Special Interest Influence Under Direct Versus Representative Democracy

45 Pages Posted: 11 Jun 2018 Last revised: 10 Jul 2018

See all articles by John G. Matsusaka

John G. Matsusaka

University of Southern California - Marshall School of Business; USC Gould School of Law

Date Written: July 10, 2018

Abstract

The ability of economic interest groups to influence policy is a common theme in economics and political science. Most theories posit that interest group power arises from the ability to influence elected or appointed government officials through vote-buying, lobbying, or revolving doors; that is, by exploiting the representative part of democracy. This raises the question: does special interest influence decline when policy is chosen using direct democracy, without involvement of representatives? An analysis of the content of the universe of state-level ballot initiatives during 1904-2017 reveals that business interests have been worse off as a result of initiatives across major industrial groups. An examination of all large contributions to ballot measure campaigns in California during 2000-2016 reveals that corporate and business interests were usually on the defensive with initiatives, and were much less likely to gain favorable legislation from citizen-initiated proposals than from proposals that originate in the legislature. The evidence suggests that economic interest groups have less influence under direct than representative democracy.

Keywords: special interests, interest groups, direct democracy, initiative and referendum, public policy, representation, state and local politics, campaign contributions

JEL Classification: D7, K2, P16

Suggested Citation

Matsusaka, John G., Special Interest Influence Under Direct Versus Representative Democracy (July 10, 2018). USC CLASS Research Paper Series No. CLASS18-14; USC Law Legal Studies Paper No. 18-16. Available at SSRN: https://ssrn.com/abstract=3185260 or http://dx.doi.org/10.2139/ssrn.3185260

John G. Matsusaka (Contact Author)

University of Southern California - Marshall School of Business ( email )

Department of Finance & Business Economics
Los Angeles, CA 90089
United States
213-740-6495 (Phone)
213-740-6650 (Fax)

USC Gould School of Law

699 Exposition Boulevard
Los Angeles, CA 90089
United States
213-740-6495 (Phone)

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