| Sumario: | Responses to questions given to a random sample of Michigan households are used to estimate public spending demand functions. While income and price elasticities are similar to those obtained from aggregate data, positive income elasticities appear to arise because public services are distributed in a prorich manner. A relatively small variance in spending demands among urban and suburban communities in metropolitan areas with substantial public service variety suggests that the Tiebout mechanism works. This interpretation is supported by the fact that actual spending conforms substantially to desired levels in urban areas, but less so in rural areas with little public sector choice. In this paper we use data from a micro survey on demands for public spending to test these hypotheses. The survey, taken by the University of Michigan's Institute for Social Research (ISR), includes 2,001 households in the state of Michigan, sampled randomly immediately after Michigan's 1978 tax-limitation vote. Most questions dealt with why voters voted for or against various tax-limitation amendments, but the survey was also designed to treat these more basic issues of public expenditure demand.[1] The strength of a survey such as this is that a relatively complete array of fiscal, demographic, voting, and attitudinal information is available for a random sample of the state population. These data as well as some direct questions about public sector demand allow one to test the underlying hypotheses. The weakness is that like all other survey data respondents do not have to act on the basis of their answers, and the results are therefore hypothetical.[2].
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