Merchants of doubt: Corporate political action when NGO credibility is uncertain

• DOI: http://doi.org/10.1111/jems.12338
• Author: Thomas P. Lyon,Mireille Chiroleu‐Assouline
• Published date: 01 April 2020
• Date: 01 April 2020

J Econ Manage Strat. 2020;29:439–461. wileyonlinelibrary.com/journal/jems © 2020 Wiley Periodicals, Inc.

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Received: 3 January 2018

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Revised: 27 June 2019

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Accepted: 16 November 2019

DOI: 10.1111/jems.12338

ORIGINAL ARTICLE

Merchants of doubt: Corporate political action when NGO

credibility is uncertain

Mireille Chiroleu‐Assouline

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Thomas P. Lyon

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Paris School of Economics, University of

Paris 1 Panthéon‐Sorbonne, Paris, France

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Business Economics and Public Policy,

Ross School of Business, University of

Michigan, Ann Arbor, Michigan

Correspondence

Thomas P. Lyon, Ross School of Business,

701 Tappan St., University of Michigan,

Ann Arbor, MI 48109.

Email: tplyon@umich.edu

Funding information

French National Research Agency,

Grant/Award Number: ANR‐15‐CE05‐

0008‐01; Investissements d’Avenir

Program of the French government,

Grant/Award Number: ANR‐17‐EURE‐001

Abstract

The literature on special interest groups emphasizes two main influence

channels: campaign contributions and informational lobbying. We introduce a

third channel: providing information about the credibility of political rivals. In

particular, nongovernmental organizations (NGOs) often aim to communicate

scientific knowledge to policymakers, but industry‐backed groups often attempt

to undermine their credibility. We extend a standard signaling model of

interest‐group lobbying to include fixed costs of policymaker action and show

that these costs make possible two mechanisms for creating doubt about the

value of policy action. The first uses Bayesian persuasion to suggest the NGO

may be a noncredible radical. The second involves creating an opposition think

tank (TT) that acts as a possible radical, not a credible moderate. We show that

the TT cannot always implement the Bayesian persuasion benchmark, and we

characterize how optimal TT design varies with exogenous parameters.

KEYWORDS

informational lobbying, nonmarket strategy, persuasion, special interest politics

JEL CLASSIFICATION

D72; D82; L31; Q58

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INTRODUCTION

Political action to regulate externalities, provide public goods and protect public health depends crucially on scientific

knowledge. However, public doubts about the credibility of scientific experts may undermine political support for

regulation. Indeed, Oreskes and Conway (2010) present a series of in‐depth case studies showing how business groups

whose profits were threatened by regulation sowed doubt about the scientific basis for action. They cover cases

involving the regulation of tobacco, acid rain, the hole in the ozone layer, and climate change. Their central

contribution is to detail how business interests attempted to block or delay legislation, even though the weight of

scientific evidence was against them. In each case, the strategies involved creating uncertainty about the scientific case

for regulation by undermining the credibility of scientists and science‐based nongovernmental organizations (NGOs).

In fact, a 1969 memo by a tobacco industry executive explained that “Doubt is our product since it is the best means of

competing with the ‘body of fact’that exists in the minds of the general public.”(Oreskes & Conway, 2010, p. 34).

[Correction added after online publication on 14 January 2020: The affiliation of the author “Mireille Chiroleu‐Assouline”has been corrected from

“Centre d’Economie de la Sorbonne, Paris School of Economics, University of Paris 1 Panthéon‐Sorbonne, Paris, France”to “Paris School of

Economics, University of Paris 1 Panthéon‐Sorbonne, Paris, France.”]

One common strategy for creating doubt is to attack the character of science‐based organizations, accusing them of a

political bias that makes their recommendations untrustworthy. Even if there is no evidence to support such an attack, bold

assertions may be enough to create sufficient doubt to damage a scientist’s reputation. One victim of such attacks was Ben

Santer, recipient of a 1998 MacArthur Foundation “genius”grant and lead author of Chapter 8 of the Second Assessment

Report issued by the Intergovernmental Panel on Climate Change (IPCC). Santer was the target of a 1996 Op‐Ed piece in the

Wall Street Journal that accused him of making changes to the IPCC report to “deceive policy makers and the public.”(Oreskes

& Conway, 2010, p. 3). The charges were false—he had simply edited the chapter in response to review comments from fellow

scientists—but that did not stop Frederick Seitz, chairman of the George C. Marshall Institute, from making them. Seitz, then

85 years old, had had an illustrious career in materials science and solid‐state physics. Upon his retirement in 1979, he became

a consultant for the tobacco industry and later the fossil fuel industry, arguing against regulation of second‐hand smoke and

global warming. Although Santer and 40 other climate scientists wrote a sharp rebuttal to the Journal, the newspaper edited

the rebuttal heavily and deleted the names of the other 40 signatories, making it appear to be a self‐serving response by Santer

alone. The ensuing public war of words was too complicated for most members of the public to parse, and could easily be seen

as just another debate between “two sides,”each with their own equally valid views. Doubt had been sown.

A second common strategy is for a “think tank”(TT) to put forward competing scientific “experts”whose opinions are

opposed to those of the scientists calling for policy action. This is a tactic that has become increasingly common since

Anthony Fisher created the Atlas Network in 1981 with the intention “to litter the world with free‐market think tanks.”

(Djelic, 2014).

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For example, in 1989 the Marshall Institute issued a “white paper”on global warming that argued any

warming was caused by solar activity, not greenhouse gas emissions. Although the paper was not written by climate scientists

and had not been subjected to peer review, the Institute contacted the White House and was invited to present the report to

members of the Council of Economic Advisers, the Office of Management and Budget, and other high‐level executive branch

entities. This outreach effort was remarkably effective and “had a big impact, stopping the positive momentum that had been

building in the Bush administration.”(Oreskes & Conway, 2010, p. 186). This was hardly the only example of counter‐

lobbying by industry‐funded TTs. Indeed, Jacques, Dunlap, and Freeman (2008) study 141 English‐language books that adopt

a skeptical stance on environmental issues and find that 92% of them are associated with conservative TTs. Dunlap and

Jacques (2013) study books denying climate change in particular and find that at least 90% of them do not undergo peer

review. One of the key funders of climate denial efforts was ExxonMobil, which has given over $20 million to sow doubt about

global warming to a wide array of TTs, with the biggest recipient being the Competitive Enterprise Institute with $2 million of

ExxonMobil support (Hoggan & Littlemore, 2009, p. 82). After its support for climate denialists was exposed publicly by

Greenpeace, ExxonMobil cut off funding to the Competitive Enterprise Institute, though it nevertheless continued to donate

over $2 million to other denialists in 2007 (Hoggan & Littlemore, 2009, p. 84).

There is a rich literature in economics and political science on the strategies used by interest groups to influence the

political process. The literature has focused on two main channels of influence: campaign contributions (Austen‐Smith,

1995, 1998; Bernheim & Whinston, 1986; Cotton, 2009; Groseclose & Snyder, 1996; Kroszner & Stratmann, 1998;

Snyder, 1990) and informational lobbying (Crawford & Sobel, 1982; Krishna & Morgan, 2001; Lohmann, 1995; Potters &

Van Winden, 1992). Grossman and Helpman (2001) provide an excellent overview of both strategies. Recent models

have begun to incorporate both options. For example, Bennedsen and Feldmann (2006) study the choice between

lobbying and campaign contributions; they assume the politician can see whether an interest group invested in

gathering information, so a failure to lobby is informative, and hence there is a tradeoff between lobbying and campaign

contributions, with interest groups specializing in one or the other. Dahm and Porteiro (2008) have a similar model to

Bennedsen and Feldmann, but they assume the politican cannot observe whether an interest group has engaged in

information gathering or not, and hence they find that interest groups invest in both strategies.

In this paper, we introduce a new channel through which an interest group can influence policy: supplying

information about the credibility of political rivals. We develop a model that extends the literature on informational

lobbying (Grossman & Helpman, 2001) to explore the impact of doubt‐creation strategies on the public policy process.

We identify conditions under which the creation of doubt can weaken regulatory policy or block its passage altogether.

Because a firm that faces increased costs from regulation is typically not a credible source of information, it may need to

resort to indirect tactics to influence public policy. In particular, we model the two tactics described above, motivated by

recent literature on the role of business in the policy process. First, we model the process of undermining the credibility

of the NGO as a form of Bayesian persuasion, not about the state of the world itself but about the political bias of the

NGO. Second, we model the operations of a “think tank”that can provide noisy information about the state of the

world that is contrary to that provided by the NGO. We show that the two mechanisms can be used to produce identical

effects, and we characterize the conditions under which they are effective.

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