In Washington, it's a truism that a political connection is worth a lot. But now economists have put a price on it.
According to a new study from economists at the University of Warwick in the UK, a lobbyist's connection to a senator or senior member of the House is equivalent to 24 percent of the lobbyist's total earnings. And when a lobbying firm loses that connection—when the senator retires, for example—it sees a loss of $177,000 on average for the year. Lobbyists in D.C. make an average salary of $62,000, according to employment search site Simply Hired.
"Connection is this specific human capital that they have, where you know this politician, you can get access to this politician and you know the policy preferences of this politician. That's what a connection is: access and knowledge," Mirko Draca, an assistant professor of economics at the University of Warwick and co-author of the study, tells Whispers. "The usability of that disappears when the politician leaves the Congress."
The study, published this month in the American Economic Review, specifically looked at the connections that more than 1000 lobbyists had with lawmakers they formerly worked for, and what happened to the lobbyist's earnings if that lawmaker left office.
The economists did not look at indirect connections the lobbyists may have had.