median voters or budget maximizers evidence from school expenditure referenda some readers may have found these results of greater interest were we able to confirm the directional hypotheses of the certainty setter model in addition to finding that spending is related to the reversion the much weaker prediction of the uncertainty model yet the failure of the certainty when base elections were optional their infrequent occurrence might be expected under either a median voter or a setter model for those districts that did hold base elections the observations appear consistent with a setter model but are either inexplicable by or inconsistent with a median voter model finally both a the relationship between the number of budget elections and the presence of base elections and b the outcome of mandatory base elections in 1978 provide a set of observations that are challenging to either model a similar challenge was posed by our investigation of budget elections when we called attention to the inadequacy of static full information models rather than resolving the question of the simple setter model against the simple median voter model our results indicate that both may be inappropriate and that endeavors dealing with complexities omitted here are warranted

the median voter according to garp this paper adapts the generalized axiom of revealed preference garp empirical method to the public goods problem to test whether observed municipal public spending can be explained as if the city governments maximize the utility of the median income voter it applies the test procedure for medium size municipal governments in five midwest states the data are consistent with garp and reveal that the local governments in the sample behave as if they maximize median voter utility once we control for the state specific effects government management structure and population density the median voter hypothesis is the proposition that local governments behave as if they maximize the utility of the median income voter in the jurisdiction although an important tool in public economic analysis there has been no conclusive direct test of the maximization hypothesis to date revealed preference theory shows that any finite set of price and quantity observations satisfying the generalized axiom of revealed preference garp can be rationalized by the constrained maximization of an increasing continuous concave utility function afriat 1967 1973 varian 1982 this paper adapts the revealed preference method to the public goods problem in order to test municipal spending data for consistency under garp thereby providing the first direct test of whether or not the local governments behave as if they maximize median voter utility the median voter hypothesis represents a simple tool that is the most widely used characterization of local government behavior given its prominence in the literature it is not surprising that the hypothesis itself has become the subject of scrutiny the framework assumes direct or representative democracy without strategic behavior in which competition among politicians ensures that the public sector bureaucracy responds efficiently to voters desires public sector decision making reduces to an as if constrained maximization problem a simplified picture of the outcome of collective action still much of the empirical testing literature is motivated by concerns over whether the model is too simplistic nonetheless it can be argued that given its depiction as an as if outcome the median voter hypothesis should be judged not by its descriptive accuracy of the public sector decision process but instead by how well it explains observed local fiscal choices on this basis the existing empirical evidence although mixed reveals a surprising amount of indirect support for the framework one approach taken in the literature is to evaluate the median voter hypothesis by testing the predictive power of regression equations with median income and tax price terms for explaining state or local fiscal behavior in this line of the

micro estimates of public spending demand functions and tests of the tiebout and median voter hypotheses responses to questions given to a random sample of michigan households are used to estimate public spending demand functions while income and price elasticities are similar to those obtained from aggregate data positive income elasticities appear to arise because public services are distributed in a prorich manner a relatively small variance in spending demands among urban and suburban communities in metropolitan areas with substantial public service variety suggests that the tiebout mechanism works this interpretation is supported by the fact that actual spending conforms substantially to desired levels in urban areas but less so in rural areas with little public sector choice

income and the utilization of long term care services evidence from the social security benefit notch this paper estimates the impact of income on the long term care utilization of elderly americans using a natural experiment that led otherwise similar retirees to receive significantly different social security payments based on their year of birth using data from the 1993 and 1995 waves of the ahead we estimate instrumental variables models and find that a positive permanent income shock lowers nursing home use but increases the utilization of paid home care services we find some suggestive evidence that the effects are due to substitution of home care for nursing home utilization the magnitude of these estimates suggests that moderate reductions in post retirement income would significantly alter long term utilization patterns among elderly individuals

fiscal illusion and political accountability theory and evidence from two local tax regimes in britain local tax reform in britain in 1993 reinstating a propertytax may have reversed some intended fiscal illusion reducing and accountability improving features of the poll tax itself a reform introduced in 1990 with the specific aim ofpromoting accountability we formalize these features withina median voter model of the demand for local publicexpenditure that distinguishes between accountability andfiscal illusion effects the model shows that a prioriaccountability effects on expenditures are ambiguous available data for england and wales are used to test themodel we find strong evidence of grant illusion the flypapereffect similar across tax regimes with evidence of renterillusion and of less accountability under the property tax the degree of local income inequality appears to affectexpenditure levels only with the property tax

is the median voter decisive evidence from referenda voting patterns abstract this paper examines whether the voter with the median income is decisive in local spending decisions previous tests have relied on cross sectional data while we make use of a pair of california referenda to estimate a first difference specification the referenda proposed to lower the required vote share for passing local educational bonding initiatives from 67 to 50 and 67 to 55 respectively we find that voters rationally consider future public service decisions when deciding how to vote on voting rules however the empirical evidence strongly suggests that an income percentile below the median is decisive for majority voting rules especially in communities that have a large share of high income voters with attributes that suggest low demand for public services based on a model that explicitly recognizes that each community contains voters with both high and low demand for public school spending we also find that an increase in the share of low demand voters is associated with a lower decisive voter income percentile for the high demand group this two type model implies that our low demand types individuals over age 45 with no children have demands that are 45 lower than other voters collectively these findings are consistent with high income voters with weak preferences for public educational services voting with the poor against increases in public spending on education

the overspending and flypaper effects of fiscal illusion theory and empirical evidence abstract this paper broadens the notion of fiscal illusion to include imperfect information where voters are unsure about how much they must pay for additional services or where they are unsure about the services received in return for higher taxes it shows how each type of voter imperfect information has different effects on public spending and modifies the overspending and flypaper effects predicted by the certainty model an empirical study of municipal expenditures provides support for the broader notion of fiscal illusion as imperfect information

how does income inequality affect energy efficiency empirical evidence from 33 belt and road initiative countries abstract at present income distribution and environmental pollution are serious issues faced by the belt and road initiative bri countries and exploring the impact of income inequality on energy efficiency is meaningful for the sustainability of bri countries using the panel data of 33 bri countries from 2000 to 2016 we first evaluate the energy efficiency of the countries by dynamic dea model and then adopt the tobit regression model to investigate the nonlinear effect of income inequality on energy efficiency the results suggest that first during 2000 2016 the overall energy efficiency of 33 bri countries is relatively low falling to 0 38 while the overall energy efficiency of high income bri countries is much higher than that of the middle and low income bri countries second the average energy efficiency of the bri countries has declined since year 2013 third there is an inverted u type effect of income inequality on energy efficiency in the whole sample but the impact of income inequality on energy efficiency is heterogeneous for countries at different income levels specifically in high income bri countries income inequality shows a u type effect on energy efficiency while in middle and low income bri countries the relationship between income inequality and energy efficiency is an inverted u type moreover economic growth positively impacts the energy efficiency while industrialization and energy structure negatively influence the energy efficiency

demand for locally provided public services within the median voter s framework the case of the brazilian municipalities in this paper we estimated the demand for local public spending for the brazilian municipalities within a median voter s framework the rationale for applying that framework came from the fact that in federal systems voters preferences are more likely to be reflected at the local level as the consumers of public services have a better knowledge of the benefits and costs of the local public expenditures results obtained are consistent with the theoretical background thus suggesting that this hypothesis might be useful to describe the demand for local public goods in brazil in particular the use of quantile regression permitted us to investigate the impacts of the conditioning variables on local public expenses across different expenditures classes thus allowing for heterogeneity across municipalities our results also suggest that the impact of the city size on the quality of club goods shows crowding effects as is between zero and one however in the estimated models marginal congestion slightly d

the median voter model across levels of government the median voter model provides a method of aggregating individual voter s demands to obtain community demand although higher level governments are often assumed to be less responsive to voters than lower level governments it remains an open question whether or not the median voter model which has been found to apply to the lowest tier of the federalist system extends to higher level governments we use the cox specification test to find that the ad hoc model dominates the median model for counties and states the county results are sensitive to the time periods budgetary structure and degree of urbanization

a direct test of direct democracy new england town meetings representative democracies govern most locales in the us making it difficult to compare performance relative to direct democracy new england states however provide an opportunity to test both direct and representative democracy at the local level this article uses revealed preference axioms to compare spending patterns in new england towns and cities against median voter hypothesis benchmarks contrary to previous evidence we find no differences between direct and representative democracy the results suggest that horizontal competition arising from local fragmentation minimize differences between direct and representative local government providing support for wider applicability of median voter based empirical models of local government behaviour in the us

the median voter model in public choice theory the changing perception by public choice theorists about the relevance of the median voter model is a result of excessive extrapolation of the conclusions of theoretical models to the real world early in the 1970s the median voter model was often accepted as implying that the output produced in the public sector was what was most preferred by the median voter this claim is excessive because the median voter model is only a model of demand aggregation under majority rule and has little to say about the supply side of the public sector in the late 1970s many scholars identified several circumstances under which the model would not apply in theory but these critiques of the model were often viewed as reasons to abandon the median voter model altogether the model went from having excessive claims that made the model appear to be more powerful than it really is to excessive claims that made the model appear to be less powerful than it really is these latter claims were often in response to the earlier claims rather than to the model appropriately applied

the flypaper effect identifying areas for further research the flypaper effect literature dates back three decades it is overwhelmingly neo classical in approach attempting to improve the median voter demand model and or temper it with public choice supply side perspectives whilst this approach provided valuable early substantial analytical insights more recent papers seem to have contributed only marginally to an understanding of the flypaper effect if indeed it exists at all hence as well as providing a long overdue comprehensive review of the literature on the flypaper effect this paper identifies more productive avenues for further research

government form and performance fiscal illusion and administrative ability in u s counties key differences in local government organizational form lie in separation of powers versus unified powers and elected versus professional chief executive officers ceos this paper studies how these features lead to differences in fiscal illusion and production cost evidence from u s counties indicates that there is less fiscal illusion under separation of powers which by itself reduces spending separation of powers however leads to greater overall spending when compared with unified governments the inelastic public demand therefore implies that separation of powers leads to services being provided at greater cost than under governments with unified powers similar conclusions hold for professional relative to elected ceos

the flypaper effect and other anomalies abstract i develop a model in which income both in its own right and as a proxy for other socioeconomic characteristics is an input in the production function for local public services the most obvious example is education though there are other applications as well the comparative statics results from this model yield the following results 1 the observed flypaper effect the tendency for local government to spend a higher fraction of unrestricted grants than income of residents may be due at least in part to the fact that own income but not grants is a substitute for purchased inputs in the technology hence the propensity to spend on purchased inputs out of own income is lower than out of grants 2 the income elasticity of demand for public sector output may be higher than the observed income elasticity of demand for purchased inputs 3 equalization of educational opportunity via wealth neutrality as suggested by feldstein requires major changes in education finance once we recognice the distinction between purchased inputs and output

fiscal illusion and the grantor government empirical studies indicate that unconditional intergovernmental grants have a flypaper effect several authors have modeled recipient government spending under fiscal illusion to explain this phenomenon in short grants reduce the perceived marginal cost of recipient government output this paper develops a more general model of illusion that incorporates the grantor government thereby eliminating inconsistencies encountered in previous models the more general model implies that grant finance increases the perceived marginal cost of grantor government output thus grant induced illusion should have two effects an increase in recipient output and a decrease in grantor output the empirical work supports this hypothesis

the linear expenditure system and the demand for municipal public services the median voter specification revisited following bergstrom and goodman 1973 this paper contributes to the set of studies estimating demand for publicly provided goods and services the main innovation in this paper is methodological as it uses a stone geary utility function to describe median voter preferences unlike in previous studies the local public expenditure function in a simplified linear expenditure system can be derived directly from the theoretical framework the translated expenditure function provides an estimate of the minimum required local public services in each municipality using cross sectional municipal data from france it is found to be at the most 30 per cent of the total per capita expenditure compared with the specification conventionally used in the literature linear and non linear expenditure systems show a greater sensitivity to price and income variations and reveal a greater number of significant variables

the optimal property tax with mobile nonresidential capital abstract implications of the dynamic nature of mobile nonresidential capital for community fiscal behavior are examined using the median voter framework the representative voter s control rule calls for the community to lower its current public service demand in order to retain or attract taxable capital the model predicts a positive short run and a negative long run income effect on public good demand incorporating intergovernmental aid into the model asymmetry between effects of the unconditional aid and of the voter income is demonstrated

on government structure and spending the effects of management form and separation of powers summary this paper contributes to the on going debate over how government form affects spending it broadens the previous focus on elected versus professional management to address the separation of legislative and executive powers the empirical results reveal spending differences between governments with separation of powers and those with unified powers only for southern counties of the us in addition for all regions and time periods professional or elected executive management does not significantly affect either municipal or county spending

a bureaucratic theory of flypaper effects abstract one well documented pattern in local public finance is that in comparison with what is spent out of residents private income a disproportionate amount of lump sum intergovernmental aid is used to increase expenditures rather than to reduce local taxes this paper shows how a bureaucratic model of the type suggested by niskanen bureaucracy and representative government aldine atherton chicago 1971 can be used to explain this behavior an empirical test of the model using 115 small governments in michigan suggests that this bureaucratic model explains capital expenditures well while operating expenditures appear to be better explained by the standard median voter model

the median voter hypothesis evidence from general purpose local governments the median voter hypothesis mvh represents a much used as well as much criticized tool in the hands of public finance economists to evaluate the mvh this paper applies the cox specification test using data from general purpose municipal governments the cox test allows for possible simultaneous rejection of the mvh and all tested models thus providing stricter criteria than applied to date in empirical mvh analyses the test results reveal that the mvh is appropriate for explaining the aggregate behavior of municipal governments but not specific services further the single service and single tax base assumptions are not critical to the empirical mvh performance

the elusive flypaper effect abstract the flypaper effect is the common empirical result that lump sum intergovernmental grants stimulate more local government spending than increases in private income which are theoretically equivalent in this paper four of the best known explanations of the flypaper effect are tested using data from michigan school districts none of these explanations are confirmed by the data the cause of the flypaper effect is likely to be much more deeply rooted in the nature of local decision making than is currently recognized

distributional effects of growth and public expenditures in africa estimates for tanzania and rwanda summary in this paper we explore the effects of fiscal policies and growth on measures of household welfare across the distribution of expenditures for two african countries rwanda and tanzania we explore the effect of government expenditures on expenditure growth in each quintile of the expenditure distribution and the effect of growth for each group we find that the benefits of growth are concentrated among the better off sectors of the population in these two countries perhaps to the detriment of the poorer sectors by looking at the effects within a country and across different groups of households and administrative entities we exploit variation in expenditures and growth across and within regions of each country to estimate the elasticities of expenditure with respect to fiscal expenditure and mean expenditure growth at different points of the expenditure distribution using household survey data and government expenditure data at the district level we find that overall mean expenditure growth benefits the top expenditure groups the welfare spillovers are mostly present for top 20 of the expenditure distribution with the middle of the distribution in tanzania responding slightly to these spillovers public social expenditures do not appear to affect inequality considerably but do tend to work toward decreasing inequality however mean expenditure growth is related to increases in inequality in the sense that the richest sectors of the population benefit the most from growth we find that the growth elasticity of expenditure is only above one for the top quintile in both countries in tanzania a 1 increase in average household expenditure is related to a 1 96 expenditure growth in the top quintile and 0 43 in the third quintile in rwanda a 1 increase in average household expenditure is related to a 1 93 increase in household expenditure in the top 20 of the distribution