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What do high bankruptcy rates in states like Tennessee and Utah tell us about the people that live in those places? Not much, according to a new 50-state bankruptcy study published in the latest issue of the Journal of Law and Economics.

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Featured in Wall Street Journal
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Red Ink in the Rearview Mirror: Local Fiscal Conditions and the Issuance of Traffic Tickets
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But a study in last month's Journal of Law and Economics concluded that, as many motorists have long suspected, "governments use traffic tickets as a means of generating revenue." The authors, Thomas Garrett of the St. Louis Fed and Gary Wagner of the University of Arkansas at Little Rock, studied 14 years of traffic-ticket data from 96 counties in North Carolina. They found that when local-government revenue declines, police issue more tickets in the following year. Officials at the North Carolina Association of Chiefs of Police didn't respond to requests for comment.

October 2003

Volume 46, Number 2
[The Journal of Law and Economics, vol. 46 (October 2003)]
© 2003 by The University of Chicago. All rights reserved.
0022-2186/2003/4602-0013$01.50
DOI: 10.1086/377114

Deadweight Costs and the Size of Government*

Gary S. Becker

Casey B. Mulligan

University of Chicago

We provide a model for analyzing effects of the tax system and spending programs on the determination of government spending and taxpayer welfare. An improvement in the efficiency of either taxes or spending would reduce political pressure for suppressing the growth of government and thereby increase total tax revenue and spending. We demonstrate the similarity of the political responses to revenue shocks, spending shocks, changes in tax efficiency, and changes in spending program efficiency. Empirical analysis of oil shocks, intergovernmental grants, and other autonomous changes in taxes or spending indicates that cause and effect is not only from spending to tax structures.

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  • We appreciate the comments of David Bradford, Austan Goolsbee, Bob Inman, Matt MacDonald, Milton Friedman, Jonathan Hamilton, Kevin M. Murphy, Richard Posner, Sherwin Rosen, Paul Rubin, Bob Topel, John Wallis, an anonymous referee, seminar participants at Stanford University, the National Bureau of Economic Research, the American Enterprise Institute, and the University of Chicago; and the research assistance of Song Han, Erica Landes, Pakshun Ng, and Irina Zavina. Mulligan gratefully acknowledges the Olin Foundation for its financial support under its Faculty Fellowship. Becker and Mulligan grateful acknowledge financial support from the Smith‐Richardson Foundation and George Stigler Center for the Study of the Economy and the State.

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