Parochial Interests and the Centralized Provision of Local Public Goods: Evidence from Congressional Voting on Transportation Projects

Local public goods financed from a national tax base provide concentrated benefits to receipient jurisdictions but disperse costs, creating incentives for legislators to increase own-district spending but to restrain aggregate spending due to the associated tax costs. While these common pool incentives underpin a variety of theoretical analyses, which tend to predict inefficiencies in the allocation of public goods, there is little direct evidence that individual legislators respond to such incentives. To test for reactions to such incentives, this paper analyzes 1998 Congressional votes over transportation project funding. The empirical results provide evidence that legislators respond to common pool incentives: the probability of supporting the projects is increasing in own-district spending and decreasing in the tax burden associated with aggregate spending. Having found that legislators do respond to such incentives, I use the parameter estimates to calculate the efficient level of public goods, which suggest over-spending in aggregate, especially in politically powerful districts, and large associated deadweight loss.

Bargaining in Legislatures: An Empirical Investigation

While the theoretical literature on non-cooperative legislative bargaining has grown voluminous, there is little empirical work attempting to test a key prediction in this literature: proposal power is valuable. This paper aims to fill this gap in the literature by investigating the role of proposal power in the allocation of transportation projects across U.S. Congressional districts in 1991 and 1998. The evidence supports the key qualitative prediction of the Baron and Ferejohn legislative bargaining model: members with proposal power, those sitting on the transportation authorization committee, secure more project spending for their districts than do other representatives. Support for the quantitative restrictions on the value of proposal power, which are more powerful than the qualitative restrictions, is more mixed. I then empirically address several alternative models of legislative behavior, including partisian models, informational roles for committees, models with appropriations committees, and theories of committees as preference outliers.

Are Policy Platforms Capitalized into Equity Prices? Evidence from the Bush/Gore 2000 Presidential Election

This paper tests for the capitalization of policy platforms into equity prices using a sample of 70 firms favored under Bush or Gore platforms during the 2000 U.S. Presidential Election. Two sources of daily data during the six months leading up to the election are incorporated: firm-specific equity returns and the probability of a Bush victory as implied by prices from the Iowa electronic market. For this group of politically-sensitive firms, the daily baseline estimates demonstrate that platforms are capitalized into equity prices: under a Bush administration, relative to a counterfactual Gore administration, Bush-favored firms are worth 3 percent more and Gore-favored firms are worth 6 percent less, implying a statistically significant differential return of 9 percent. The most sensitive sectors include tobacco, worth 13 percent more under a favorable Bush administration, Microsoft competitors, worth 15 percent less under an unfavorable Bush administration, and alternative energy companies, worth 16 percent less under an unfavorable Bush administration. A corresponding analysis of campaign contributions, which allows for heterogeneity in the importance of policy platforms to the firms, supports the baseline estimates. These results are then compared with results from a more traditional event study based upon the Florida recount.

Pet Overpopulation: An Economic Analysis

This paper considers the problem of pet overpopulation. It develops a tractable dynamic model whose positive predictions square well with key features of the current U.S. market for pets. The model is used to understand, from a welfare economic perspective, the sense in which there is \overpopulation" of pets and the underlying causes of the problem. The paper also employs the model to consider what policies might be implemented to deal with the problem. A calibrated example is developed to illustrate these corrective policies and quantify the welfare gains they produce.

The Causes of Political Integration: An Application to School Districts

This paper examines the forces behind political integration through the lens of school district consolidations, which reduced the number of school districts in the United States from around 130,000 in 1930 to under 15,000 at present. Despite this large observed decline, many districts resisted consolidation before ultimately merging and others never merged, choosing to remain at enrollment levels that nearly any education cost function would deem inefficiently small. Why do some districts voluntarily integrate while others remain small, and how do those districts that do merge choose with which of their neighbors to do so? In addressing these questions, we empirically examine the role of potential economies and diseconomies of scale, heterogeneity between merger partners, and the role of state governments. We first develop a simulation-based estimator that is rooted in the economics of matching and thus accounts for three important features of typical merger protocol: two-sided decision making, multiple potential partners, and spatial interdependence. We then apply this methodology to a wave of school district mergers in the state of Iowa during the 1990s. Our results highlight the importance of economies of scale, diseconomies of scale, state financial incentives for consolidation, and a variety of heterogeneity measures.

Socially Optimal Districting

This paper provides a welfare economic analysis of the problem of districting. In the context of a simple micro-founded model intended to capture the salient features of U.S. politics, it studies how a social planner should allocate citizens of different ideologies across districts to maximize aggregate utility. In the model, districting determines the equilibrium seat-vote curve which is the relationship between the aggregate vote share of the political parties and their share of seats in the legislature. To understand optimal districting, the paper first characterizes the optimal seat-vote curve which describes the ideal relationship between votes and seats. It then shows that under rather weak conditions the optimal seat-vote curve is implementable in the sense that there exist districtings which make the equilibrium seat-vote curve equal to the optimal seat-vote curve. The nature of these optimal districtings is described. Finally, the paper provides a full characterization of the constrained optimal seat-vote curve and the districtings that underlie it when the optimal seat-vote curve is not achievable.

Momentum and Social Learning in Presidential Primaries

This paper provides an investigation of the role of momentum and social learning in sequential voting systems. In the econometric model, voters are uncertain over candidate quality, and voters in late states attempt to infer the information held by those in early states from voting returns. Candidates experience momentum effects when their performance in early states exceeds expectations. The empirical application focuses on the responses of daily polling data to the release of voting returns in the 2004 presidential primary. We find that Kerry benefited from surprising wins in early states and took votes away from Dean, who held a strong lead prior to the beginning of the primary season. The voting weights implied by the estimated model demonstrate that early voters have up to 20 times the influence of late voters in the selection of candidates, demonstrating a significant departure from the ideal of "one person, one vote." We then address several alternative, non-learning explanations for our results. Finally, we run simulations under different electoral structures and find that a simultaneous election would have been more competitive due to the absence of herding and that alternative sequential structures would have yielded different outcomes.

Partisan Control, Media Bias, and Viewer Responses: Evidence from Berlusconi’s Italy.

This paper examines whether and how viewers respond to changes in partisan bias in media news. We use data from Italy, where the main private television network is owned by Silvio Berlusconi, the leader of the centerright coalition, and the public television corporation is largely controlled by the ruling coalition. We first document that after the 2001 national elections, when the control of the government moved from the center-left to the center-right, news content on public television shifted to the right. Using individual survey data, we find robust evidence that viewers responded to these changes by modifying their choice of favorite news programs. On the one hand, right-leaning viewers increased their propensity to watch public channels which, even after the change, remained to the left of private channels. On the other hand, left-wing viewers reacted by switching from the main public channel to another public channel that was controlled by the left during both periods. We show that this behavioral response, which tended to shift ideological exposure to the left, significantly, though only partially, offset the movement of public news content to the right.

Socially Optimal Districting: A Theoretical and Empirical Exploration

This paper investigates the problem of optimal districting in the context of a simple model of legislative elections. In the model, districting matters because it determines the seat-vote curve, which describes the relationship between seats and votes. The paper first characterizes the optimal seat-vote curve, and shows that, under a weak condition, there exist districtings that generate this ideal relationship. The paper then develops an empirical methodology for computing seat-vote curves and measuring the welfare gains from implementing optimal districting. This is applied to analyze the districting plans used to elect U.S. state legislators during the 1990s.

Pet Overpopulation: An Economic Analysis

This paper considers the problem of pet overpopulation. It develops a tractable dynamic model whose positive predictions square well with key features of the current U.S. market for pets. The model is used to understand, from a welfare economic perspective, the sense in which there is "overpopulation" of pets and the underlying causes of the problem. The paper also employs the model to consider what policies might be implemented to deal with the problem. A calibrated example is developed to illustrate these corrective policies and quantify the welfare gains they produce.