Demographic characteristics and the public bundle.

Abstract

"This paper explores the relationship between the demographic characteristics of a community and the quantities of goods and services provided by its government, what we label the ¿public bundle'. We consider three models of 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. We find that the estimated effects of demographic characteristics in the state equations are strikingly different from the estimated effects in the county equations. One possible explanation for these differences is that a jurisdiction's spending is affected differently by its own demographic characteristics and by the characteristics of the surrounding area. We conclude that community preference is important in explaining local spending, but that its determination is more complex than simple theory suggests."