Denzau and Munger: Legislators and interest groups

Denzau and Munger. 1986. Legislators and interest groups: How unorganized interests get represented. APSR (1986): 86-106.

Main Point

Derives a supply price for public policy. Shows that interest groups will generally target legislators whose voters are indifferent to the policy the interest group seeks. Thus, even unorganized voters can have their preferences represented.

The Model

Three Actors

1. The legislator: Supplies public policy to maximize votes.
2. The organized interest groups: Offer campaign contributions (and other resources) in exchange for policy action.
3. The voter. Offer votes to get outcomes closest to their preferences.

The Intuition

• Y: The supply price for public policy. In other words, how many electoral resources (R) would an interest group have to give to a given legislator in order to win his support? This varies from negative (i.e. you have to pay him to not support you) to positive. Variation in a legislator's supply price for a particular policy varies with his comparative advantage in supplying it, which depends on two factors.
• X1: The productivity of the legislator's effort (E). In any given policy realm, the legislator's ability to produce policy results depends on committee assignments, political abilities, and so on. As E rises, the supply price falls.
• X2: The preferences of the unorganized constituency. How would voters respond if they knew what the legislator was doing in this particular policy area? The stronger the potential sanction, the higher the supply price.

Rational interest groups will channel their money towards the swing votes on a committee (i.e. those with a supply price closest to zero). It would be a wasted to try buying off legislators with a high supply price, since opposing interest groups could give the same legislators a very small sum and thereby keep these high-price legislators on their side. By the same logic, interest groups wouldn't try to buy off legislators that already support them (i.e. a negative supply price), unless they needed to counter an attempt by opposing interest groups. Thus, all groups will try to outbid one another to buy off the legislators with the supply price closest to zero; these are the swing voters on each committee.

Since there interest groups from both sides target the same swing voters, the relatively indifferent legislators might receive lots of campaign resources (see p 98).

Comparative Statics: Rational Ignorance versus Full Information

If voters are rationally ignorant, you might think that interest groups completely control the legislator's activities (subject only to the constraints of 'E'). This is mistaken, however. Even if the voters are ignorant, self-interested challengers and the media have incentives to discover and advertise the incumbent's wayward behavior. Thus, even rationally ignorant voters have their preferences represented.

If voters are perfectly informed, then interest groups can't buy off any legislators. If they get what they want from legislators, it's only because the legislator's constituents support it.

Implications

Interest groups will seek out those legislators who have generally indifferent (about a given policy) constituencies. They can thus have some influence on legislative outcomes, though this influence is constrained.