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A Test of Herd Theory: The Number of Lobbyists and the Venture Capital Loan Policy
Author(s) -
Hunter Kennith G.
Publication year - 2005
Publication title -
politics and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.259
H-Index - 23
eISSN - 1747-1346
pISSN - 1555-5623
DOI - 10.1111/j.1747-1346.2005.tb00804.x
Subject(s) - loan , interest group , herd , venture capital , economics , test (biology) , public economics , political science , macroeconomics , finance , politics , law , medicine , paleontology , biology , veterinary medicine
This report examines the relationship between selected interest group lobbying efforts and a venture capital policy used by the American states to promote economic development. Using discriminant analysis, two different sets of interest group lobbying efforts are used to predict the presence of the policy groups. Results indicate that the most common efforts are essentially equal to the least common lobbying efforts at predicting the presence of the policy groups despite the former having fewer members. In addition, the percentage of correctly classified states does not increase as it should according to the traditional theories of interest group behavior. Furthermore, the results do not appear to be unique to this policy because similar results were mapped for five other economic development policies. Given this, it is plausible that interest groups engage in herd behavior, thus explaining why the differences among organized interests do not vary in predicting the six policies.