Download - FACTORS AFFECTING THE FORMATION OF INTEREST GROUPS Aileen G. Sampson Clemson University Clemson, SC
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FACTORS AFFECTING THE FORMATION OF INTEREST
GROUPS
Aileen G. SampsonClemson UniversityClemson, SC
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Introduction
Clemson, SC example In 2000, Wal-mart proposed Supercenter
construction in Clemson on Issaqueena Trail. Citizens for Responsible Growth in Clemson
opposed Wal-mart. Wal-mart waged extended, expensive legal
battle. 2006, no Wal-mart store in Clemson. In 2002, Wal-mart built a Supercenter in
neighboring Central. Wal-mart faced no citizen opposition to their locating in Central.
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Introduction
Examples of Promotional Interest Groups Citizens for Responsible Growth in
Clemson The National Rifle Association The American Association of Retired
Persons The Waterville Women’s Association
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Introduction
What is a promotional interest group? An entity filing under Internal Revenue
Code (IRC) section 501 (c) (4) Civic Leagues and Social Welfare
Organizations Not charities Contributions, generally, not tax
deductible Purpose: advocate policy positions
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Introduction
Why study the formation patterns of these groups? Economic impact
In 1999, 21,082 promotional interest groups reported $41.6 billion in revenue and held $59.5 billion in assets
Influence economic policy nationally and locally
Influence industrial and business patterns Can oppose businesses Can support businesses
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Introduction
The objective of this study is to identify community characteristics that encourage or discourage the formation (mobilization) of groups like Citizens for Responsible Growth in Clemson.
At issue is the opportunity cost of acquiring influence.
Related studies have not considered as many community factors or as many communities as this study considers.
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Literature Review
Interest Group Theory of Government
Political operatives are self-interested economic agents whose behavior can be explained using general economic principles.
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Literature Review
Political Scientists Bentley(1908; 1967) and Truman (1951) speak to significance of interest groups in shaping political landscape.
Economists have enhanced and refined the observations of Bentley and Truman.
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Literature Review
Olson (1965) questions why individuals join large pressure groups.
Olson concludes lobbying activity is a by-product of private goods provision (a purpose other than lobbying).
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Literature Review
Stigler (1971) examines regulatory activity as a market phenomenon.
Demanders: special interest groups Suppliers: those bearing costs of
regulation Legislative bodies: brokers facilitating
wealth transfers
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Literature Review
Peltzman (1976) builds on Stigler’s work. Provides quantitative, general model of
legislative decision-making process Models legislator as a vote (majority)
maximizer subject to wealth constraints
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Literature Review
Becker (1983) explores competition among interest groups for influence.
Concludes wealth transfers are smaller when there is competition among interest groups for influence
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Literature Review
Two papers provided the theoretical citations used to determine the list of factors to include in the empirical work.
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Literature Review
Gronbjerg and Paarlberg (2001) use Internal Revenue Service (IRS) data on advocacy nonprofits in Indiana counties to examine variations in the density of nonprofit organizations.
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Literature Review
Murrell (1984) studies “sectional” groups. The groups in his study are trade associations. He uses international data from the Organization for Economic Cooperation and Development (OECD) to test 11 hypotheses about interest group formation.
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Approach
Each cited theory suggests one or more factors as possible determinants of interest group formation.
13 hypotheses were formulated and tested based on the theories cited in Murrell (1984) and Gronbjerg and Paarlberg (2001).
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Empirical Method Summary
Dependent variable: Number of interest groups per capita (density)
Model: y=a+βX1+ βX2+βX3+ …+ε Population density is raised to -.25. All other variables untransformed. 30 continuous variables 4 regional indicator variables 8 population size categories Estimation Method: OLS
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Data Summary
Circa 2000 County-Level Government and Private Sources
IRS Business Master Files Census Bureau Bureau of Labor Statistics Glenmary Research Center
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Theory Classes
Structural Theories Government Theories Voting Theories Socioeconomic Theories Community “Needs” Theories
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Support for Structural Theories
Structural Measures
Description Theory Predicts elasticity p>|t|
County Age + Charities Per Capita + Churches Per Capita + Labor Force Part. Rate + Percent Adherents + 0.24 0.01 Population Density - -0.08 0.00 Prod. Workers Per Capita + Religious Herfindahl - , + -0.21 0.00 State Capital County + 0.09 0.05 Population 50K-99.9K - Population 100K-249.9K - Population 250K-499.9K - Population 500K-749.9K - Population 750K-999.9K - Population 1000K-1499.9K - Population > 1500K -
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Support for Government Theories
Description Theory Predicts
Elasticity P>|t|
Expenditure per capita + 0.09 0.00
Cities, Towns, Special Districts, School Districts + 0.06 0.00
Degree of Decentralization +
Government Measures
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Support for Socioeconomic TheoriesSocioeconomic Measures
Description Theory Predicts
Elasticity p>|t|
High-status human capital measures
Percent with bachelor’s degree +
Dentist per capita +
Doctors per capita +
Attorneys per capita +
Middle-to-lower class human capital measures
Farms per capita, proxy for farmers - 0.13 0.00
Production workers per capita -
Other socioeconomic measures
Infant mortality rate -
Income per capita +
Percent above the poverty level + 1.17 0.00
Percent earnings from farming - -0.03 0.04
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Support for Voting Theories
Voting Measures
Description Theory Predicts
Elasticity p>|t|
Voter Participation Rate + -0.26 0.04
Percent Voting for Third Party Candidates +
There is no support found for the voting theory(ies).
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Support for Community “Needs” Theories
There is no support found for the community “needs” theory(ies).
Description Theory Predicts elasticity p>|t|
Percent Population Under 18 years old + Percent Above Poverty - 1.17 0.00 Crime Rate +
Community “Needs” Measures
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ImplicationsTo minimize likelihood of resistance:
Locate in the Southern region in an urban center removed from the state capital.
Locate in a community featuring a small middle class, small over-65 segment, fewer charities, and higher voter participation rates on average.
Locate where there are many different religious denominations, but only one or two dominant religions. The percentage of the population adhering to religion should be relatively low.
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The END