Essay Assignment

Econ

Your essay should be about 1000 words plus table or charts. Answer all questions as thoroughly as possible.

(1) What is the Tiebout hypothesis? What are the conditions, according to Tiebout, that lead to the most efficient public tax and spending outcomes? (Explain what is meant by "efficient")?

(2) If there are increasing returns to scale, communities may need to be too large to be truly homogenous. In this case, voting will be needed to determine public preferences. Explain.

(3) Consider two states that are considered to be polar opposites politically: Texas, a highly conservative, Republican state and Massachusetts, a consistently liberal and Democratic state. Research state budget priorities in each state. Compare these two states policies and budgets. Look at such factors as government spending per capita, taxes per capita, types of taxes levied, Medicaid coverage and health care coverage, median income, average wages, poverty rates, unemployment, personal income per capita, per-pupil education spending and other indicators that seem pertinent.

Data can be found through the Tax Policy Center (tax facts), the Census Bureau (annual report on poverty and health coverage), the Kaiser Family Foundation, the Bureau of Labor Statistics and the Bureau of Economic Analysis, forabettertexas.org, massbudget.org. You can also find state budget data on the state government websites. Do not use commercial (.com) sources - they are not reliable.

In answering the last question, putting the data in a comparative table would be most useful.