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Pressure Groups and Public Expenditures: The Flypaper Effect Reconsidered

William Dougan and Daphne A Kenyon

Economic Inquiry, 1988, vol. 26, issue 1, 159-70

Abstract: A model of government budgeting is developed in which lobbying by interest group s can divert the allocation of funds away from the one preferred by t he median voter. The model is applied to state and local governments to show that the "flypaper effect"-the tendency for lump-sum grants to increase public expenditures by more than an equivalent increase in the community's pretax income-can be explained without the customa ry assumption of voter fiscal illusion. Furthermore, the model predic ts variation in the extent of the flypaper effect among expenditure c ategories, as found in previous empirical studies. Copyright 1988 by Oxford University Press.

Date: 1988
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Handle: RePEc:oup:ecinqu:v:26:y:1988:i:1:p:159-70