Empirical tests of basic formulations of a median voter approach versus a political
support maximization approach to state government decision making are conducted
in this article. Refutable empirical implications are rigorously developed from the
theoretical models and are tested with data on welfare programs for which there is
both a state and a federal component. The programs analyzed include both an
in-kind program (Medicaid) and a cash transfer program (AFDC). Efficient esti mates are produced by using a systemwide approach in the estimation. The results
favor the use of political support models that include altruistic motives on the part
of taxpayers. Empirical estimates indicate that a state's welfare generosity per poor
person falls with the total number of poor, rises with the total number of nonpoor,
and rises with the strength of a relevant producer group.
Get full access to this article
View all access options for this article.
References
1.
Avery, R.B.1977. Error components and seemingly unrelated regressions . Econometrica45:199-209.
2.
Baltagi, B.H.1980. On seemingly unrelated regressions with error components . Econometrica48:1547-51.
3.
Becker, G.S.1983. A theory of competition among pressure groups for political influence. Quarterly Journal of Economics98:371-400.
4.
Bentley, A.F.1908. The process of government: A study of social pressures . Chicago: University of Chicago Press.
5.
Black, D.1948. On the rationale of group decision-making. Journal of Political Economy56:23-34.
6.
Bowen, H.R.1943. The interpretation of voting in the allocation of economic resources. Quarterly Journal of Economics58:27-48.
7.
Cone, K.R., and D. Dranove.1986. Why did states enact hospital rate-setting laws? Journal of Law and Economics29:287-302.
8.
Craig, S.G., and R.P. Inman.1986. Education, welfare and the "new" federalism: State budgeting in a federalist public economy. In Studies in state and local public finance, edited by Harvey S. Rosen.Chicago: University of Chicago Press.
9.
Cromwell, J., S. Hurdle, and R. Schurman.1987. Defederalizing Medicaid: Fair to the poor, fair to taxpayers? Journal of Health Polctics, Policy and Law12:1-34.
10.
Gardner, B.L.1987. Causes of U.S. farm commodity programs. Journal of Political Economy95:290-310.
11.
Gramlich, E.M.1982. An econometric examination of the new federalism . Brookings Papers on Economic Activcty2:327-60.
12.
Grannemann, T.W.1979. The demand for publicly financed medical care: The role of interdependent preferences. Ph.D. diss., Northwestern University.
13.
—. 1980. Reforming national health programs for the poor . In National health insurance: What now, what later, what never?, edited by Mark V. Pauly.Washington, DC: American Enterprise Institute for Public Policy Research.
14.
Health Care Financing Administration.Various years. The Medicare and Medicaid data book. Baltimore : Health Care Financing Administration.
15.
Holahan, J.F., and J.W. Cohen.1986. Medicaid: The trade-off between cost containment and access to care. Washington, DC: Urban Institute.
16.
Hulten, C.R., and J. McCallum.1982. A model of state determination of AFDC benefits. Washington, DC: Urban Institute.
17.
Husted, T.A.1989. Nonmonotonic demand for income redistribution benefits: The case of AFDC. Southern Economic Journal55:710-27.
18.
Inman, R.P.1978. Testing political economy's "as if" proposition: Is the median income voter really decisive? Public Choice3(4): 45-65.
19.
McDevitt, R., W. Buczko, J. Mauskopf, J. Rodgers, and A. Dobson.1985. Medicaid program characteristics: Effects on health care expenditures and utilization. Health Care Financing Review7:1-29.
20.
Moffitt, R.A.1984. The effects of grants-in-aid on state and local expenditures: The case of AFDC. Journal of Public Economics23:279-305.
21.
Orr, L.L.1976. Income transfers as a public good: An application to AFDC .American Economic Review66:359-71.
22.
Pauly, M.V.1971. Medical care at public expense: A study in applied welfare economics. New York: Praeger .
23.
Peltzman, S.1976. Toward a more general theory of regulation. Journal of Law and Economics19:211-40.
24.
Plotnick, R.D.1986. An interest group model of direct income redistribution . Review of Economics and Statistics68:594-602.
25.
Plott, C.R.1967. A notion of equilibrium and its possibility under majority rule. American Economic Review57:787-806.
26.
Prucha, I.R.1984. On the asymptotic efficiency of feasible Aitken estimators for seemingly unrelated regression models with error components . Econometrica52:203-7.
27.
Roberts, R.D.1984. Apositive model of private charity and public transfers . Journal of Political Economy92:136-48.
28.
—. 1985. Recipient preferences and the design of government transfer programs. Journal of Law and Economics28:27-54.
29.
Social Security Administration.1988. Social Security bulletin: Annual statistical supplement, 1988. Washington, DC: Government Printing Office .
30.
Stigler, G.J.1971. The theory of economic regulation. Bell Journal of Economics and Management Science2:3-21.
31.
Theil, H.1971. Principles of econometrics. New York : Wiley.
32.
U.S. Bureau of the Census.1988. County statistics file 3. Computer file. Washington, DC : U.S. Department of Commerce, Bureau of the Census (producer). Ann Arbor, MI: Inter-University Consortium for Political and Social Research, 1989 (distributor).
