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Tiebout Question from My Graduate Public Choice Midterm

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Here's the most open-ended question I included on last week's Graduate Public Choice midterm:

Suppose four states engage in Tiebout competition for a population that looks exactly like the current population of the United States.  What are the main differences between populations of the four states likely to be?  What are the main policy differences between the four states likely to be?  Carefully defend your answer using empirical public opinion research.

I'd like to hear your answers.  Remember that relocation in the standard Tiebout model is costless.  I'll post my suggested answer in a follow-up post.

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COMMENTS (5 to date)
Cole writes:

It was a fun question to answer, but its always difficult to determine the best way to go about forming a response. I choose multiple broad answers over a single in depth answer, but regretted it a little after finishing the question.

I think in my short 'Donald Whitman' response I had all 4 states turning out exactly like the US is today since the democratic process would have selected for the most desired policies.

What I thought of after the test is that the evolution of online games might have been a good indicator of how a Tiebout model generally turn out. They are all pulling from mostly the same population (either western players or east asian players). There is near perfect mobility between most of the online worlds (depending on your country and language). Player's decisions on where to go is a mixture of instrumental, and expressive preferences. Online games tend to look pretty similar in that they imitate WoW the most successful online game. There are innovators in the field that look nothing like WoW and appeal to niche markets.

Based on that my best guess might be one of the states being successful with the largest population, and two of the other states trying to imitate the policies with slight optimizations. While the fourth state becomes some kind of mish-mash testing ground for different things.

Zac Gochenour writes:

This seemed like the most interesting question on the exam. I was wondering what folks wrote.

I think people would split up on ideology. You'd have a "very conservative," "conservative," "liberal," and "very liberal" state. Those states would go from lowest to highest amount of government spending, but I don't expect the very liberal state would have far more spending than the very conservative state. And actually, I expect spending would be very high for all states, since there would be little opposition to funding favored programs. Gridlock is our friend..

The very conservative state would be relatively high-income and high-education, but just barely, and it would be very high-religiosity. We know that higher IQ is correlated with preferring more extreme policies. It would have the least amount of business regulation and be the hardest on crime. It would be majority white by a large margin. They would oppose immigration, but not as much as the conservative state. Abortion would be illegal. It would have more men than women.

The very liberal state would be almost as high-income and high-education as the very conservative state. They would be racially diverse. Gay marriage would be legal. They would be very pro-immigration. They'd have relatively low religiosity. They'd probably have the best universities, but be lacking in corporations. Marijuana would be legal.

The conservative state would probably have policies similar to Colorado and the liberal state would be like New York. The liberal state would have the highest proportion of non-whites of any state. Both states would be poorer and less educated than their extreme counterparts. The conservative state would be very anti-immigration, the liberal state less so.

Seth writes:

I'd say we have something close to four states already, though there were costs to get there. Without costs, you might see four states emerge that look very similar to what we see in:

1) Urban areas - (liberal, high tax, big gov)
2) Suburbs - (moderate to conservative, lower tax, smaller gov)
3) Rural areas - (conservative, low tax, small gov)
4) Universities/mental health facilities - no other description needed here.

Henry writes:

A key thing to consider when comparing Tiebout to democracy is that there is that "expressive voting" is much more expensive in Tiebout world. "Limousine liberals" would likely be much less common. Hence, we probably wouldn't see an ideological breakdown as would be predicted by voting patterns.

There would be an actual "Jesusland", where conservative Christianity is the de facto state religion or even the de jure one. Abortion is illegal possibly with very strict exceptions, there is no recognition of same-sex couples to speak of, school prayer is mandatory, etc. Then there would be a "Hippieland", which is pretty much the polar opposite of "Jesusland". The other states would be moderate variants of each.

Economically, the states don't vary as much as they do socially. A highly redistributionist state would be hard to sustain, because you wouldn't have that many people willing to be significant net contributors and it would get flooded by people likely to be net benefactors. Hence, while the size of goverment would vary across the states, it would mostly be in relatively non-redistributionist ways (e.g. national parks, public schooling).

Potter writes:

My initial thoughts revolved around politics. But the more I thought about it, the more I thought that race would be more important than politics. I think you would see a very White state, and a very Hispanic state. The other two states would form from what remained.

I think the Whiteness of the White state would cause it to be socially conservative but economically more liberal then one would expect. [Think about big-government Republicans like Mike Huckabee]. I would expect the White state to be very anti-foreigner, and it would have strong immigration & trade restrictions.

The Hispanic state would be more interesting. It would be surprisingly conservative. A large block of religious Catholics and recent Cuban immigrants would form the backbone of the conservative wing of the Hispanic state. Remember, George W. Bush polled highly among Hispanic voters despite having his party associated with an anti-immigration platform. Without association of conservatism with anti-immigration politics, conservative Hispanics would be free to vote their true political preferences causing the Hispanic state to be split roughly 50-50 liberal to conservative. The politics of the Hispanic state would be roughly analogous to the current USA.

I think you have a second white state, would be made up of white people who think the first white state is too white for them. This state would be more liberal, think California or New York.

Finally, I would see a misfit state emerging. The final state would be the hardest to place politically. It could be a libertarian state, or it could be socialist state. It would be made up of people who do not identify strongly with people of their race, but do identify with people who share their political identity.

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