Demographic Characteristics and the Public Bundle

55 Pages Posted: 27 Apr 2000 Last revised: 16 Sep 2010

See all articles by David M. Cutler

David M. Cutler

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); Harvard University - Harvard Kennedy School (HKS)

Douglas W. Elmendorf

Harvard Kennedy School

Richard J. Zeckhauser

Harvard University - Harvard Kennedy School (HKS); National Bureau of Economic Research (NBER)

Date Written: February 1993

Abstract

This paper explores the relationship between the demographic characteristics of a community and the quantities of goods and services provided by its government We consider three models of public spending: a traditional "selfish" public choice model in which individuals care only about themselves, a "community preference" model in which an individual's preferred spending depends on the characteristics of his or her community. and a sorting process through which individuals choose communities according to their tastes for public spending. To evaluate these models of spending, we examine how county and state spending in the United States is affected by the age and racial composition, and the total size of a jurisdiction. The estimated effects of demographic characteristics in the state equations are strikingly different from the estimated effects in the county equations, apparently because a jurisdiction's spending is affected differently by its own demographic characteristics and by the characteristics of the surrounding area.

Suggested Citation

Cutler, David M. and Elmendorf, Douglas W. and Zeckhauser, Richard J., Demographic Characteristics and the Public Bundle (February 1993). NBER Working Paper No. w4283. Available at SSRN: https://ssrn.com/abstract=227055

David M. Cutler (Contact Author)

Harvard University - Department of Economics ( email )

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Douglas W. Elmendorf

Harvard Kennedy School ( email )

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Richard J. Zeckhauser

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
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National Bureau of Economic Research (NBER) ( email )

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