David R. Henderson  

Concentrated vs. Dispersed Interests

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From my former student, Michael Williams:

What I am wondering, or maybe proposing, is that as communications become easier and require less effort (i.e. writing an email as opposed to writing a letter) and information becomes easier to access will special interest groups lose their power? My reasoning follows (from teachings in your class):
Special interest groups have a lot of power in the political and public interest world because they can rally support within their specific "area" or "field" to influence public officials to pass advantageous (to them) legislation. One example used in your class was the subsidies [actually, import quotas, DRH] to the sugar industry. It is worth the time and effort for a sugar grower to write to his legislative representative to advocate that the government continue to subsidize the sugar industry. It is not worth it for the average consumer to write to his legislative representative to stop the subsidies going to the sugar industry since he may see only an eight or nine cent drop in price (I'm completely making that up).
But will it become advantageous to the average consumer to write (or communicate by some means) to his representative to stop subsidizing sugar as the opportunity costs drop? In the past you had to put pen to paper and mail the letter in but now you can simply write an email (or twitter). I realize the the sugar grower also has the same ease in communications that average consumer does but I think that the opportunity cost for the consumer is approaching the gain (savings in products they buy) they would see at the supermarket.

My answer:

I think there will be a shift in the direction you say but that it will be small.

First, although the opportunity cost of writing the Congressman does approach the potential gain from eliminating the sugar import quota, that's not the right comparison. Even if the potential gain from eliminating the sugar import quota were a multiple of the cost of communicating with the Congressman, the relevant comparison is between the cost of communicating and the expected value from contacting the Congressman. This latter equals the reduction in the probability of the quota being renewed times the gain to the consumer if the quota is not renewed. Because this probability is extremely low, the expected value is likely to be well under one penny.

Second, what I've heard (and I've forgotten where but I think an activist told me) is that Congressmen don't pay much attention to e-mails precisely because they're so cheap to generate. That same person told me that if a member of the House of Representatives gets even 10 stamped letters on an issue that are all in one direction, he/she will pay serious attention. So we're back to the old-fashioned letter. It's kind of a Gresham's Law thing going on here.

Finally, though, what does change substantially in the direction of the effect you think will happen is the cost of getting information. Now it's much easier for consumers to get the information that the lobby had little trouble getting. That effect goes all in one direction.

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CATEGORIES: Public Choice Theory

COMMENTS (6 to date)
Ted Levy writes:

But what doesn't go in only one direction is the benefits of lowered communication costs. Special interests, too, now find it easier to send blast emails, urging all their minions to do something to maintain the guild. I frequently get blast emails from The American College of [my medical specialty] urging that I contact my representative [they even kindly now provide the name, number, and address of MY representative, based on their knowledge of my ZIP code] to urge him to do X, or oppose Y.

Your point about what Representatives "take seriously" is important, but shouldn't be oversold. As technology improves, it becomes less costly, in the opportunity sense, to send out "real" letters. You can even have computers generate 20 different templates, each stressing a different set of arguments, so it isn't obvious they are all generated centrally. Of course, it remains the case that this technology is available both to those who have already centralized benefits as well as those who already suffer from diffused costs. Who will be more likely to use it?

[The underlying assumption I'm making here is that "special interests" are not all simply huddled in DC twisting their mustaches. Unions, professional guilds, small business interests...these all have representatives in DC but they communicate with their members all over the nation. So these lowered communication costs may work more against us than for us.]

Tony Licari writes:

Having worked for a Congressman, they do care about email and letters pretty much equally. BUT if there are form letters of form emails, those get much less attention and a quick "thanks and (insert Congressman's basic position on said issue). Also, the problem with mailing a letter to Congress is that it can take two weeks+ to get to the office because of the mail system (anti-anthrax protection etc).

Mike Hammock writes:

I agree that the cost of getting information is lower, but given that the benefits of becoming informed are still nearly zero, I don't think it matters. I often ask my students how many of them are aware that light truck imports into the U.S. are subject to a 25% tariff (one of the highest remaining tariffs on any goods). None of them ever raise their hands. Becoming informed about the existence of a policy is still very costly relative to the benefits of becoming informed. People must also overcome their systematically biased beliefs (as Bryan has argued). The barriers to getting people together to oppose a policy are so high that inefficient policies are likely to remain.

Bryan Willman writes:

This all misses the huge issue of the limits of human time and attention. Any one person has finite time and mental energy to devote to reading or writing, listening or talking.

Even when the delivery of the material to be read or that one has written is literally free, the time to read or write or both dominates.

So, in my state I can read the text of all proposed legislation very easily - it's fast and incrementally free to get. It's also prohibitively time costly. So instead, when some party I have delegated scrutiny to says "call your legislator about X" I go look, and often do send a message.

This phenomenon - "delegated evaluation" mandated by limits of time and attention mean that "interest groups" will be as strong, or stronger, going forward, not less. It's NOT that the AARP (for example) tells people what to do, but rather, that if they squak their (large) pool of allied citizens are likely to pay a Great Deal of Attention to whatever congressperson SomePol is proposing. Since getting reelected is often about having people not notice you too much in the wrong ways, this will restrain the behavoirs of SomePol.

We aren't floating on a sea of free information, we are mostly drowning in it. Offering filtering and navigation through it will always be a great lever for various interest groups.

David R. Henderson writes:

@Ted Levy, Tony Licari, Mike Hammock, and Bryan Willman,
Your comments are well-taken. Thanks.

Ken B writes:

Won't it be easier to co-ordinate larger (but still relatively small) groups? The costs of group formation grow geometrically in the group size, so now more somewhat groups can form.

Geeky example: It's like getting a faster CPU when you are trying to solve an NP-complete problem like the travelling salesman. Right now assume we can do 20 cities. With our new super CPU we can do vastly more, and can now solve a 23 city problem.

In short, won't the increased ease of communicating make the formation of special interest groups easier, pushing against the postulated effect?

My guess is this will swamp any gains.

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