeding $10,000 and allowed rounding to the nearest $20,000.

Lobbyist Registration and Compliance Handbook (2009).

Some scholars may also be frustrated by the fact that some filers have to report certain mid-level executive branch officials while others do not. Although this does not affect the lobbying expense total, it may be a barrier to scholars who wish to understand influence in the executive branch.

Baumgartner et al. (2009).

Only in-house lobbying expenditures, where an organization lobbies on its own behalf, are subject to error due to the B and C filing methods. Lobbying performed by contract lobbyists is always 100% federal. Nonetheless, I look at total expenditures (in-house plus contract) because this is what OpenSecrets reports and what most scholars are interested in when they use LDA expenditures as a covariate.

The ideological group category is fairly inclusive. For example, CRP places business associations like the Chamber of Commerce in this category. Also included are the Arthritis Foundation, the Association of Public Safety Communication Officials, the Coalition to Stop Gun Violence, Lupus Foundation of America, and the March of Dimes. Although this is a broad category, there are still groups that my sample misses. CRP classifies the American Medical Association, and some other professional associations, separately, for example, as well as some business associations and labor unions. Given the broadness of the ideological category, I believe this is a fairly representative sample, but the omission of some groups is an important caveat.

I do not have any southern states. Although a few southern states have begun to collect this data, they remain considerably behind other parts of the country in this particular area of sunshine legislation.

The presence of non-profits picking C and for-profits picking B is not a data collection error on my part. It is either an entry error or, in some cases, could be a transcription error, for pre-electronic filing reports.

This is a very rough estimate of the effect. It should be noted that these six states have larger populations and larger economies than the states I am leaving out. Moreover, as I noted in a previous footnote, there is no representation from the South. Nonetheless, I feel that this rough estimate is better than no estimate of the 50-state effect at all, and can be useful to scholars using this data.

A small number of ideological groups do, however, perform a significant amount of their lobbying activities in the states. This could have a substantial impact on small N studies.

Chen, Parsley, and Yang (2010).

A more common approach to the question of corporate political influence is to regress financial measures of success on the amount of money given by a firm’s PAC. See, for example, Cooper, Gulen, and Ovtchinnikov (2010).

I emphasize that I am looking only at the simplest analysis in Chen et al. That lobbying is correlated with firm success in a simple OLS regression like this one is hardly surprising. The relationship between firm success and lobbying is endogenous. Simply lagging lobbying spending is not a fix for this endogeneity. Chen et al. take other steps to address this endogeneity, including a system of equations where the decision to lobby is estimated via probit. Moreover, Chen et al. address some forms of measurement error by, for example, including fixed effects by firm and employing an instrumental variable approach.

This is a flaw of the LDA filing process rather than any failing on CRP’s part. Filers are only required to give a company name and an address. They are then assigned a unique identifier by the Office of the Clerk (the Senate and the House assign different identifiers). This is often not enough information to conclusively link a filer with a fairly generic name to one of several firms in the COMPUSTAT database that share that name or variations on it.

de Figueiredo and Silverman (2006).


Citation Information: Business and Politics, ISSN (Online) 1469-3569, ISSN (Print) 1369-5258, DOI: https://doi.org/10.1515/bap-2013-0017.

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