ideological conviction and persuasion in the rent-seeking society

Journal of Public Economics 44 (1991) 65-86. North-Holland

Ideological conviction and persuasion in the rent-seeking society

Roger D. Congleton*

Center for Study of Public Choice, George Mason University, Fairfax, VA 22030, USA

Received June 1989, revised version received April 1990

The paper develops a model of rent-seeking in a democratic political context where voting, as well as rent-seeking, matters. In this context, the paper demonstrates that voter ideology is a constraint on the rent-seeking game as well as a possible avenue of rent-seeking. In a setting where there are both rent-seeking and ideological interest groups, rent-seekers can free ride on the efforts of ideologues, which tends to reduce rent-seeking effort. In a setting where complementary economic and ideological interest groups coordinate their efforts, both rent- seeking and ideological conflict tend to increase.

‘Error and ignorance often are not due to low mental capacity but to “prejudice”, which can blind men even to the obvious’ - Frank Knight

(1950).

1. Introduction

For the most part, the literature on rent-seeking has operated under the assumption that special interest groups seek and gain economic rents from favorable legislation by investing economic resources in the lobbying process.’ Large rents are considered to be consequences of large investments in rent-seeking activities, other things being equal. Little attention has been focused on the role of ideology or ideological interest groups in this process. Yet, as Tullock (1981, 1987) has observed, the rent-seeking industry is smaller than one would expect based on the standard models. Moreover, rent-conferring programs are rarely as efficient as they might have been.

*William Hunter, Chris Paul, Gordon Tullock, Al Wilhite, and an anonymous referee made helpful comments on previous drafts of the paper. They, of course, bear no responsibility for any errors or misconceptions that remain, or for the use to which I put their good advice. A previous version of the paper was presented at the 1989 meetings of the Public Choice Society.

‘Buchanan, Tollison and Tullock (1980) contains a good sampling of the methodology of the rent-seeking approach. Bhagwati et al. (1984) prefer the term DUP, directly unproductive activities.

0047-2727/91/%03.50 0 199l-Elsevier Science Publishers B.V. (North-Holland)

66 R.D. Congleton, Ideology and persuasion

Quotas and price supports are more common than lump-sum payments in cash.

This paper argues that a proper accounting of the effects of ideology can shed considerable light on both the rhetoric and reality of the politics of redistribution. In polities where voting matters, ideology is both a constraint on the rent-seeking domain and an element of that domain. In order to demonstrate this, a model of the interplay between economic interest groups, ideological interest groups and voters is developed which includes roles for preference and message filtering aspects of ideology. While little generally can be said about the relationship between ideology and rent-seeking without specifying the specific content of an ideology, the analysis demonstrates that the strength of the electorate’s ideological convictions does have systematic effects on the extent and scope of rent-seeking activities. The analysis also demonstrates that interaction between economic and ideological groups affects the level of rent-seeking activities.

Ideology constrains the process of rent seeking in a democratic polity in several ways. For example, transfer activities are constrained by institutional rules based, at least partly, on the ideological beliefs of past participants in the political process. Under the U.S. Constitution, one is not allowed to expropriate private property without compensating its owner. To the extent that institutions change more slowly than the ideological beliefs of those affected by them, the ideological beliefs of past participants in the political process constrain the feasible realm of current transfer schemes. [See North (1988) for a discussion of ideology and institutions.] Yet, while institutional arrangements often increase the cost of such transfers, they do not rule them out. As a consequence, it is often profitable for individuals to promote public policies which directly or indirectly transfer wealth to their own accounts.

The range of transfers one might obtain is also constrained by current ideology insofar as the ideological preferences of those with ultimate political control affect the transfer policies finally adopted. Political ideologies nor- mally include a notion of the good society towards which the actual, naturally imperfect, society should move. New transfer schemes which are said to move society closer to an accepted ideal naturally have greater appeal than those which go against the ideological grain. If the prevailing ideology leads voters to prefer transfers from the rich to the poor to other transfer schemes, such transfers will be more likely, other things being equal. In this manner, the current ideology of political decision-makers partly determines the range of politically feasible transfer schemes.

Ideology also constrains the range of transfers insofar as it affects the domain of political debate. Success in policy debate is obviously an important matter. Special interest groups rarely have sufficient votes to directly determine the policy sought. Consequently, successful enactment usually requires the support of individuals who are not direct beneficiaries of

R.D. Congleton, Ideology and persuasion 61

the proposed program. This can be a matter of log rolling, where several special interest groups join forces to assure simultaneous passage of a melange of transfer programs. See Tullock (1970). Or, of greater interest here, a majority coalition can be assembled by persuading enough voters who are not direct beneficiaries of a particular redistribution scheme that their indirect interest in a more perfect society is served. Such arguments are generally ideological in nature and serve to legitimize the transfer programs sought. Because not all arguments are equally persuasive, the ideological filters of the relevant population of voters shape the domain of the policy debate. Ideological filters thereby affect both the rhetoric and reality of transfers.

It is the information processing aspect of ideology that is the focus of analysis in this paper. Ideological aspects of political institutions and voter tastes are taken as given. It is clear that the informational aspects of ideology are important in a rent-seeking society. Political persuasion becomes the principle legitimate door left open for rent-seekers in a setting where tastes and institutional arrangements are relatively unsusceptible to change. Since the information filters of voters determine just how persuasive a given line of argument is, these filters also determine ultimately who gets what.

As evidence of ideologically oriented debate, observe that arguments for farm programs, which tend to benefit individuals with large farms more than those with small farms, are publicly cast in terms of the Jeffersonian ideal of a rural agrarian society rather than power politics. Sympathy for the poor hard-working independent farm family is evoked, almost as an endangered species, rather than respect for a politically powerful coalition. Appparently, it is not sufficient to be the most exuberant lobbyist favoring transfers to wealthy land owners. Neither voters not their representatives are persuaded by arguments based solely on ‘I want’. Since the median voter is not a farmer, he must be convinced to favor such transfers on other grounds.

Both informational and preference aspects of ideology have previously attracted the attention of researchers interested in political outcomes. For example, evidence that ideological concerns affect presidential elections is discussed in Enelow and Hinich (1984, ch. 9). Kau and Rubin (1982) provide statistical evidence from role-call votes in the U.S. Congress that ideological preferences influence legislation. ’ Kalt and Zupan (1984) find evidence of

‘There is by no means a complete consensus on the importance of ideology in political decision-making. Several prominent economists argue that what appears to be ideology is actually personal economic interest rather than an interest in the ‘good society’, however conceived. See, for example, Stigler (1976) or Peltzman (1984). However, if politics is only about economic interests it is difficult to explain the ideological language of political debates. Unless ideological arguments are more persuasive than economic arguments, there is no obvious reason to expect individuals seeking to advance their economic interests to cloak their efforts in ideological terms. Moreover, it is difftcult to explain why ideological arguments are persuasive unless voters and/or representatives are at least partly motivated by ideological concerns.


what they refer to as ideological shirking in their examination of Senate votes on strip mining. Poole and Daniels (1985) suggest that more than 80 percent of roll-call voting can be explained by a one-dimensional ideological spectrum. Enelow and Hinich (1982) argue that ideological labels allow voters accurately to estimate candidate positions on a variety of issues with a minimal investment in information. However, little attention has been focused on ideology’s role in political debate or on the level of resources invested in political contests.

In order to analyze the effect that ideology has on political debate, a model of political persuasion is developed in the next section of the paper. Voters are assumed to have Bayesian priors over the consequences of policy alternatives which can be affected by messages sent by rent-seeking and/or ideological groups. Messages affect political outcomes by changing voter estimates of the probable consequences of the policy alternatives to be voted on. Economic interest groups are modelled as groups that sponsor messages in order to increase (or protect) their economic rents. Ideological interest groups are assumed to sponsor messages to advance their vision of the ideal world.

The model developed is sufficiently general that it can be interpreted in non-ideological terms as a model of investment in the manipulation of voter information in a world of uncertainty. It sheds light on the role of ideology in political debate only insofar as the link between political messages and expected policy consequences can be given an ideological interpretation. However, this link is fairly direct. In Bayesian terms, an individual’s ideological theories and conviction can be characterized as a distribution of prior probabilities used to interpret political messages and forecast the consequences of political or other policies. Seen in this light, ideology and ideological conviction affect the conclusions (posterior probabilities) that voters draw from political messages. Insofar as interest groups sponsor political messages because of their effects on policy outcomes, ideology and ideological conviction affect both the content and intensity of policy debates. The analysis that follows suggests that, other things being equal, fewer resources will be invested in political debate as the level of ideological conviction increases.

The remainder of the paper is organized as follows. Section 2 models the effects of rent-seeking in a democratic polity populated by voters who are more or less persuadable. Section 3 characterizes equilibrium levels of rent- seeking in such an environment. Section 4 explores the extent to which the efforts of ideological groups affect rent-seeking activities. Section 5 summar- izes the results and suggests possible extensions.

2. A model of the effects of ideology and rent-seeking on elections

The essential features of ideology’s effect on politics can be demonstrated


by focusing on an ordinary day-to-day choice of some public service level. Consider the politics of a world in which there are two goods, a public service produced by government, G, and a private consumption good, C, where the method of finance is pre-determined. Suppose that the output of the public service level is to be determined by a direct vote (or by a subset of representatives chosen randomly from the population of voters), and that the extent of the public service is far easier to determine than its production and finance costs are. (A brief reflection on the wide range of professional estimates of the burden of the national debt or of the cost of public funds will make this assumption seem plausible.)

Voters opt for the public service level which maximizes their expected utility subject to personal and public budget constraints. However, this cannot be done without forecasting the tax price of the public service. Given models of government production and taxation, the result is a probabilistic representation of the link between service levels and personal tax burden. Final estimates of the consequences of policy are based on posterior probabilities generated from pre-campaign priors and new information processed in the period immediately preceding the policy choice.

The individual’s subjective posterior probability distribution of possible tax burdens associated with a particular service level is conditioned on the service level, past experience, and the range and number of new policy messages confronted. Similar structures have been previously used by Congleton (1986) and Austin-Smith (1987). Ideology plays a role in the estimation of tax burden insofar as it affects both the choice of models used to forecast tax burdens and production costs, and one’s confidence in them. That is to say, ideological theories partly determine the shape of an individual’s posterior probability function for given values of the service level, experience, and political messages. An individual’s ideological conviction is simply the extent to which his priors for specific theories approach unity.3

Special interest groups are assumed to sponsor messages as a means of altering the electorate’s anticipated tax price for the public services. Groups with an interest in greater service levels attempt to convince voters that their tax costs will be smaller than initially believed. Those opposed to an increase in service levels attempt to persuade voters that their tax costs will be higher than initially thought. The extent to which a voter is open to influence by political messages is determined by his past experience with political

3The extent to which an individual has strong beliefs is, in principle, independent of the particular preference content of his ideology. One can be more or less committed to principles of democratic tolerance or to more extreme ideologies like Maoism or Fundamentalist Islam. One can be more or less confident that particular policies doom society or lead to nirvana. Although the term ideologue is rarely used as a complement, the essential feature of an ideologue is his confident view of the world rather than his particular beliefs.


messages and policy which, for the purposes of this paper, is represented by parameter I, denoting the extent of an individual’s ideological conviction.4

To the extent that interest groups can be classified into those favoring more of the government service and those favoring less of the service than a typical voter, one can represent interest group activities as a contest between two groups. Suppose that each group sponsors a single message honed for maximum impact. Let M, be the number of messages confronted by the voter which imply that the tax burden of the program will be small, and M, be the number of messages suggesting that the tax burden will be large.

The typical voter’s preferred service level is the one that maximizes:

U’= P’U(G, Y) + i PU(G, C) dT, 0

(1) u,>o, u,>o, u,,>o, u,,<o, u,,<o,

where

(2)

p%-jPd7; 0

and

C=Y-7;

with

P,>O, P,<O, P,,<O, P,,>O,

(3)

P GMI > 0, P,,, < 0, PI, = 0,

(Letter subscripts designate partial derivatives with respect to the variable subscripted.) P is the voter’s conditional subjective probability distribution

%ee Congleton (1986) for an analysis of the messages that policy proponents tend to transmit to the voters. It bears noting that message filtering is both more necessary and more difftcult in the area of politics than in most other areas. A good deal of the information available to voters is directly or indirectly provided by rent-seeking groups with a direct interest in the policy under review. For example, defense contractors often sponsor messages that attempt to persuade voters to favor a strong national defense; while educators sponsor messages rationalizing new schools or higher salaries for educators. Because the sponsors of political messages are known to be building a case for particular policies, their messages cannot be taken at face value. At the very least, the information provided tends to have a selectivity bias.

RD. Congleton, Ideology and persuasion 71

over possible positive tax burdens. The probability of a zero tax, PO, is one minus the probability of a tax greater than zero. Y is the voter’s pre-tax

income.5 The general shape of the conditional probability distribution reflects the

voter’s initial beliefs about tax burdens and the plausibility of alternative political messages. His Bayesian priors are this distribution conditioned on no political messages. His Bayesian posteriors are this distribution conditioned on the actual series of political messages confronted.

Conviction parameter I represents the extent to which messages affect prior beliefs about tax burdens. A pure ideologue ignores all new political messages, P,, and P,, approach zero as I approaches infinity. Naturally, the effect that ideological conviction has on the probability of a particular tax burden depends on the content of the ideology deemed most plausible by the voter. For convenience, it is arbitrarily assumed that an increase in ideological conviction causes a decrease in the expected tax price of the public service, P,<O. That is to say, voters are assumed to be ideologically predisposed to be a bit left of center.

Differentiating eq. (1) with respect to G and setting the result equal to zero characterizes the voter’s preferred service level:

+ i P&J-U”)d7-+iP(U&$dT=O, (4)

where

U” = U( G, Y).

Each voter prefers the public service level that sets the marginal utility from the public service equal to his expected marginal tax cost for the service in terms of utility sacrificed from reduced private consumption.

The implicit function theorem implies that eq, (4) can be used as a basis to characterize a voter’s preferred public service level, G*, as a function of the variables beyond his control:

G*=g(Xz,M,,M,).

Each voter’s preferred service level is a function of his income, ideological conviction and the combination of policy messages confronted. Partial

‘Life-cycle problems are ignored to simplify analysis and allow a sharper focus on rent- seeking effort levels. The analysis is not very much changed if one takes account of intergenerational and lifetime problems. In this case, one would expect that the current median voter’s expected Iifetime utility would be maximized rather than his instantaneous utility. See Congleton and Shughart (1990) for an application of this sort of framework.


derivatives with respect to ideological conviction and the number of pro and con messages are of particular interest here:

+ G;1;,= i PG,,(C’-LI’)dt+iP,,(U,-U~)dT II -K>O, (6.1)

0

+ Gz2= i PGM2(LI-010)dt+iP~2(UC-U~)dT -K<O, (6.2)

0

3 P&U-U’)dt+ j P,(U,-U$)dT II -K>O, 0 0 (6.3)

K=i +2P&-U;)dT+jP(U,,-U&)dT<O 0 0

(6.4)

K is the second derivative of eq. (3) and is negative as required for eq. (4) to characterize utility-maximizing levels of government services. The derivatives of utility under a zero tax exceed those under a positive tax, since UGC> 0. Thus, the qualitative effects of income and political messages on a voter’s preferred public service level are determined by the signs of the numerators, all of which are determined unambiguously.

Note that K ~0 implies that voter preferences are single peaked in policy domain G. This, in turn, implies that electoral competition tends to generate policy outcomes that maximize the median voter’s utility subject to his constraints.6 In this context, eqs. (6.1), (6.2), and (6.3) imply that the public service level increases as the median voter’s income increases, and ‘pro- service’ messages persuade him that his personal tax cost will be smaller than initially believed. Service levels tend to decline as the median voter is persuaded by ‘anti-service’ messages that his tax cost for the public service will be larger than initially thought.

Note that the effects of ideological conviction on government output are determined by the particular content of the median voter’s ideology. As the assumed ideological inclinations of the median voter lead him to expect a

6The median voter result follows from the two-good, one policy, structure of the model. In more complex settings, a number of severe symmetry restrictions would have to be added to ensure median voter results. See, for example, those developed by Plott (1967). However, Hinich and Enelow’s (1982) theoretical work suggests that if there is a monotone mapping of policies into a one-dimensional ideological space, median voter results tend to obtain. In conjunction with the empirical work of Poole and Daniels (1985) showing that a one-dimensional ideological spectrum does an excellent job of predicting the voting pattern of U.S. Congressmen, this suggests that median voter models may be more broadly applicable than analysis of voting models generally implies.


relatively small tax price for this particular public service, the public service level increases as ideological conviction increases, thus G,>O. The reverse would have held were the median voter assumed to be a ‘conservative’ with P, and P,, greater than zero.

3. Rent-seeking in an ideological environment

The effect that ideological conviction has on rent-seeking activities is less arbitrary. The model of public policy formation developed above characterizes a mechanism by which special interest groups can influence political outcomes by sponsoring appropriate policy messages. Since ideological conviction directly affects the productivity of such messages, it also directly affects incentives to sponsor them. Consequently, as demonstrated below, rent-seeking activities tend to decline as ideological conviction increases.

This section examines the effect of ideological conviction on the rent- seeking activities of economic interest groups. Ideological interest groups are taken up in the next section of the paper. Economic groups differ from ideological groups chiefly in their motivation. Rent-seeking groups have a specific pecuniary interest in public policy outcomes. Ideological groups have no particular economic interest at stake, but rather an ideological interest in the general thrust of public policies. The National Education Association and National Farmers Organization are economic interest groups. The American Civil Liberties Union and the American Conservative Union are ideological interest groups. Rent-seekers maximize their own private pecuniary income, while ideological groups try to advance their vision of the ‘good’ society through ‘proper’ legislation. Both sorts of groups send political messages, although the content of their messages may differ substantially. To facilitate analysis, the activities of ideological groups are neglected initially in order to focus attention on the strategies of ordinary rent-seekers.

Returning to the model, suppose that there are two groups (or coalitions of groups) whose economic interests are affected by the public service level to be decided. Group l’s profits, R,, increase as the public services increase, and Group 2’s profits, RZ, fall as service levels increase. Group 1 might own inputs used to produce the public service, or be a group that faces unusually low tax costs for the public service. Group 2 might be an alternative employer of those inputs, or a group that faces an unusually high tax price for expanded government services. Both groups sponsor the number of messages that maximize their net income from the government service.

Group l’s net income, Ni, is simply the rent generated by the public service level, r(G), less the cost of sponsoring political messages. Suppose that message transmission services are purchased in a competitive market at a cost of m dollars per message sent. Group l’s net income is:


N, =r(G)-mM,, (7)

with RI, i 0 and Rl,, 20. Service level, G, is as previously characterized by eq. (5) for given levels of median voter income, ideological conviction, and policy messages.

Differentiating eq. (7) with respect to M, and setting the result equal to zero yields:

O=R,G,, -m. C-9

The pro-service group sends messages up to the point. where the marginal increase in personal income derived from the public service equals the marginal cost of sending messages, other things being equal. Group 2 would send its messages up to the point where the marginal reduction in losses from the public service equals its message cost.

Applying the implicit function theorem to eq. (8) allows the net rent- maximizing number of messages for Group 1 to be written as:

Ml*=ml(~I,m,M,). (9)

The optimal number of messages for Group 1 to sponsor is a function of the median voter’s income and ideological conviction, the cost of sponsoring messages, and the number of opposing messages sent by Group 2.

The effect of ideological conviction on Group l’s rent-seeking effort can be appraised by differentiating eq. (9) with respect to I:

Ml:=(R,,G,G,, +R&,,,)I-K’, (10)

with

K’=R,,Gb, +R,G,,,,,.

Unfortunately, signing eq. (10) requires additional assumptions about the geometry of eqs. (1) and (2). Third derivatives of P and U come into play. Suppose that these are such that G is concave. That is to say, suppose that:

G MIM1>0, GM2MZ<0, and GII<O,

with

G MIMZ<O, GIMl ~0 and GIMZ>O.

Given these, the numerator of eq. (10) is unambiguously negative, and the denominator is unambiguously positive, so Ml: < 0.

Group 1 sends fewer messages as ideological conviction increases because


the marginal productivity of message transmissions falls as ideological conviction increases. Thus, less persuadable voters attract relatively smaller rent-seeking investments by pro-service group(s). A similar result can easily be obtained for Group 2’s efforts to oppose production of the public service.

It bears noting that this result is independent of the particulars of the ideologies held by the median voter. The point here is that the more firmly rooted the beliefs of decisive voters are, the more costly it is for rent-seekers to influence political outcomes through persuasion, other things being equal. Consequently, fewer resources, m(M, +M,), tend to be devoted to public rent-seeking activities in ideologically committed societies.

However, other things are not equal. Each group’s efforts are partly determined by the efforts of its opposition, which are likewise affected by the persuadability of voters. This interaction between economic interest groups can also be characterized with reference to eq. (9). Given values for the median voter’s income, ideological conviction and message costs, eq. (9) is the Cournot-Nash reaction function of the pro-service group. A similar function can be found for Group 2.

The overall effect of an increase in ideological conviction can be modelled as a change in the Nash equilibrium of this rent-seeking game. The geometry of a typical equilibrium can be characterized by differentiating eq. (9) with respect to M,:

Ml,,=(&G,,G,, +R,G,,,,)I-K’. (11)

K’ is as previously defined, so terms in the numerator determine the slope of Group l’s reaction curve. However, the numerator cannot be signed. The first term is positive, and the second is negative. Because the income received from government programs is subject to diminishing returns, R,, ~0, an increase in messages by the opposition reduces the service level, GMMZ <O, and thereby increases the marginal benefit generated by an additional message. On the other hand, increased message levels by the opposition reduce the productivity of messages sent by the pro-service group, GMiMZ < 0. The slope of the reaction function is determined by the relative sizes of these two effects. Escalation occurs if the first effect dominates, as would be the case when economic rents are subject to substantial diminishing returns. De- escalation occurs if the second effect dominates, as would be the case where rents are proportional to the size of the government service. For example, Group 1 might be composed of ‘cost plus’ contractors.

In either case, eq. (10) implies that rent-seeking activities fall as ideological conviction increases if the rent-seeking game is reasonably symmetric. Fig. 1 depicts a Nash equilibrium for the case where both groups have upward- sloping reaction functions. Eq. (10) implies that an increase in ideological conviction shifts Group l’s curve toward the M2 axis and Group 2’s curve


M,** M, - Fig I

Fig. 2

toward the Ml axis. This implies an unambiguous decrease in rent-seeking activities by both groups. While one group may be less affected by ideological conviction than the other, the total resources devoted to political persuasion clearly decline.

Only in the case where the economic situation facing rent-gainers and rent- losers is extremely asymmetric could an increase in ideological conviction increase rent-seeking activities. [The ideological terms in eq. (10) are the same


for each group.] For example, it is possible that Group 2’s gains are subject to constant returns while Group l’s losses are subject to diminishing marginal returns. Fig. 2 illustrates the effect of ideological conviction in an economically asymmetric game. In the case depicted, the reaction functions of the two groups can have opposite slopes. Eq. (10) implies that an increase in ideological conviction shifts the M 1* reaction curve towards the M2 axis and the M2* reaction curve towards the Ml axis. In this case, reductions in the rent-seeking effort of Group 1 causes Group 2 to increase its investment. If Group 2’s increase is large enough to generate a new equilibrium beyond a 45” line passing through the original equilibrium, aggregate rent-seeking efforts increase.

In both the symmetric and asymmetric cases, the scale and composition of rent-seeking are directly affected by the ideological environment in which it takes place. Ideological conviction affects the number of messages sponsored by each group.

In cases where the disputed policies have symmetric effects on pro and anti service groups, as in the usual rent-seeking (zero-sum) transfer game, ideological conviction reduces expenditures on politicized information by rent-seekers. Insofar as this form of competition generates a deadweight loss, an increase in ideological conviction increases economic efficiency.’ Conse- quently, societies populated by individuals with firmly held priors are less prone to rent-seeking losses than those with a less rigid world view or in the process of changing from one ideology to another.*

4. Ideological conflict in a rent-seeking society

Ideology and ideological conviction have to this point been taken as given. To a large extent, this is a reasonably good approximation of the situation facing rent-seekers during the course of a single election or referendum. Ideological perspectives appear to be relatively stable on a day-to-day or

‘Expenditures on political persuasion are not necessarily a deadweight loss in total. The messages sponsored may benefit voters. The normative question of whether social welfare is increased by increased ideological conviction depends on whether or not the reduced cost of rent-seeking activities exceeds any benefits lost from political messages no longer sent. The polity clearly benefits if fewer fraudulent or irrelevant claims have to sorted through by voters. On the other hand, greater ideological certainty may cause voters to neglect political messages which they could have in fact (were it to be known) benetited from while reducting incentives to transmit such beneficial messages.

‘This is one possible explanation of the empirical estimates of rent-seeking losses in the Third World. See, for example, Krueger (1974). Third World countries generally are in a greater state of ideological turmoil than countries at more advanced or more primitive stages of economic and political development. The above analysis implies that there will be greater rent-seeking in Turkey or India than in New Guinea or Canada.

78 R.D. Congleron, Ideology and persuasion

year-to-year basis. Poole and Daniels (1985) report only modest ideological drift in their twenty-year study of role-call voting in the U.S. Congress. Moreover, to the extent that ideology or ideological conviction do change, it is probably more often the result of undirected persona1 experience than the persuasive efforts of ideologically oriented interest groups. On the other hand, it is clear that changes in ideology can also be the result of directed experience, as in public education, or be stimulated by public debate. The possibility that ideology and/or ideological conviction can be systematically altered creates another avenue by which interest groups can affect policy outcomes.

To simplify a bit, it is assumed that the ideological groups sponsor only ideological messages and that the rent-seeking groups sponsor only policy messages. Ideological messages are assumed to be aimed at genera1 normative and conceptual issues relevant for a variety of public policy issues. Policy messages are assumed to focus on somewhat narrower issues especially relevant for the policy at issue. For example, an ideological group might attempt to promote equity by sponsoring message that emphasize the desirable progressive nature of the tax used to finance the public service. To the extent that this reinforces the ideological propensities of voters, it makes them more confident of their world view. That is to say, it increases their ideological conviction. The analysis of the previous section indicates that even if this is the only effect that such messages have, these messages will affect the extent of political debate. The analysis below indicates that such modest effects are also sufficient to motivate ideological messages.

Given this somewhat exaggerated distinction between policy and ideological messages, a minor revision to the previous model allows it to be used to analyze ideological conflict in the course of a single election or referendum. Political outcomes continue to reflect the preferences and expectations of the median voter, subject to anticipated financial constraints. Ordinary policy messages continue to affect particular beliefs about the tax consequences of the policy at issue. However, now ideological conviction becomes an endogenous variable, influenced by the messages sent by ideological groups. (Ideological messages are assumed to raise doubts or reinforce the world view of targeted individuals rather than induce sudden wholesale revisions in ideological preferences or theories.)

To the extent that ideological interest groups either prefer greater or lesser service levels than the median voter, little is lost by assuming that there are two ideological interest groups, Group 3 and Group 4, with opposite interests in the size of government. Let Group 3 prefer a large public sector, and sponsor messages that strengthen the median voter’s assumed predilec- tion to support relatively large public service levels as his ideological conviction increases. (Recall that the assumed ideological predisposition of the median voter implies than an increase in ideological convicion reduces


the median voter’s estimated tax cost, P, < 0, and so increases his demand for the public service.) Group 4 prefers a small government sector and therefore sponsors messages that attempt to reduce the median voter’s confidence in his ideology. Note that even ideological messages are affected by the ideological predilections of voters.

The political process in this setting can be modeled using eqs. (l), (2), and (3), plus eq. (12) below which characterizes the relationship between ideological messages and ideological conviction:

(12)

with

D, is the number of messages sent by the pro-service group and D, i the number of messages sent by the more conservative ideological group. I is the resulting ideological conviction of the median voter.

The first-order condition characterizing political outcomes is as before in eq. (4). However, the function describing the median voter’s preferred service level now includes ideological messages rather than ideological conviction:

The median voter’s tastes and message-filtering process continue to affect the shape of this function, while pretax income, together with the number of political and ideological messages, determine its value.

Ideological groups sponsor messages as a means of moving the political outcome, G*, closer to their ideal points. That is to say, ideological groups are motivated by ideological aspects of their utility functions. Their interest is in living in a more free, just or perfect world rather than greater personal income, per se. Members of ideological groups can be thought of as altruists or individuals with meddlesome preferences, since for them the ‘good society’ is an end in itself rather than a means to an end.

Ideological organizations invest their resources in political messages to minimize the extent to which actual policy, G, deviates from their ideal subject to various economic and political constraints. Cast in net-benefit terms, smaller deviations from the ideal are preferred to larger ones, so the benefit associated with a particular policy outcome by the ith group, q, is a monotone decreasing function of the difference between the actual policy, G, and the group’s ideal policy, G;. If it costs d dollars to transmit an ideological message, the net advantage that Group i derives from Di ideological messages can be represented as:


Ni = y( G;) - dD,, (14)

with

G;=IG-GI’I

and

V&O, v&y<0

To reduce notational complexity, Group 3’s ideal point is assumed to be larger than the service level favored by the median voter, and Group 4’s ideal point is assumed to be smaller than the median voter’s preferred service level. This allows the absolute value signs to be dispensed with.

The essential features of an ideological interest group’s decision to participate in policy debate can be characterized by focusing on either interest group. The net advantage of Group 3 is maximized if it chooses D, such that

- V&G,>, = d. (15)

Recall that G,, = - 1, I,, >O and G, >O, which implies that CD3 >O. Group 3’s ideological messages attempt to strengthen the median voter’s ideological conviction as a means of increasing his inclination to opt for relatively large service levels. Vi. is less than 0, and represents the extent to which moving the actual policy closer to Group 3’s ideal point diminishes their dissatisfac- tion with ‘inadequate’ government services. The left-hand side of eq. (15) thus represents the extent to which an additional ideological message increases Group 3’s satisfaction with the policies chosen by the electorate. Group 3 will sponsor ideological messages up to the point where the marginal value of induced increases in public service levels equals the marginal cost of its messages. Group 4 would similarly sponsor messages up to the point where the value of induced reductions in public service equals the marginal cost of

its messages. Eq. (15) can be used as the basis for characterizing Group 3’s message

levels as a function of variables beyond their control:

(16)

Group 3’s messages are affected by median voter income, the cost of ideological messages, and the number of messages sent by other ideological and non-ideological interest groups. Given values for median voter income and the cost of ideological messages, eq. (16) can be used as the basis for Group 3’s Nash reaction function. A similar equation can easily be developed for Group 4.


The effects of the messages of the other special interest groups can be determined by differentiating eq. (16) with respect to D,, M,, and M,:

D3,4 = [ I/,.G,,G,, + V&,,,,l/- K” > 0, (17.1)

03 Mi = CI’XMiGD3 + bG,,,,l/-K”<O, (17.2)

03 M2 = [VyGmGm + bG,,,,l/ - K” > 0, (17.3)

with

K” = - [V&G& + V&G,,,,] < 0. ( 17.4)

Note that ideological conflict differs from ordinary rent-seeking in that ideological conflict between extreme groups always tends towards escalation. D3,, is unambiguously greater than zero. On the other hand, the existence of independent rent-seeking groups with similar policy interests moderate efforts by ideological groups, here D3,, ~0. Rent-seekers whose messages run at cross purposes intensify the efforts of ideological groups, D3,, >O.

The overall effect of ideological messages on the level of rent-seeking depends on (a) whether the net effect is to increase or decrease the median voter’s ideological conviction, and (b) the extent to which symmetry characterizes the rent-seeking game. In the case where ideological conviction is increased and the game is more or less symmetric, the rent-seeking efforts of economic interest groups tend to decline. On the other hand, if ideological messages reduce the confidence that the median voter has in his model of the world, by for example reopening issues previously thought settled, ideological conflict can encourage additional efforts by rent-seekers.

The pattern of relationships between interest groups can also affect the level of rent-seeking activities. An overall Nash equilibrium of interest groups requires a combination of messages such that eqs. (16) and (9), along with their counterparts for the opposing ideological and economic interest groups, are simultaneously satisfied. Fig. 3 illustrates the geometry of a partial equilibrium between rent-seeking Group 1 and ideological Group 3 whose messages are substitutes for one another. The reaction functions characterized by eqs. (16) and (9) are both downward-sloping in the M x D plane, both D3,, and MlJ,, are less than zero. (Similar geometry holds for Groups 2 and 4.)

In the absence of ideological messages, the rent-seeking group would have sent messages at the point where their reaction curve intersects the M-axis. The downward-sloping reaction function implies that the existence of an active complementary ideological group, D, > 0, necessarily reduces the number of rent-seeking messages transmitted, ceteris paribus. Here, Group 3’s efforts reduce rent-seeking expenditures by Group 1 because they reduce


Ml’ Ml

Fig. 3

Fig. 4

Group l’s returns from sponsoring additional policy messages. Group l’s messages have a similar effect on Group 3’s ideological messages. At the Nash equilibrium, complementary interest groups can free ride on each other’s efforts.

On the other hand, suppose, instead of independently participating in the policy debate, that complementary interest groups coordinate their efforts. In this case, the existence of a complementary interest group tends to increase


the resources devoted to political conflict. To see this, recall that the optimal combination of messages for a particular confederation of interest groups to sponsor is the one that maximizes the sum of their net advantages:9

N=R(G)+V(lG”-GI)-dD-mM. (18)

Functions R and V are as previously defined for Groups 1 and 3. The optimal combination of messages satisfies:

(R,- V,,,)G,Z,3=d

and

(R,- V,,,)G,, =m.

(19.1)

(19.2)

Comparing the equations for joint optimization with their counterparts for independent optimization, eqs. (8) and (15), it is clear that there will be both more rent-seeking and more ideological messages sent in a confederation of interest groups, other things being equal. Accounting for the benefits that fellow travellers receive causes more messages of each sort to pass muster. R, and -V,, are both positive over the range of interest. Similar results obtain for Groups 2 and 4. Coordination allows the external benefits of complementary group activities to be internalized.

‘There are four general types of relationships that complementary economic and ideological interest groups can have. (1) Their behavior can be independent of one another. This sort of behavior yields the Nash game examined above. (2) Ideologues might know the reaction functions of rent-seekers and take their anticipated responses into account when sending messages. In this case, the result is a Stackleburg equilibrium between ideological groups and economic interest groups, and a Cournot-Nash equilibrium between the ideological groups. (3) The third possibility is the mirror image of the second. It is possible that ideological groups might be sponsored by rent-seekers in a manner calculated to make their preferred policy outcome more likely. In this case, rent-seekers would, in effect, send two sorts of messages: direct policy messages, and indirect ideological messages by manipulating the ideological groups. (4) Ideological and rent-seeking groups with complementary goals might cooperate w&h each other. This is the second case examined. Here, the equilibrium to the message game is a Nash-Cournot equilibrium between opposing confederations of interest groups. The second and third structures can be thought of as special cases o f ‘he fourth which highlight relationships within a federation of interest groups.

Relationships within and between ideological and economic interest groups are often complex. For example, economic interest groups can hire employees with the appropriate ideological zeal for lower money wages than would be the case for employees entirely motivated by money wages. As a consequence, trade organizations may find themselves with an unintentional ideological agenda. For example, one occasionally observes a trade organization providing economic resources to ideological groups whose stated agenda runs counter to the trade organization’s economic interest. The National Education Association is said to provide funds for Planned Parenthood groups. Naturally, this indirectly tends to reduce the number of children born, and thereby reduces the demand for teachers. On the other hand, it may be the result of coalitional logrolling. In many cases, it is difficult to determine whether such trade groups are engaged in ordinary rent-seeking activities or have an ideological agenda of their own.


Fig. 4 superimposes solutions for eqs. (19.1) and (19.2), denoted with a superscript c, over those for eqs. (8) and (15), previously used in fig. 3, to illustrate this result. The semi-cooperative equilibrium lies generally to the northeast of the Nash Equilibrium. Cooperation implies that more messages will be sponsored regardless of whether or not both groups participate in the policy debate of interest. Note that eq. (19.1) intersects the M-axis somewhat above the point where eq. (9) strikes it. Properly accounting for the interests of ideologues requires rent-seekers to sponsor additional policy messages even if the ideological groups transmit no additional messages themselves. Similar results hold for ideological groups at the other extreme. In general, coordination by complementary economic and ideological groups causes an increase in the extent to which resources are devoted to political conflict.

5. Overview and conclusions

The purpose of this paper has been to explore some of the effects that the ideological filtering of messages has on rent-seeking activities. The analysis has demonstrated that individuals who are relatively certain of their beliefs generally attract smaller efforts by special interest groups. The analysis also demonstrates that relationships among special interest groups affect the extent of rent-seeking activities. Interest groups with similar policy interests invest less than they otherwise would be inclined to if they can free ride on each others’ efforts. Thus, overall investments in political messages are affected by the persuadability of the targeted group of individuals and the extent to which relevant interest groups coordinate their efforts.

Interpreted in ideological terms, the paper has shown that the ideological environment in which rent-seeking takes place has a variety of effects on both the level and content of rent-seeking activities. The more certain voters are of their pre-campaign ideologies, the less inclined economic interest groups are to invest in rent-seeking activities: political messages and the like. Ideological conviction reduces the productivity of public rent-seeking activities. And since ideological filters make some political messages more plausible than others, ideology affects both the content and mix of messages that rent-seeking and ideological groups sponsor. Conclusions drawn from the messages, in turn, affect policy outcomes. Ideology and ideological conviction thereby affect the rhetoric and reality of political redistribution.

Prospects for ideological conflict widen the domain of political competition, while ideological conviction constrains it. If the second effect dominates the first, the analysis suggests that ideological transitions will be difficult times as the polity confronts extensive rent-seeking coupled with intense ideological competition. On the other hand, the analysis suggests that societies strongly committed to particular ideologies will exhibit relatively little public debate because the returns from both rent-seeking and ideologi-


cal messages are relatively low. Ideological conviction may blind (or bind) one to the truth, but it also blinds one to many of the blandishments of interest groups.

The analysis has neglected some interesting problems associated with ideological conflict. Associated ideological preferences or visions of the good society were subsumed into voter tastes assumed to be exogenously predeter- mined. Persuasion rather than violence was assumed to be the vehicle of policy change. Political arrangements were taken as given. The paper sheds little light on the extent to which ideological messages might convert a person from one sort of ideologue to another. Nor does it illuminate ideology’s substantial role in shaping institutional arrangements except insofar as these arrangements are determined by ordinary legislation. How- ever, even without these additional complexities, the analysis has demonstrated that ideology and ideological conviction matter. And while the analysis has focused on a democratic political setting, many of its conclusions would apply to authoritarian regimes or to the bureaucracy to the extent that such policy-makers can be modelled as forward-looking utility maximizers who rely at least partly on ideological filters.

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