Search results

Neoclassical economists insist that government outlays for administration, defense, & internal security generate pure public goods that benefit all members of the community since they are completely nonrival in consumption; eg, the benefits to one citizen from a battleship in no way prevent others from having similar benefits. Hence, in studies of fiscal incidence, economists allocate all such presumed benefits at their total costs to households by some a priori formula. It is argued that the benefits from so-called pure public goods -- insofar as they exist -- are civilization itself. They are the overhead costs of the modern state, whose benefits are community life, incomes, etc. They do not enter into individual preference functions in the usual manner; allocating them as if they did involves double counting. A better procedure is to ask who pays for these public overhead expenditures, or who pays more in taxes than received in benefits such as transfer payments, food subsidies, schooling, etc. The evidence from studies of fiscal incidence in several countries indicates that the rich -- who also most enjoy the "blessings of civilization" -- generally pay for them. 4 Tables. AA.

We study how policymakers play public goods games, and how their behavior compares to the typical subjects we study, by conducting parallel experiments on college undergraduates and American state legislators. We find that the legislators play public goods games more cooperatively and more consistently than the undergraduates. Legislators are also less responsive to treatments that involve social elements but are more likely to respond to additional information that they receive. Further, legislators' fixed characteristics explain much of the variation in how legislators play the game. We discuss the implications of these findings for understanding how institutions affect the provision of public goods.