Do People Vote with Their Feet? An Empirical Test of Tiebout's Mechanism | Zendy

H. Spencer Banzhaf | Zendy; Randall Walsh | Zendy

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Do People Vote with Their Feet? An Empirical Test of Tiebout's Mechanism

Author(s) -

H. Spencer Banzhaf,

Randall Walsh

Publication year - 2008

Publication title -

american economic review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 16.936

H-Index - 297

eISSN - 1944-7981

pISSN - 0002-8282

DOI - 10.1257/aer.98.3.843

Subject(s) - tiebout model , public good , economics , context (archaeology) , test (biology) , premise , microeconomics , public finance , empirical evidence , quality (philosophy) , public economics , empirical research , population , macroeconomics , sociology , ecology , biology , paleontology , linguistics , philosophy , demography , epistemology

Charles Tiebout's suggestion that people "vote with their feet" for communities with optimal bundles of taxes and public goods has played a central role in local public finance for over 50 years. Using a locational equilibrium model, we derive formal tests of his premise. The model predicts increased population density in neighborhoods experiencing exogenous improvements in public goods and, for large improvements, increased relative mean incomes. We test these hypotheses in the context of changing air quality. Our results provide strong empirical support for the notion that households "vote with their feet" for environmental quality.

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