Essay: Lobbying

Geschreven door: H.M. Jong

Studentennummer: 616976
In this essay, I will delve into the Information Lobbying Model (ILM) and answer the corresponding
questions. To start off, I am going to explain the value and workings of economic models and the ILM
in particular. Then, I will shed a light on the accessibility of the political scene for lobbyists and
interest groups from a politician’s perspective. After that, I will have a look into the potential
benefits of lobbying for politicians by using the ILM. And to conclude, I will apply the ILM in a specific
scenario from the perspective of an interest group.

A model can help to support a theory or undermine it. It is there for validation seeking purposes, but
can also lead to the opposite, where we find out that the expected outcome is on the other side of
the spectrum. This is immediately one of the big advantages of a model; it is there to test the theory,
not support it. If we apply this knowledge to the ILM and we were to look at it through the eyes of
an interest group and the politician, we find out that the model is not in favor of either party.
Because a model is reliant on its input and (lack of) information, the model will lead to different
expected outcomes. This ties in to the second reason: a model - if fundamentally well-crafted – is
not prone to mistakes due to the necessary factors it takes into account. This allows for all parties to
test their theory and come with strong conclusions and thus insight that is not flawed by perspective
or asymmetrical information.

From a politician’s point of view, we can take a look to see what effect the cost of lobbying (c) has on
lobbying and implementation/maintaining status quo.

The formula above can be taken from the ILM and describes the politician’s tendency to follow up on
a positive recommendation, as long as his predisposition plus the expected value of the interests
group’s message, outweigh the politician’s predisposition plus the expected value of µ. When the
interest group wants to influence x = 1, they will send a message. The decision to send a message is
inherently tied to the cost of sending one. Therefore, if a politician receives a message with a
positive recommendation (s = 1, m = mg), and said politician knows the cost of sending a message is
high, he can derive a higher expected value and is thus more inclined to implement. This is good
news for the politician, because he does not want to risk taking the wrong decision. However, should
the cost of lobbying be low, it will be harder for a politician to make the right decision. The expected
value will be lower, because the value of the message will be lower, leading to higher influx of
messages from lobbyists, and, because of the politician’s lack of knowledge on µ, there is a higher
risk of uncertainty, making it less likely for the politician to implement because he does not want to
make the wrong decision on x.

Based on those two scenarios where cost is either low or high, we can come to the conclusion the
politician doesn’t always benefit from lobbying. Like mentioned before, a low cost can lead to a
higher influx of interest groups, leading to more uncertainty and a lower rate of implantation thanks
to the politician’s unwillingness to risk making a wrong decision. However, the presence of lobbyists
do have a positive influence on the politician in expectation, where the positive influence is rises
alongside c, the cost of lobbying. They provide him with worthwhile input on the state of µ (albeit
not directly), a factor he didn’t know anything about beforehand, which allows for more informed
decision making.
Suppose there is a specific scenario, where an interest group has the chance to send a message to a
politician through television, under what conditions should he take advantage of this opportunity?

If we use formula above seen in the ILM, we can see that I derives a higher utility (when s = 1
compared to s = 0) when µ > -i + c. Because there are no costs associated for the interest group, the
formula changes to µ > -I, or µ + i > 0, where the state of the world plus the interest group’s
predisposition must be higher than zero in order to consider accepting the invitation. Because there
is no uncertainty about whether the politician is tuning into the television that night, the second
condition which must be met, is that the benefit of airing a message on public television (b) must be
higher than the cost of sending him a message in private (c). If, for example, negative backlash would
occur after the television program ended, where c < -b, the lobbyists would be better off by sending
a message through a more traditional manner.

In conclusion, an economic model can be used to study behavior and test theories, which is shown in
this essay through applying the ILM on politicians and lobbyists/interest groups. Through using
different inputs and hypothesizing the change of variables, it has become clear that an economic
model like ILM helps further understand what decisions a rational economic agent will make in
certain scenarios and what influence that can have when looking at it from a broad point of view.