Diversity and Public Expenditures
Last updated: Wednesday - April 9, 2008
"I look forward to seeing this. It is counter to what needs to happen, IMHO."
A G Rud Jr of Purdue

Rud was referring to a comment in an earlier posting: "A new study just published by a couple of political scientists demonstrates that nations with ethnic and racial diversity spend less on public services than homogeneous nations. More on this later."

The research I was referring to is an impressive line of inquiry being pursued by Alberto Alesina and Edward Glaeser at Harvard. A key reference is

http://post.economics.harvard.edu/hier/2001papers/2001list.html

which can be downloaded for free.

Essentially, Alesina and Glaeser have shown that across nations and even states in the US that the more racially heterogeneous units receive lesser amounts of public expenditures, even after controlling for differences in wealth of the nations. Here are the last two sentences from the abstract of one of their papers:

"Racial animosity in the US makes redistribution to the poor, who are disproportionately black, unappealing to many voters. American political institutions limited the growth of a socialist party, and more generally limited the political power of the poor."

I make a great deal in "Fertilizers, Pills, and Magnetic Strips" of the underlying causal influence of racial animosity and fear on the part of the politically powerful sector of the population.

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