An empirical test of neutrality and the crowding-out hypothesis

This paper tests Warr's neutrality hypothesis that the voluntary provision of a public good is independent of the distribution of income. Specifically, I test the null hypothesis of neutrality against the alternative that total contributions to a public good will be larger the less equally income is distributed. To test this hypothesis, a new data set is constructed by merging data on total voluntary contributions to individual public radio stations with 1990 Census data on the income distribution in each station's listening area. I find that voluntary contributions increase as income inequality rises.     

A dynamic test of the marginality hypothesis

The marginality hypothesis is an attempt to relate the voting margins of members of Congress to their subsequent legislative behavior. A major corollary of the hypothesis is that members of Congress with small victory margins will be more responsive to constituents than those with large victory margins. This has been assumed to mean that electorally secure representatives can afford to be more loyal to their congressional parties, since they have less cause to worry about their chances for reelection. Previous empirical studies have produced mixed results. We ask the question in a different way: Do changes in marginality affect party voting within Congress? If so, major shifts in the electorate potentially can have a fundamental impact on the behavior of Congress itself. We find that this is not true. Electoral margin is simply not related to party loyalty.     

The convergence of fiscal regimes and the decline of the Tiebout effect

A measure of waste from the competitive rent-seeking activity of special interest groups in federal, state and local budgets was calculated over the period 1900–88. This period in U.S. fiscal history is characterized by constitutional changes that have made for more transparency in governmental fiscal activities and for greater diffusion of taxes. The XVI Amendment to the Constitution created the progressive individual income tax (the corporate income tax was judged to be an excise tax in 1909 and passed the test of constitutionality). High marginal tax rates are a justification for a high average level of taxation. The Full Employment Act of 1946 insitutionalized government deficits as a means of meeting a political objective. As a result, opportunities for rent-seeking through budgetary reallocations rose in the United States. In the first two decades of the 20th century, waste at all levels of government represented about 10 percent of incremental national output. Today, waste is three times that amount.The transparency and diffusion of taxes are highest at the federal level and least at the local level. Rent-seeking through budgetary reallocation has followed the public purse. One explanation for the observed centralization of government in the 20th century may be that opportunities to concentrate benefits and diffuse taxes are highest at the federal level.     

Standing Tiebout on his Head: Tax Capitalization and the Monopoly Power of Local Governments

Unlike other governmental units, statelottery agencies publicly acknowledge thattheir primary objective is revenuemaximization. This claim and the inherentmonopoly power of lottery agencies providesa unique arena to test for Leviathan. Withdata obtained from United States' lotterygames, I perform a Laffer curve analysis toderive the optimal lottery tax rates fordifferent categories of games. Theseoptimal tax rates and Monte Carlosimulations are then used to test whetherthe current tax structure of lottery gamesis indeed the revenue maximizing structure. I find strong empirical evidence for the``Leviathan Lottery''.     

Group size and the free-rider hypothesis: An examination of new evidence from churches

Conventional economic wisdom maintains that expansion of group size exacerbates group members' free riding tendencies. Nevertheless, experimental studies attempting to account for the effects of group size on free riding have failed to support a pure “numbers effect.” This study corroborates these experimental findings by examining contributions of church members from congregations of three prominent U.S. Protestant denominations. As a whole, these results show that, for congregations ranging from 7 members to 3,294 members, per member contributions do not decline with increased membership. The free-rider problem does not appear to be exacerbated by increases in group size.     

The Tiebout Hypothesis 50 Years Later: Lessons and Lingering Challenges for Metropolitan Governance in the 21st Century

More than five decades have passed since Charles Tiebout wrote his seminal 1956 paper, often cited as the classic apologetic for locally based systems of metropolitan governance. This essay traces the impact of Tiebout's work and subsequent scholarship in public choice, identifying important lessons and lingering issues. Although public choice has demonstrated that polycentric systems are adept and flexible in producing and providing municipal services and a variety of interlocal agreements, the presence of municipal boundaries gives rise to a host of spillover problems, such as urban sprawl and segregation. These spillovers are particularly nefarious because, unlike the natural cooperation that seems to occur in service provision, municipalities tend to assert narrow self-interest in the face of these types of externalities. The essay proposes that, commensurate with the growing salience of equity among the pillars of public administration, interjurisdictional spillovers and their attendant equity impacts will be the central challenge for thinkers studying metropolitan governance in the 21st century.     

The calculus of voting: An empirical test

Abstract. According to the rational choice model, the calculus of voting takes the form of the equation R = BP − C, where the net rewards for voting (R) are a function of the instrumental benefits from the preferred outcome compared to others (B) and the probability (P) of casting the decisive vote that secures these benefits, minus the costs of becoming informed and going to the polls (C). Here, we provide a systematic test of this model. The analysis relies on two surveys, conducted during the 1995 Quebec referendum and the 1996 British Columbia provincial election, in which very specific questions measured each element of the model. As well, this study incorporates two other factors that can affect the propensity to vote — Respondents' level of political interest and their sense of duty. We find that B, P, and C each matter, but only among those with a relatively weak sense of duty. The feeling that one has a moral obligation to vote is the most powerful motivation to go to the polls. We conclude that the rational choice model is useful, but only in explaining behaviour at the margins of this important norm.     

Budget-maximizing governmental agencies: An empirical test

Niskanen's theory of government budgeting, involving powerful agencies interested in maximizing their budgets through bargaining with a weak, poorly informed governmental ‘Sponsor’, has received wide recognition. This paper presents the first direct empirical tests of Niskanen's ideas. One implication of Niskanen's model of budgeting is that the demand for public services will appear to be elastic. Niskanen's model also implies restrictions on the elasticity of the derived demand for labor in the public sector. Neither set of predictions is supported by existing empirical research on government activity.     

Testing the Mill hypothesis of fiscal illusion

According to the “Mill hypothesis”, the tax burden from indirect taxation is underestimated because indirect taxes are less “visible” than direct taxes. We experimentally test the Mill hypothesis and identify tax framing as a cause of fiscal illusion. We find that the tax burden associated with an indirect tax is underestimated, whereas this is not the case with an equivalent direct tax. In a referendum to tax and redistribute tax revenue, fiscal illusion is found to distort democratic decisions and to result in “excessive” redistribution. Yet, voters eventually learn to overcome fiscal illusion.