Consistent estimates of the impact of special interest groups on economic growth

Empirical studies designed to test Olson's (1982) theory of institutional sclerosis are typically forced to rely upon proxies to measure the ability of special interest groups to engage in redistributive activities, which in turn are expected to hinder economic growth. This note shows that reliance on proxies biases the estimates toward zero. Here, instrumental variable routines are utilized which increase the estimated impact of special interests on the economy.