In 2000, Wal-mart proposed Supercenter construction i

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FACTORS AFFECTING THE FORMATION OF INTEREST GROUPS

• Aileen G. Sampson
• Clemson University
• Clemson, 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 Womens 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 Stiglers 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

13
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 yaßX1 ßX2ßX3 e
• 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
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Support for Government Theories
Government Measures
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Support for Socioeconomic Theories
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Support for Voting Theories
There is no support found for the voting
theory(ies).
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Support for Community Needs Theories
Community Needs Measures
There is no support found for the community
needs theory(ies).
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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