Testing the Implications of the Olson Hypothesis.

Considerable attention has been paid to the hypothesis, advanced by M. Olson, that accumulations of interest groups build up over time and retard economic performance. Most previous tests of this hypothesis have been based on comparisons of growth rates. In this paper, it is argued that comparisons of income yield a superior test. Strong forms of the Olson hypothesis, in which shocks such as revolution and war yield positive benefits, are rejected using this test. Copyright 1992 by The London School of Economics and Political Science.