midterm public econ

Zelman v. Simmons-Harris

was a case decided by the United States Supreme Court that tested the allowance of school vouchers in relation to the First Amendment's Establishment Clause. it doesn't violate

median voter theorem

"a majority rule voting system will select the outcome most preferred by the median voter".[1] The median voter theorem makes two key assumptions. First, the theorem assumes that voters can place all election alternatives along a one-dimensional political spectrum.[2] It seems plausible that voters could do this if they can clearly place political candidates on a left-to-right continuum, but this is often not the case as each party will have its own policy on each of many different issues. Similarly, in the case of a referendum, the alternatives on offer may cover more than one issue. Second, the theorem assumes that voters' preferences are single-peaked, which means that voters choose the alternative closest to their own view. This assumption predicts that the further away the outcome is from the voter's most preferred outcome, the less likely the voter is to select that alternative.[3] It also assumes that voters always vote, regardless of how far the alternatives are from their own views. The median voter theorem implies that voters have an incentive to vote for their true preferences. Finally, the median voter theorem applies best to a majoritarian election system.

2 principles of taxation

1. Benefits principle, 2. Ability to pay principle

Education

Government should subsidize education if the goal is efficiency because of positive externalities.

pure public good

One person's consumption does not interfere with another person's consumption.

Lindahl tax

a form of taxation conceived by ______ in which individuals pay for public goods according to their marginal benefits. In other words, they pay according to the amount of satisfaction or utility they derive from the consumption of an additional unit of the public good. It can be seen as an individual's share of the collective tax burden of an economy. The optimal level of a public good is that quantity at which the willingness to pay for one more unit of the good, taken in totality for all the individuals is equal to the marginal cost of supplying that good. _______ tax is the optimal quantity times the willingness to pay for one more unit of that good at this quantity.

pigouvian tax

a tax levied on any market activity that generates negative externalities (costs not internalized in the market price). The tax is intended to correct an inefficient market outcome, and does so by being set equal to the social cost of the negative externalities. In the presence of negative externalities, the social cost of a market activity is not covered by the private cost of the activity. In such a case, the market outcome is not efficient and may lead to over-consumption of the product.[1] An often-cited example of such an externality is environmental pollution.

median voter theorem

as long as all preferences are single peaked, the outcome of majority voting reflects the preferences of the median voter. the outcome of representative democracy will be similar to the outcome of direct democracy.

quasi public good

characteristics of both private and public goods, including partial excludability, partial rivalry, partial diminish ability and partial rejectability. Examples include roads, tunnels and bridges. Markets for these goods are considered to be incomplete markets and their lack of provision by free markets would be considered to be inefficient and a market failure.

Blaine amendment

constitutional provisions in 38 of the 50 state constitutions in the United States that forbid direct government aid to educational institutions that have a religious affiliation. They were designed to prohibit aid to parochial schools, especially those operated by the Catholic Church in locations with large immigrant populations.[1]

local public good

goods are public goods that can be enjoyed only by residents in the local community: for example, local public school, beaches, parks, etc. are typical examples of public goods. not pure

coase theorem

describes the economic efficiency of an economic allocation or outcome in the presence of externalities. The theorem states that if trade in an externality is possible and there are sufficiently low transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property. In practice, obstacles to bargaining or poorly defined property rights can prevent Coasian bargaining.

social insurance

does not include means tested aid

Tiebout model

is a positive political theory model first described by economist Charles Tiebout in his article "A Pure Theory of Local Expenditures" (1956). The essence of the model is that there is in fact a non-political solution to the free rider problem in local governance.

voting paradox

is a situation noted by the Marquis de Condorcet in the late 18th century, in which collective preferences can be cyclic (i.e., not transitive), even if the preferences of individual voters are not cyclic. This is paradoxical, because it means that majority wishes can be in conflict with each other. When this occurs, it is because the conflicting majorities are each made up of different groups of individuals. Thus an expectation that transitivity on the part of all individuals' preferences should result in transitivity of societal preferences is an example of a fallacy of composition.

Arrow's Theorem

it is impossible to find a voting rule that always converts individual preferences into a consistent aggregate decision. they ensure that competing alternatives may be experimentally and provisionally adopted, tested, and replaced by new compromise alternatives approved by a majority group of ever-changing composition.

Double peaked preferences

most voters' utility will presumably again decline at some point to L's left and some point to R's right, creating two peaks in their utility functions. Doesn't guarantee voting paradox.

Real value in year x

nominal value in year x/(PIyear"x"/PIbase)

Taxation as a government function

only if it's a means to an end.

Every Student Succeeds Act

reduces emphasis on standardized testing

arrows impossibility theorem

when voters have three or more distinct alternatives (options), no ranked order voting system can convert the ranked preferences of individuals into a community-wide (complete and transitive) ranking while also meeting a pre-specified set of criteria. These pre-specified criteria are called unrestricted domain, non-dictatorship, Pareto efficiency, and independence of irrelevant alternatives.