Demands for public spending: An attitudinal approach

This paper develops a conceptual model of public spending demands applicable to attitudinal data on public spending demands and demonstrates its usefulness by estimating qualitative demand equations for six public spending categories: education, welfare, housing, health, highways, and defense. The estimation, based on a data set constructed by merging the 1973 Survey of Consumer Attitudes and Behavior with relevant government data, reveals that tax-prices, private benefit measures and socio-demographic characteristics are instrumental in explaining differences in the public spending demands among individuals.     

Public Capital Investment and Economic Growth in Forth Worth: The Implications for Public Budgeting and Infrastructure Management

There is a common assumption that local government investment in infrastructure stimulates private development. This article examines relationships in one southwestern city between public capital spending and city infrastructure assets and private economic activity as measured by building permit activity, permit values, and assessed property valuations. Two research questions are examined: (1) Is public investment in new capital associated with private capital formation? and (2) Is public investment associated with improvements in the property tax base? The findings hold implications for infrastructure planning, budgeting, and management. First, public and private capital spending patterns varied in tandem across several cycles, and tracking such cycles may help public managers predict short- and mid-term infrastructure needs. Second, utility capital spending is critically related to private capital formation, and may offer higher fiscal returns than other public infrastructure. Third, infrastructure capital had a strong significant effect on the assessed value of urban property, and will therefore influence the property tax base.     

Der Kampf um knappe Mittel: Die Bestimmungsfaktoren der öffentlichen, privaten und sektoralen Bildungsausgaben im OECD-Länder-Vergleich

This article identifies the statistical determinants of public, private, and sectoral education spending in 21 OECD countries in the time period from 1980 to 2002. It is shown that socio-economic variables like the economic well-being of a country and the size of the youth population are important factors driving spending. In addition, political and institutional factors like the partisan composition of the government or the number of veto points play a major role as well. Private spending can in part substitute for a lack of public spending. The analysis of public spending on higher education shows that countries with left governments and a high openness of trade exhibit higher levels of spending, probably to compensate for negative externalities of internationalization.     

Charitable giving in the German welfare state: fiscal incentives and crowding out

There are two ways that government activities influence private charitable giving: (1) government spending on the provision of public goods may cause crowding out of private charitable contributions; and (2) tax incentives may boost private charitable giving. From a sample of German income tax returns, we estimate the elasticity of charitable giving relative to tax incentives, income, and government spending. Using censored quantile regression analysis, we derive results for different points of the underlying distribution of charitable giving. Evaluating overall treasury efficiency, the tax deductibility of charitable donations fosters enough private giving to offset foregone tax revenues.     

The Gnomes of Washington: Four Myths of the 1976 IMF Crisis

The IMF settlement of December 1976 looms large in popular and partisan views of the politics of the 1970s. It is argued here that conventional academic wisdom has come to embody several misleading myths about its impact on economic policy. Evidence is presented to challenge four such myths which suggest that the IMF forced the Labour government to launch an attack on public spending, introduce cash limits to control public spending, introduce monetary targets and abandon the pursuit of full employment through demand management.
Although the language of the [IMF] negotiations reflected the arcane terms of international finance… the decisions required of the British Government were profoundly political… behind the technical financial decisions lay fundamental differences over the appropriate balance between the private and public sectors, the priority between capital accumulation and social welfare, the relative weight to be given to incentives and equality… What was at issue was the future shape of the political economy of Great Britain.¹     

Public Attitudes Toward Social Spending in the United States: The Differences Between Direct Spending and Tax Expenditures

This paper uses a survey experiment to examine differences in public attitudes toward ‘direct’ and ‘indirect’ government spending. Federal social welfare spending in the USA has two components: the federal government spends money to directly provide social benefits to citizens, and also indirectly subsidizes the private provision of social benefits through tax expenditures. Though benefits provided through tax expenditures are considered spending for budgetary purposes, they differ from direct spending in several ways: in the mechanisms through which benefits are delivered to citizens, in how they distribute wealth across the income spectrum, and in the visibility of their policy consequences to the mass public. We develop and test a model explaining how these differences will affect public attitudes toward spending conducted through direct and indirect means. We find that support for otherwise identical social programs is generally higher when such programs are portrayed as being delivered through tax expenditures than when they are portrayed as being delivered by direct spending. In addition, support for tax expenditure programs which redistribute wealth upward drops when citizens are provided information about the redistributive effects. Both of these results are conditioned by partisanship, with the opinions of Republicans more sensitive to the mechanism through which benefits are delivered, and the opinions of Democrats more sensitive to information about their redistributive effects.     

The Public/Private Cleavage in a Welfare State: Attitudes Toward Public Management Reform

This study contributes to the growing literature on differences in attitudes between public and private sector employees, particularly with respect to their receptivity or resistance to public management reforms. We begin by asking the question: to what degree does perceived self-interest play a role in accounting for attitudes toward public management reforms such as downsizing, privatization, and public spending? Using attitudinal data from Sweden, a social welfare state with a large public bureaucracy, a tension is observed both among public employees in different levels of government and between public and private sector employees. In the context of public management reforms, national government employees emerge as more right-leaning politically and more supportive of public management reforms than those working in local government. The analysis finds, particularly among national government employees, that while interest as measured here is strongly related to attitudes toward reform, status as a public employee and status as a public bureaucrat are not as significant as other components of interest in accounting for attitudes toward public management reform.     

Public sector unions and public spending

This study examines the influence of public sector unions on the expansion of the public sector. Based on public goods theory, our paper models how unions influence the supply of and demand for public sector activities. On the demand side, public sector unions are special interests which advocate public sector expansion to policy makers; on the supply side, they exert pressure to maintain and expand monopoly powers. Empirical evidence supports the hypothesis that a positive relationship exists between public sector unionism and public spending.     

An Investigation of the Public Deficts and Government Spending Relationship: Evidence for Greece

This paper tests the validity of the Buchanan-Wagner hypothesis for Greece, that increases in public spending are the result of the tolerance of large deficits over the period 1961–1994. To test this hypothesis, three unit-root pretests, the Dickey-Fuller, Phillips-Perron and Kwiatkowski et al. and maximum likelihood estimation techniques of cointegrating vectors and a vector error-correction model are employed. A long-run relationship is found to exist among government spending, deficit, income,wages and adult population and the importance of short-run deviations are presented. The empirical evidence suggests that Buchanan and Wagner hypothesis, seems to find support for Greece in the long-run and the short-run. Further, productivity in the public sector is lower than in the private sector and the growth of income is not an important determinant of the increase in the relative size of public spending.     

The size of government

Most research on the causes of growth in government expenditure has focused on the demand for government services. In this paper, we argue that in fact this growth may have occurred because of changes in supply. Changes in technology leading to increased specialization and thus increased opportunity costs of self-production have led to increased market production and increased record keeping. Also, female labor force participation has increased. Both of these factors serve to reduce the (efficiency) cost of collecting taxes; if the demand for government spending has not changed, this increase in supply would lead to a larger public sector. We estimate a system of simultaneous equations for the period 1929–1970 incorporating this hypothesis, and the results are consistent with the theory. We are able to explain virtually all of the growth of government; increases in female labor force participation seems to be a very important variable in this explanation.     

Can private governance boost public policy? Insights from public–private governance interactions in the fisheries and electricity sectors

Based on the inductive analysis of two parallel cases of private environmental governance – private, market-driven fisheries governance and private, market-driven governance for electricity decarbonization – this paper uncovers a trigger for positive public policy spillovers from private environmental governance. It identifies circumstances that prompt groups of business actors working as private regulators to also take on a role as public policy advocates and supporters, revealing a potential for private governance initiatives that are targeted at a particular environmental problem to serve as a bolster for the public regulatory governance of that problem as well. Both private governance cases at the basis of this analysis feature groups of business actors seeking to meet voluntary sustainability goals through the tools of private governance (specifically, through flexing buyer power and private authority in an effort to reform environmentally problematic practices among particular groups of suppliers). In both cases, the business's inability to attain private sustainability goals though private governance means alone has given rise to business demand for facilitative public environmental policy and regulation. The analysis presented in this paper thus points to the occurrence of a particular and intriguing pattern of complementarity between private authority and public policy – one where public policy is called on to fill gaps left by private environmental governance and authority. And it identifies key conditions for such private-governance-driven recentering of public policy to occur, namely the presence of private supply chain greening goals and commitments that are economically, reputationally, and/or competitively critical for businesses to attain, combined with shortfalls in the capacity of businesses' private authority to bring about such attainment. The two case analysis further suggests the importance of ENGOs in identifying and activating some of the opportunities for leveraging shortfalls in private environmental governance to the advantage of public environmental policy and regulation.     

Easy Money: Tax Exporting and State Support for Higher Education

There is a substantial literature that assesses the effects of tax‐exporting capacities on the tax structures and aggregate spending levels that state governments choose to implement, but no work exists that isolates the effects of state tax exporting on higher education spending. Using state‐level data for 1989, 1995, 2002, and 2007, we estimate for the median voter in each state the change in the marginal cost of higher education subsidization generated by tax exportation, and calculate the increased higher education spending that results. We consider three types of spending: state appropriations to public universities as well as need‐ and non‐need‐based aid awarded to in‐state students. We find that neither type of aid is responsive to the marginal cost, or tax price, faced by the median voter. However, the median voter's price elasticity of demand for state appropriations is statistically significant and negative. We find that the median voter's tax price is substantially reduced by the presence of prominent mining and tourism industries and by the federal deductibility offset available to firms. Thus, these tax‐exporting capacities exert upward pressure on voter demand for state appropriations to public universities.     

Social spending,partisan bias and vote choice. Evidence from the US

Most models in political science and political economy assume that benefiting from public spending increases the likelihood of voting for the government. However, we do not have much empirical evidence on the conditions under which recipients of public spending reward governments for their public transfers. This article studies the electoral implications of welfare spending cuts in the early years of the Reagan Presidency, when public spending changes were particularly pronounced. Using 1982 NES data, this paper demonstrates that voters who lost public benefits punished Reagan but this only occurred when they identified with the Democratic Party. By contrast, benefit recipients not affected by government cuts were more likely to support Reagan, but again this was only significant among voters identifying with the party of government. This paper thus finds that governments cannot automatically “buy” votes by using welfare spending, the influence of which is instead cushioned by party identification.     

Governance and regulation of urban bus transportation: Using partial privatization to achieve the better of two worlds

Mixed delivery of public services is gaining increasing attention as a way for public managers to avoid deciding between a purely public and purely private delivery system. The unusual coexistence of public and private operators in the urban bus market in Barcelona provides an interesting context in which to analyze the challenges and opportunities posed by this system. Competition for concessions among private operators and the regulation of concessionaires generate incentives to improve efficiency and quality. Furthermore, partial privatization increases the efficiency and feasibility of public operators. In fact, competitive bidding is effective in disciplining private operators and increasing the regulators' bargaining power over both public and private firms. The reform implemented in Barcelona offers an interesting insight into all metropolitan areas that are in a position to create a number of separate concessions large enough to benefit from economies of density.     

Public School Music: Notes on the Public Provision of a Quasi-Private Good

This paper uses a version of theBergstrom/Goodman median voter model toexamine whether there are aspects ofpublicness to public school music. It alsoexamines whether the provision of publicschool music is an example of the abilityof small groups to seek benefits forthemselves at the expense of larger groups. School music programs provide a uniquesetting in which it is possible to separatethe demand for school music programs by theconsumers of school music (the privatebeneficiaries) from the demand for schoolmusic programs by those who do not directlyconsume the product. If those who are notdirect consumers of music programs appearto value school music programs as a publicgood, their valuation cannot be confusedwith a jointly consumed private good, orconsumption of a private good with scaleeconomies, because they are not themselvesconsuming it as a private good. Using datafrom the 1987 Schools and Staffing Survey,the results from a logarithmic, normative,demand model show that (parents of)nonmusic students appear to value musicprograms as a public good. Once it isprovided for music students, additionalproportions of nonmusic students do notdemand additional music classes. In thatmodel, music students appear to value musicclasses as a private good. In thepositive, additive, demand model, moremusic students mean that more music classeswill be provided. Further, since music isvalued as a non-subtractable public goodwhose costs can easily be spread,increasing numbers of non-music studentsalso result in (slightly) more musicclasses. The method can be used to estimate thepublicness of publicly provided goodswhenever it is possible to separate thedirect beneficiaries of the good from thosewho could only value its externalities. The model seems particularly applicable tostudying the extent to which defense isvalued as a quasi-private good by theconcentrated defense industry; and whetherit is also valued as a public good bycitizen/voters with no connection to thedefense industry. It may also be usefulfor investigating still unsettled questionsregarding the publicness of publiclyprovided education.     

Race,Sophistication, and White Opinion on Government Spending

The conventional wisdom in public opinion research suggests that the white public views government spending as a single race-coded issue. This article develops an alternative theory that rests on two propositions. First, the white public sees government spending not as a single issue, but rather, as two distinct issues: spending on the deserving poor and spending on the undeserving poor. Second, political sophistication strengthens the impact racial stereotypes have on attitudes toward spending on the undeserving poor, and it does not affect the relationship between stereotypes and attitudes toward spending on the deserving poor. These hypotheses are tested using data from the 1996 and 1992 NES surveys. The empirical results provide strong support for both propositions.     

Representatives of the public? Public opinion and interest group activity

Although scholars have long speculated about how organised interests link the public to decision makers, there has actually been little empirical research on this important element of democratic theory. This important gap in the literature is addressed in this article by examining, in addition to other supply‐side and demand‐side factors, whether groups mobilise on issues in policy areas that are regarded as salient by the public. Based on an analysis of 4,501 contributions in 142 European Commission online consultations, it is found that organised interests potentially can act as a transmission belt between the public and decision makers. Although the results vary to some degree by issues, higher rates of mobilisation are found on those issues that fall within policy areas that are regarded as salient by the general public and those with consequences for budgetary spending.     

Is the Median Voter a Clear-Cut Winner?: Comparing theMedian Voter Theory and Competing Theories in Explaining LocalGovernment Spending

This paper attempts to test the power of the median model againstthe respective strength of other alternate models based onredistributive, political-institutional and interest group theoriesin explaining the demand for public spending in New York statecounties during 1990, 1980 and 1970. To execute the comparison ofthe performance of median voter model with that of each of thenonmedian voter ones, various nonnested tests such as J and JAtests, N-tilde, W and encompassing tests have been employed.Results of the study show that although the median voter model hasa marginal edge over the rival models based on the alternativetheories, it may not be relied upon solely when many otherinstitutional, redistributive and interest group factors are alsorelevant for explaining public spending. The results of this studydiffer from those in Congleton and Bennett (1995). We do not findthat interest group models are substantially weaker than the medianvoter model.     

Religion and the demand for membership in environmental citizen groups

I test the hypothesis that religious affiliation is an empirical measure of tastes and beliefs that affect the demand for membership in environmental citizen groups. The number of adherents to Judeo-Christian denominations per household has a significant, negative effect on state membership rates for nine groups advocating a preservationist approach to environmental policy, particularly in states with many Catholics, Baptists and Mormons. Religious affiliation has a marginally significant, positive effect on membership rates for two sportsmen groups advocating private stewardship. These results suggest that religious affiliation should also be a significant determinant of constituent preferences for environmental policies.     

Private and public choices in public education: An investigation of trustee effects

The paper applies the concepts of the horizon problem, agency costs, monitoring, and special interest incentives to trustee management of public schools and higher education. We examine whether South Carolina's 1984 Education Improvement Act, a major restructuring of educational organization and spending in South Carolina, is related to the ratio of pupils in private versus public schools. We employ 30 years of county level data in South Carolina, and we uncover several things. There is no statistically credible relation between public school expenditures per pupil and the private school/public school enrollment ratio. However, we do find that the directed changes in rules, organizational structure, and incentives mandated by the 1984 Educational Improvement Act are associated with a reduction in the relative number of children attending private school. We interpret this to mean that the features of the law requiring better accountability and the like were perceived by parents to make for better education while the increased money spent was only a transfer to teachers or some other groups; we find that organization matters more than money.