Efficiency considerations and the allocation of new deal funds: an examination of the public goods explanation of expenditure patterns

The uneven state-level distribution of New Deal spending has been frequently studied and a variety of economic and political models have been developed. In their article, “Does the Distribution of New Deal Spending Reflect an Optimal Provision of Public Goods?,†(Economics Bulletin, Vol. 8, No. 3, 2007. pp 1-5) Bateman and Taylor propose that much of the disparity in state-level New Deal expenditures can be explained if the creation of public goods and the spillover effects are included in economic models. Using the available wealth of data on New Deal programs, expenditures by agencies within the New Deal are examined and correlation statistics provided to test this hypothesis against the 1930 US census population density figures.