The changing focus of Public Economics research, 1980-2010.

• Author: Chetty, Raj
• Position: Program Report

The NBER's Program on Public Economics (PE) has covered a very wide range of topics since the last program report six years ago. Rather than attempting to summarize the entire corpus of work that has been done by this program in the past few years, this report provides a bird's eye view of some of the major changes in the field from two perspectives. First, we quantify the main trends in public finance research at the NBER over the last thirty years, drawing on statistics from the database of NBER Working Papers. Second, we qualitatively summarize some of the emerging themes of recent research, both in terms of topics and methods.

A Statistical Perspective

The Public Economics Program began as the Business Taxation and Finance Program, which held its first meeting under the direction of David Bradford in December 1977. It was renamed the Taxation Program in 1980, to reflect the broader research interests of its affiliated researchers. To recognize the importance of expenditure as well as tax research, the program was renamed "Public Economics" in 1991, when James Poterba succeeded David Bradford as Program Director.

In the last two decades, the research conducted by the Public Economics Program has changed dramatically in volume, methodology, and topics. To broadly characterize some of the main trends, we downloaded all of the Working Papers in the Taxation Program in 1990 and in the Public Economics Program in 2000 and 2010, and classified them in various ways, which we summarize in Table 1, on page 3.

Table 1-Overview 1990 2000 2010 Total # of 398 665 1025 NBER Working Papers Total # of 55 153 183 Working Papers in Public Economics Share of 13.8% 23.0% 17.9% Working Papers in Public Economics Public Economics Working Papers by Methodology 1990 2000 2010 Empirical 29.1% 46.4% 52.5% Theory 38.2% 37.3% 30.1% Both 29.1% 11.8% 5.5% Other (survey 3.6% 4.6% 12.1% of the literature, research methodology, etc) Public Economics Working Papers by Topic 1990 2000 2010 Tax 63.6% 28.1% 15.3% Spending 5.5% 13.7% 20.8% Tax and 0.0% 7.8% 1.1% Spending Other 30.9% 50.3% 62.8% (Education, Regulation, etc) * Public Economics Working Papers on Taxation: Corporate vs. Individual 1990 2000 2010 Individual 47.1% 79.2% 88.9% Corporate 41.2% 13.2% 7.4% Both 11.8% 7.5% 3.7% * WPs on education factors and their productivity, such as teachers' value added and school choice mechanisms, are categorized under "other" while WPs on the financing of public education are categorized under "spending". The number of Public Economics (PE) papers per year has grown over time from 55 in 1990 to 183 in 2010. This appears to primarily reflect the growth in the number of Program members; over the same period, the total number of NBER affiliates has also increased; and the Public Economics share of NBER Working Papers has not shown any pronounced trend. However, the activities of the PE Program have branched out in part to related programs, including Children, the Economics of Education, Aging, Health Economics, and Health Care. The papers in these programs collectively account for over 40 percent of NBER Working Papers in 2010.

The typical methodology used in papers in the PE Program also has changed over time. In 1990, about 30 percent of papers listed in PE were purely empirical; by 2010 that number had grown to about 50 percent. Much of this growth is likely due to the greater availability of micro data that permit rigorous empirical analyses of questions that cannot be answered purely based on theory. We expect this growth to be even more rapid in the coming years, as researchers gain access to large administrative panel databases that permit even finer analysis.

The topics analyzed by public economists have changed as much as the methods used. Although public finance traditionally has been associated with government spending and taxation, our analysis of papers listed in the PE Program shows a marked trend over time toward a broader definition of what constitutes public finance. The share of papers listed in the PE Program that are not directly related to government spending or taxation rose from 30 percent in 1990 to over 60 percent in 2010. Common topics for these other papers include macroeconomics, regulation (environmental, housing, financial and so on), and papers on educational productivity and outcomes. Another metric of this broadening of focus is the increasing share of PE papers that are cross-listed in another field, from about 30 percent in 1990 to about 90 percent in 2010.

There also has been a marked shift in research from the analysis of taxation to the analysis of government expenditures. In 1990, less than 10 percent of PE papers on taxes or spending dealt exclusively with spending; in 2010 that number was about 55 percent. Part of this increase is related to the fact that the nature of government expenditure today is more amenable to economic analysis: economists have less to say about the best way to build bridges than about how to design social insurance programs. But another likely reason for the shift is that the varied nature of expenditure programs at the state and local level creates many important and interesting questions that researchers can investigate using modern quasi-experimental techniques.

There also have been important changes within the subfield of taxation. Most notably, research has focused increasingly on issues of individual taxation. The share of...