As we discussed in class, lobbying efforts by small, politically unconnected groups are nearly always unsuccessful as the costs of lobbying by such groups are high while expected benefits are low. As a result, it is typically large firms that succeed in their lobbying efforts: They have the money to spend on lobbying, and they often have much to gain from the passing of certain industry regulations. This article, however, gives an example of successful lobbying by a small group of extremely committed individuals with limited political and financial resources. Family members of victims of the 2009 crash of Continental Airlines Flight 3407 managed to out-lobby highly influential airline industry opponents to influence legislation on pilot training and flight schedules that will cost airlines $7 billion over the next 10 years. Amazingly, the families out-lobbied their airline opponents not with money, but by using emotional stories, the media, and dogged persistence to win the support, one by one, of key politicians. The airlines fought back, with several large airlines spending more than $50 million in total on lobbying during 2010, but ultimately it was the families that were successful in having legislation passed.
As these new safety regulations are clearly not beneficial to the airline industry, this story seems to run counter to Stigler’s theory that “regulation is acquired by the industry and is designed and operated primarily for its benefit.” How, then, did the Families of Continental Flight 3407 succeed in having their safety regulations passed when confronted with the substantial funding and lobbying power of major airlines? First, all members of the small group had homogeneous interests and thus were able to lobby as a cohesive unit. Second, they used emotional persuasion effectively, narrating tearful stories of family members lost in the crash in order to gain the support of influential politicians. What does their success mean? Perhaps it points to the fact that, at the margin, the expected benefits of lobbying exceeded the expected costs for families but not for airlines. It could also just mean that the airline industry opposition was too fragmented to effectively lobby on its behalf. Whatever the answer, this example proves that money is not everything when it comes to influencing regulation - cohesion and unrelenting pressure can get you places too.
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When we say that industry, lobbyists or interest groups 'acquire' regulation, what we mean to say is that they trade with Congress people for favorable outcomes. As I understand the process, legislators trade favorable votes and regulation for campaign contributions, and we know from the model we learned in class that a specific interested party will contribute to a candidate to the degree to which they believe their contribution will make a difference, a probability which is factored into the marginal benefit function. Instead of looking at this as an example of the families 'out lobbying' the airline industry, we could interpret these events as simply a case in which airlines failed to realize that, given the state of public opinion following the accident, the marginal effect of each dollar of contribution towards favorable regulation was greatly diminished. Alternatively, given that they spent so much regardless of the probability of overcoming such hostile public opinion being so small, could be considered evidence that the other component of the 'benefit' parameter in the equation, what they stood to gain/lose from favorable/unfavorable regulation was large enough to them for the $50 million dollar effort to be worth it.
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