Larry DeBoer

Economies of scale and input substitution in public libraries

Abstract A translog cost function is applied to 1988 data for 194 Indiana public libraries to measure economies of scale and input substitution elasticities. Book circulation measures library output and costs include noncapital expenditures. Scale economies exist for libraries with circulations up to 55,000 per year. Larger libraries exhibit constant returns to scale. Labor, books, and supplies/services are all substitutes with inelastic own-price and cross-price elasticities.

Bias in OMB's economic forecasts and budget proposals

The Office of Management and Budget (OMB) annually submits the Presidents budget for the U.S. government to the Congress. The economic forecasts and revenue and outlay proposals contained in the budget have been criticized as biased, especially during the 1980s. Tests for bias in one year ahead proposals for the 1963–89 period show no bias in economic forecasts and revenue estimates, but substantial bias in outlay proposals. Most outlay proposals are consistently less than actual outcomes, accounting for underprediction of the Federal deficit. OMB outlay proposals appear to be influenced by politics. Republican administrations show more significant proposal biases, with defense proposals higher and domestic outlay proposals lower than outcomes.The Office of Management and Budget consistently understates the deficits by resorting to the most optimistic economic assumptions it can credibly — and now sometimes even incredibly — employ.— Senator James SasserWall Street Journal, 25 January 1990

The Demand for and Supply of Military Labor

Since the advent of the All Volunteer Force (AVF) in 1973, military manpower research has focused on the determinants of the supply of military labor, especially on the impact of various forms of military compensation and the business cycle on enlistments [6; 12]. Less work has been done on the demand side of the military labor market, which has been treated implicitly as exogenous. If the Department of Defense (DOD) set personnel levels and enlistment goals based on purely military considerations, ignoring demand would make sense. But such is not the case: the taxpaying public and their representatives in Congress set personnel strength levels (albeit with input from the DOD), and their demand for military labor is likely to be influenced by income and cost considerations.

Community Choice Between Volunteer and Professional Fire Departments

This article presents an economic model for community choice between volunteer and professional fire protection services. Using data from the Indiana State Fire Marshal and the 1991 U.S. census, regression techniques were used to estimate the share of county population served by volunteer fire protection from variables measuring community demands for fire protection and relative costs of volunteer and professional departments. The results provide evidence that professional departments are cost-effective at high levels of fire protection and volunteer departments are cost-effective at low levels of fire protection. Per capita income, population density, education, property value, percentage of renters, farm receipts, and the percentage of commuters were found to be significant determinants of fire protection choice.

State and Local Government Utility Maximization According to Garp

Many recent state and local expenditure determinant studies have modeled public choice as the result of the constrained maximization of a utility function. This model has been tested using particular utility functions, but rejection of constrained maximization under such a test may imply only the inconsistency of the data with the chosen functional form. A nonparametric test, based on the generalized axiom of revealed preference (GARP), exists that shows whether a price-quantity data set may be rationalized by the constrained maximization of any utility function. This test is applied to various state and local government cross-section and time series data sets. It appears that the constrained maximization model can explain the bulk of public price-quantity observations in each data set tested. The results tentatively suggest that time series data are more likely to be consistent with utility maximization than are cross-section data.

Jackpot size and lotto sales: Evidence from Ohio, 1986–1987

The impact of lotto jackpot size on sales is estimated using regression analysis on Ohio data for 1986–87. Sales accelerate as jackpots increase. This helps explain high variability in lottery net revenue, and implies that changes in game structure that lead to larger jackpots will increase net revenue. It was also found that Saturday drawings are more popular than Wednesday drawings, that sales increase less than proportionately when more days are available to purchase tickets, and that larger jackpots continue to increase sales even after they have been awarded.

Resident Age and Housing Search: Evidence From Hedonic Residuals

Elderly people are likely to have higher housing market search costs than the population as a whole. Costly search increases the price paid by older persons for housing relative to its characteristics, and also increases the range of prices paid. To test this latter hypothesis, hedonic equations are estimated for six SMSAs using data from the Annual Housing Survey. The residuals of these hedonics represent variation in prices not explained by housing characteristics. It is found that the absolute variation of these residuals is positively related to resident age, which is evidence supporting the hypothesis that the elderly pay higher housing prices due to higher search costs. A possible policy response to this problem is to create a housing market information service directed at reducing the search costs of the elderly.

The structure of defense production in the United States, 1929‐∗

A translog cost model is applied to three military inputs: labor, equipment, and structures for the United States, 1929–87. The results show labor and equipment to be substitutes, with a decreasing elasticity of substitution since 1929, perhaps due to decreasing flexibility in defense technology. Since 1964 defense quantity increases have favored the stockpiling of equipment. Both the Korean and Vietnam wars caused a relative increase in the use of labor. The end of the draft of 1973 shifted input use away from labor, towards equipment.

A Note On Congressional Military Pay Setting

To maintain an all-volunteer force, military pay levels must be high enough to attract a sufficient quantity and quality of volunteers. Congresss commitment to maintaining such pay levels has been questioned. In this article we test a model of congressional military pay setting for the all-volunteer period, 1974- 1987 and find that Congress responds to decreases in the percentage of high-quality enlistments by increasing real military pay. Pay is not adjusted to completely offset expected inflation, however.

Rural Property Tax Delinquency and Recession in Agriculture

Agricultural recession causes the property tax delinquency rate to increase in rural counties. The annual volume of unpaid property taxes as a percent of the tax levy is regressed on the farm debt-asset ratio, farm and nonfarm income, and the ratio of the interest rate to the delinquency penalty rate. Data from thirteen agriculturally-dependent Indiana counties are used. Increases in the debt-asset ratio and decreases in farm and nonfarm income are found to increase delinquency. Delinquency is also used as a source of capital when interest rates exceed the penalty rate.