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The US Department of Agriculture has issued dietary recommendations for more than a century, and during that period the health, longevity, and nutritional status of Americans improved markedly. Before the release of the first Dietary Guidelines for Americans (DGA) in 1980, the recommendations were based on rigorous science and simply offered general information on choosing foods and beverages to prevent deficiencies and maintain health. Yet with each subsequent version, the DGA became increasingly complex, prescriptive, and nutrient-focused (as opposed to food-based) despite an ever-increasing uncertainty and lack of credibility in the supporting evidence. This review examines the historical record of the development of the DGA and demonstrates that current recommendations were based on biased, implausible anecdotal evidence and that rigorous contrary research and the diversity of expert opinions on diet–health relationships were ignored. It concludes with an examination of the unintended negative public health consequences of founding policy on uncertain science.

Little is known about why some states enact more laws addressing obesity than others. This study examines what factors influence the enactment of laws using a data set of the 90 laws enacted over 2001–2010 in 30 states. Odds of enacting laws are mostly unrelated to state variation in education, population density, income, political party structure and obesity prevalence. Factors that significantly influence number of laws include education, black and Hispanic percentages of population and age. Examination of categories of laws indicates cases where political party structure and obesity prevalence influence cumulative numbers of laws, but often in conflicting directions. The negative but weak (p = 0.054) effect of obesity prevalence on the cumulative number of all laws also suggests that state governments that enact most laws are those with relatively low obesity prevalence. This study indicates opportunities for future research to examine which laws addressing obesity are most effective among the diverse ...

Although various studies have concluded that public sector unions raise wages and employment for members, very little research has examined whether public sector unionism influences the overall size of state and local government. The relationship is examined within a pooled data set on all states over selected years during 2003–2010. Wide variation in union membership trends across states provides a rich data set to examine. Empirical results indicate that 10 percentage point increases in public union membership raise several measures of government size within a range of 2.25–4.25%. A similar increase in union membership is estimated to raise annual real wages by $1603 for the average government worker, which amounts to a rise of 3.48%.

Many countries are either introducing or proposing to introduce taxes on fat in foods as an attempt to curb growing rates of obesity. It is argued here that such taxes would be uneconomic, ineffective, discriminate racially, encourage rent-seeking behaviour and result in various adverse unintended consequences.

Although tobacco-control spending is considered an essential component of comprehensive programmes aimed at lowering smoking, substantial variation exists across states. This article examines if variation is systematically related to cross-state differences in smoking prevalence, holding other factors constant that are expected to influence spending. An econometric model is estimated which considers effects of tobacco-settlement revenues, income, unemployment, political party of the governor, state debt and smoking prevalence on tobacco-control spending in all states during 2000–2007. Estimations control for the possibility that spending and smoking prevalence are co-determined to clearly determine the causal link from prevalence to spending. Spending variation is determined to be inconsistent with a ‘rational needs’ strategy whereby states with higher prevalence choose more funding than states with lower prevalence. This empirical result is consistent with recent studies indicating that spending on tobac...

While Centers for Disease Control and Prevention believe that most state governments under-fund tobacco-control programs, little is known about why large variation in spending exists between state governments. This study explores reasons for spending variation through an econometric model of per capita spending on tobacco-control programs that explores the effects of smoking prevalence while holding constant tobacco settlement funds, state budget deficits, and other factors that might also be expected to influence spending variation. Empirical evidence indicates no support for the hypothesis that states with high smoking prevalence spend more on tobacco-control than other states. This finding may be quite surprising to those working in areas of public health and clearly leads to many important policy questions regarding why the data indicate that funding does not appear to bear any relation to perceived public health problems as would be predicted if policymakers were following a ‘rational needs’ approach...

Although laws restricting smoking in restaurants are becoming commonplace, most research has focused on either the health benefits that laws may provide customers and workers or whether laws harm owners. But while smoking laws may directly alter profits, owners may alter prices, output, and other business attributes in ways that affect the welfare of customers and workers. This study examines whether restaurant and bar owners alter prices, entertainment, hours of operation and other business attributes in response to local smoking laws. Substantial support is found for these attribute changes in the Wisconsin hospitality industry. One implication is that an overall assessment of the desirability of smoking laws should consider economic effects imposed on owners, customers and workers, as well as health benefits that follow laws.

Fears about insufficient public education spending are often expressed in the area of higher education, whereby it is often argued that increases in expenditures on crime-related programs crowd out expenditures on higher education. This view suggests that higher education and crime-related programs directly compete for government expenditures so that what one program gains the other must lose as in a zero-sum game. A competing hypothesis is that higher crime-related spending leads to higher taxes or public debt issuance or to lower spending on programs other than higher education. We estimate a three-equation model of spending on crime-related programs, spending on higher education, and the crime rate from which we directly test whether spending on crime-related programs and higher education influence each other. Our empirical analysis provides weak evidence that crime-related programs have crowded out spending on higher education.

This paper tests the hypothesis that monopoly power of school districts allows bureaucratic expansion and fosters poor academic performance in the public school system in California. Evidence indicates that monopoly power is positively associated with employment of administrators and teachers, and therefore supports the bureaucratic expansion hypothesis. While numbers of teachers do not influence performance measures, numbers of administrators are shown to positively affect performance - results that suggest that too many teachers, but too few administrators, are employed. While bureaucracy theory may explain the resource misallocation, other reasons might include rising public pressures on hiring teachers over administrators, spending equalization policies, and the weak California economy in the period under investigation.

This paper examines school structure, spending, and performance relationships in California and finds considerable support for the public exchange model that predicts that greater competition improves student performance. The evidence indicates that, despite claims to the contrary by many advocates of public education, higher education spending does not raise student achievement. Education spending is also shown to be highest in those counties exhibiting highest monopoly power as measured by the Herfindahl index. Strong support is also shown for the public exchange view that higher market power leads to lower student achievement in the fourth and eighth grades, but little support is shown for the tenth grade.

As state and local governments have devoted a rising share of their resources to crime-related programmes, concerns have arisen that spending on other programmes such as education will fall. Coupled with growing public concerns over performance of the public education system, and expectations that prison populations will rise as states pass and enforce more stringent sentencing laws, it is not surprising that some view the expansion of crime-related programmes as troublesome. One hypothesis is that education and crime-related programmes directly compete for government expenditures so that what one programme gains the other must lose as in a fixed-pie situation. A competing hypothesis is that spending on these two public programmes are unrelated and therefore higher crime-related spending may also lead to higher taxes or public debt issuance, or to reduction in spending on programmes other than education. We estimate a three equation model of spending on crime-related programmes, spending on education, and...

Our fiscal process divorces payment from use. Whilethis divorce has led many analysts of government to separatediscussion of public expenditures from their funding, or usefrom payment, we argue that this approach does not provide auseful framework for understanding our public choices. We arguethat it is the divorce of payment from use that underlies ourfiscal process and, rather than simply “dismiss out of hand”the study of our fiscal process, it should be an integral partof our study of government. Our framework for describing fiscalinstitutions indicates how our fiscal process invites rent-seekingbecause it allows beneficiaries of programs to avoid paymentfor those programs. We conclude by examining how various changesin the fiscal process may influence our public choices.

Growth in special district governments is examined as a reason behind public sector expansion in the United States. A theoretical model is developed of the optimal mix of government suppliers which predicts how special district governments affect the overall provision of government policies. The hypothesis that expansion of special district governments leads to expansion of the public sector is expirically examined over two time periods.

Taxpayers may reveal their assessment of policy through exercise of available voice and exit options within the fiscal constitution. The voice option is utilized when taxpayers remain within political boundaries and attempt to communicate their assessments regarding the institutionalstatus quo to policymakers. Exercise of the exit option occurs when taxpayers signal discontent with thestatus quo by purchasing from another government supplier. This paper discusses and contrasts theconventional andconstitutional economics views toward fiscal design and argues that a major difference exists regarding the issue of who should be awarded primary responsibility in the policy process: taxpayers or policymakers? Because voice and exit options determine the relative leverage of taxpayers and policymakers in the policy process, it is argued that the design of voice and exit options in the fiscal constitution exerts a predictable influence on policy. The paper concludes that one's view toward the design of voice and exit options is affected by one's perception of the appropriate size of government. Competitive fiscal structures tend to be advocated by those who believe that government tends to overexpand and monopolistic structures tend to be advocated by those who believe that government tends to be too small.

Two implications from this research are noted. First, from a researcher's viewpoint, our research suggests the importance of age, wealth, tax rates, and marital status as determinants of political contributions by top U.S. wealth-holders. Therefore, these factors should be included in aggregated models that attempt to analyze the relations between such variables as voting, campaign expenditures and the outcomes of elections. Second, from politicians' viewpoints, this research suggests that individual economic variables such as marginal tax rates and wealth are major determinants of individual decisions to contribute to politicians. Assuming that such contributions reflect “votes,” this research suggests the relative importance of focusing campaign promises on economic variables — a strategy that “low tax” politicians like Ronald Reagan and George Bush may keenly be aware of.

This study examines the issue of whether or not state and federal job safety agencies provide the same levels of public output. Tests are conducted on the hypothesis that state takeover of regulation from the federal program serves to reduce the costs of firms. These costs are comprised of two components: the penalties for noncompliance and the uncertainty costs of regulation. The public policy implication that is drawn from these tests is that it matters to firms which government unit regulates them.

It is worth repeating that causality testing is a very complex task. The diversity of views on interpreting the definition of causality and on the methods for testing causality highlight this issue. In our study, we cite an excellent article which provides a detailed critique of various problems associated with causality tests (see Conway, et al., 1984). It would appear that Chowdhury's comment draws very strong conclusions and fails to consider some of the complex theoretical issues regarding causality tests as well as important data problems pertaining to state and local governments. Moreover, we find it somewhat curious that, given the strong similarities in our two studies, Chowdhury prefers to dwell on the mechanics of an alternative technique rather than concentrate on the fact that his alternative technique yields supporting results to our 1987 paper on the tax-spend hypothesis.

THE EMPIRICAL RELIABILITY OF MONETARY AGGREGATES AS INDICATORS: 1983-1987 I. INTRODUCTION It is widely believed that monetary aggregates have failed to predict real growth and inflation over 1983-87. This presumed breakdown of previously reliable linkages between money growth and future output and inflation has been variously attributed (by the present authors, among others) to changes in money demand induced by regulatory change and to parameter instability due to structural change. This paper observes that these disputations may be moot, since the traditional definition of money (currency plus demand deposits) shows no evidence of structural change, and yields nearly as low or lower prrediction root mean square errors for both real GNP growth and inflation over 1983-87Q2 than the standard errors of estimate obtained for 1961-82. Part of the so-called "breakdown" in the monetary indicators -- especially in the case of M1 -- may be explained by the fact that current M1 (or M1B) is defined much like the "old" M2, and current M1A is defined much like "old" M1. Thus, it is probably not too surprising that use of M1 as a monetary indicator does not yield consistent predictive power over a period of time in which it experienced redefinition. If there is a mystery in the 1980, it is not why M1A has done so well but why economists abandoned it for broader M1B (currency, demand deposits and other checkable deposits or OCDs). (1) With the nationwide introduction of negotiable order of withdrawal (NOW) accounts on January 1, 1981, M1A fell by 5.5 percent (a 22.1 percent per annum rate) in the first quarter, while M1B rose at a 3.1 percent per annum rate. At the time, the Federal Reserve System expected M1A demand to shift down as households chose to substitute from demand deposits to the newly available (in most states) OCDs. Accordingly, the sharp drop in M1A was expected to be reflected in a once-for-all upward shift in its velocity with no effect on nominal income or its components. (2) However, consistent with the shock-absorber view of money demand, even if the long-run demand for M1A was unchanged, a sharp decrease in its quantity would induce an equal contemporaneous increase in its velocity. (3) Contrary to the Federal Reserve's expectation, the shock absorber view would thus predict that the actual value of velocity would temporarily exceed its long-run equilibrium level so that nominal income would tend to fall or grow less rapidly as M1A velocity adjusted to the money shock. Figure 1 shows that, compared to a relatively small drop in M1 velocity, the contemporaneous velocity of M1A moved sharply in the first quarter of 1984. (4) The shock-absorber hypothesis suggests that contemporaneous velocity movements would be dominated by money supply shocks and thus attributes the different movements of M1A and M1 velocity to differences in magnitude and signs of the shocks in M1A and M1. What Milton Friedman [1983] calls "leading velocity" is a crude way of allowing nominal GNP to adjust to past money shocks. Panels a and b in Figure 2 illustrate leading velocity for lags between money and GNP of one and four quarters respectively. The longer the adjustment lag, the more leading velocity becomes a smooth, trend-dominated series for M1A. (5) However, M1B continues to display a sizeable break from its historical pattern. This observation suggests that the recent behavior of the economy may be consistent with that indicated by movements in M1A, and that the choice to switch to M1B as the standard definition of the "narrow" money supply was unfortunate and a major source of recent forecasting failure. (6) This paper runs a race among M1A, M1, and M2 by comparing out-of-sample forecasting performance and tests of structural stability. (7) An explanation is also offered for the observed departure of M1 velocity from its historical trend. Based on a large battery of conventional tests, the results are remarkably favorable to the continued reliability of M1A as a useful indicator of future economic performance and for its relevance as a tool in monetary policy. …

The primary finding of this paper is that the off-budget activity of the public sector is significantly and positively related to on-budget activity by state and local governments. We suggest the following policy implications. One, there appears to be evidence that the composition of total government activity is related to the relative costs of the alternative avenues of providing governmental activity. Future research into determining the nature of the relative cost differences may be one useful means of understanding both the composition of government activity as well as its total size. Two, our ability to measure the “true” size of public sector participation in the economy must go well beyond our attempt here. While we have presented information on one of the important “hidden” elements of public sector participation, we are still a long way from effectively incorporating similar data on legislation, regulations and so forth into our empirical tests. Further research into these issues is clearly warranted.

In Marlow (1982), i estimated a model of interest rate determination suggesting that interstate banking will, ceteris pa:ibus, decrease competition in the n~ongage market if it lowers the number of competing firms and increases deposit concentration levels. I identified statistically significant relations between mortgage rates and the n u m ~ r of firms, concentration ratios, a unit banking dummy, and the number of commet~c:al bank offices divided by the n~ambers of savings banks and savings and loan assc~.~ations. Timothy Curry and John Rose argue that despite these"impressive" results, my empirical work involving the use of concentration ratios is flawed in two respect:~. In this Reply, ! argue that Curry and Rose suffer from the same " f law" in one case a~ld introduce an arbitrary assumption in the other case. Curry and Rose argue that it is incorrect not to consolidate bank subsidiaries of multibank holding companies (MBHC) when computing bank content, ation data. Tire issue is whether or not MBHCs operate as integrated, single entities similar to branches of banks. Curry and Rose argue m the affirmative, based on survey evidence in Rose (1978); Golembe (1978); and Whalen (1981). Two points are in order. First, Rose (1978, p. 71) mentions that " . . . studies of the cperating policies of parent companies typically involve ad hoc survey work, the results of which often do not lend themselves ~o statistical analysis." Nonetheless, he argues that survey analysis suggests that MBHCs have witnessed an increasing degree of centralization over time. Second, there exist empirical studies on the issue that are not mentioned in Curry and Rose. t The studies of Ware (1975); Light (1975); Rhoades (1975); Goldberg (1976); Hoffman (1976); Whitehead a~d King (1976); and Rhoades (1977) find no evidence that MBHCs h lye exerted systematic effects on market competition. Evidehce of minor effects on competition, via small scale entry, is foun¢l in Heggestad and Rhoades (1976A) and Schweitzer and Greene (1977). It should be noted that small scale entry will not typically alter three-firm concentration ratios, l~trge scale entry effects on competition are found in Heggestad and Rhoades (1976B). Which type of evidence are we to believe? The survey evidence ~uggests that we should consolidate and the empirical evidence suggests the opposite. While I prefer empirical over survey evidence, the issue remains unsettled. However, note that ~he reestimation of my model in Curry and Rose sheds some light on this point. Reestina

While there exists an empirical literature on the market structure-performance relationship in banking, the possibility of threshold effects in bank entry has not been addressed. Two possible concerns relating to threshold effects are presented. One is whether or not increased market entry exerts differential effects on performance as related to current levels of competition. For example, does an X percent increase in entry exert a larger effect on performance in markets with a relatively few number of firms per capita versus markets with a larger number? The second concern is whether or not it makes a difference on performance if entry is de novo or by branches. For example, do de novo or branch entry exhibit different thresholds? Regression analysis relates market performance and possible threshold effects. Performance is gauged by the effective interest rate charged on conventional mortgages by banks, savings and loans, and mutual banks. A crosssectional sample of 39 cities is chosen so that they are located in states without unit banking laws. This choice is made for two reasons. One is to allow for both de novo and branch entry. The other is to minimize the impact of entry on performance by bank holding companies (BHC's). It is widely accepted that the growth of BHC's has been greatest in unit banking states. The basic equation uses the interest rate by city in 1975 as the dependent variable. The independent variables are population growth, term-to-maturity, loan-to-value, percentage growth in entry, and a dummy variable to measure for threshold effects. The dummy variable is set up so as to separate out cases of banks per capita above certain hypothesized threshold values. Threshold points are chosen by first measuring the average number of banks per capita. Subtracting one, one and one-half, two and two and one-half standard deviations of this variable from this average number of banks per capita Variable forms four possible threshold points. Also, by adding these multiples of the standard deviation to the average banks per capita variable forms four possible saturation points. The following results are obtained. The nonentry variables are found to exert the expected and significant effects on performance. While both de novo and branch entry variables exert significant and competitive effects on performance, the threshold and saturation dummies do not exert significant impacts. That is, both types of entry are found to exert positive effects on performance which are undifferentiated by present levels of competition. The implication is that both types of entry offer means of improving performance in these 39 markets. L t n