A Direct Test of the Homevoter Hypothesis

Download or read book A Direct Test of the Homevoter Hypothesis written by Carolyn A. Dehring and published by . This book was released on 2012 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: We propose a methodology that facilitates a direct test of the homevoter hypothesis, which posits that homeowners vote in favor of public projects they perceive increase residential property values and against those that do not. First, we estimate how pre-referendum events that signal a higher probability that the public project will be undertaken impact local residential property values before the referendum is held. These pre-referendum impacts are considered noisy signals to homeowners about the market's assessment of the net marginal benefits of the project. Second, we aggregate these market signals to the precinct level and relate them to precinct-level voting results concerning the proposed project. We apply this two-step approach to the 2004 referendum in Arlington, Texas, for a publicly subsidized stadium for the NFL Dallas Cowboys. The analysis supports the homevoter hypothesis and establishes a possible methodology for future evaluations in this small but growing empirical literature.