Public Economics.

• Position: Bureau News

The NBER's Program on Public Economics met in Cambridge on April 10 and 11. Program Director James M. Poterba, NBER and MIT, organized the meeting. These papers were discussed:

Brian G. Knight, NBER and Brown University, "Parochial Interests and the Centralized Provision of Local Public Goods: Evidence from Congressional Voting on Transportation Projects" Discussants: Robert P. Inman, NBER and University of Pennsylvania

Stephen Coate, NBER and Cornell University; "Pareto Improving Campaign Finance Policy" Discussant: Marco Battagline, Princeton University

Jeffrey R. Brown, NBER and University of Illinois, and Amy Finkeistein, NBER and Harvard University, "Why is the Market for Private Long-Term Care Insurance So Small? The Roll of Pricing and Medicaid Crowd-Out" Discussant: David M. Cutler, NBER and Harvard University

Julie Berry Cullen, NBER and University of Michigan, and Roger H. Gordon, NBER and University of California, San Diego, "Taxes and Entrepreneurial Activity: Theory and Evidence for the U.S." (NBER Working Paper No. 9015) Discussant: Austan Goolsbee, NBER and University of Chicago

Jagadeesh Gokhale, Federal Reserve Bank of Cleveland; Laurence J. Kotlikoff, NBER and Boston University; and Alexi Sluchynsky, ESPlanner, "Does it Pay to Work?" Discussant: Robert A. Moffitt, NBER and Johns Hopkins University

Jonathan Gruber, NBER and MIT, "Pay or Pray: The Impact of Charitable Subsidies on Religious Participation" Discussant: Laurence Tannaccone, George Mason University

Local public goods financed from a national tax base provide concentrated benefits to recipient jurisdictions but dispersed costs, creating incentives for legislators to increase own-district spending but to restrain aggregate spending because of the associated tax costs. Theoretically, therefore, one would predict inefficiencies in the allocation of public goods, but there is little direct evidence that individual legislators respond to these incentives. Knight analyzes 1998 Congressional votes on transportation project funding. He shows that legislators respond to common pool incentives: the probability of supporting the projects increases with own-district spending and decreases with the tax burden associated with aggregate spending. Having found that legislators do respond to such incentives, Knight calculates the efficient level of public goods. The results suggest over-spending in the aggregate, especially in politically powerful districts, and a large...