UW-Madison UW-Madison

Staff Paper No. 482 - Abstract

Government, Effectiveness, Performance and Local Property Values

Steven Deller [deller@aae.wisc.edu]
Craig Maher

Staff Paper No. 482, June 2005, 23p.


We offer a practical test of local government effectiveness in the provision of public services. Building on the work of Brueckner (1979, 1982, 1983) and Henderson (1990, 1995) we offer a property value maximization model where levels of local public services are capitalized into property values. Using data for Wisconsin municipalities we demonstrate that service expenditure levels, and corresponding taxation levels, should be increased. In other words, the property value maximization test suggests that local public services in Wisconsin are consistently under-provided. By monitoring local property values officials can objectively determine if public services are being provided in an optimal manner.
Last updated on Tue, Jun 28, 2005 2:47pm