Heiner Schumacher, Iris Kesternich, Michael Kosfeld, Joachim Winter, 06 July 2016

Evidence shows that individuals often do not act in a completely selfish manner, but rather take into account the welfare of other parties when making decisions. But how decision-makers trade off costs and benefits when the costs are dispersed among many individuals is unclear. This column discusses new experimental evidence showing that a large fraction of individuals are ‘insensitive to group size’, attaching similar weights to small and large groups. These findings provide a new explanation for a number of empirical patterns, including political and medical decision-making, lobbying, tax evasion, and charity donations.

Stefano DellaVigna, Ruben Durante, Brian Knight, Eliana La Ferrara, 09 March 2014

Firms hoping for regulatory favours may direct their business purchases towards firms controlled by politicians, who benefit from the additional revenue. This column provides evidence from Italy consistent with this channel. It shows that the share of advertising on Berlusconi’s televisions increased while he was in power, and this even more so in the most regulated industries.

William Kerr, William Lincoln, Prachi Mishra, 22 November 2011

Lobbying is a primary avenue through which firms attempt to change policy. But only a few big firms lobby and lobbying is highly persistent over time. This column argues that entry costs to the political process help explain these facts. It provides evidence from a change in immigration policy that induced firms that were already lobbying and were sensitive to the policy changes to switch from lobbying on other issues towards immigration while other firms did not enter the lobbying process.

Deniz Igan, Prachi Mishra, 11 August 2011

Did anti-regulation lobbying fuel the subprime crisis? This column shows that there is a strong relationship between financial industry lobbying and favourable financial regulation legislation. It argues that the financial industry fought, and defeated, measures that might have curbed some of the reckless lending practices that many think played a pivotal role in igniting the crisis.

Jordi Blanes i Vidal, Mirko Draca, Christian Fons-Rosen, 28 October 2011

This updated column, first published in October 2010, takes on new resonance following recent scandals in the UK surrounding allegations that lobby groups may have gained undue influence among senior politicians. The column investigates how much former US government officials cash in on their political connections when working as lobbyists. It finds that once the politician for whom they worked leaves office, lobbyists’ revenue falls 20% – suggesting that lobbyists are paid more for who they know than what they know.

Deniz Igan, Prachi Mishra, Thierry Tressel, 27 January 2010

Should the political influence of large financial institutions take some blame for the financial crisis? This column presents evidence that financial institutions lobbying on mortgage lending and securitisation issues were adopting riskier lending strategies. This contributed to the deterioration in credit quality and to the build-up of risks prior to the crisis.

Nauro Campos, 08 November 2008

This column presents evidence that lobbying is not only much more prevalent in developing countries than previously thought but also much more effective than corruption as a means of influencing public policy and supporting enterprise growth.