The Homevoter Hypothesis : How Home Values Influence Local Government Taxation, School Finance, and Land-Use Policies

Just as investors want the companies they hold equity in to do well, homeowners have a financial interest in the success of their communities. If neighborhood schools are good, if property taxes and crime rates are low, then the value of the homeowner's principal asset--his home--will rise. Thus, as William Fischel shows, homeowners become watchful citizens of local government, not merely to improve their quality of life, but also to counteract the risk to their largest asset, a risk that cannot be diversified. Meanwhile, their vigilance promotes a municipal governance that provides services more efficiently than do the state or national government. Fischel has coined the portmanteau word "homevoter" to crystallize the connection between homeownership and political involvement. The link neatly explains several vexing puzzles, such as why displacement of local taxation by state funds reduces school quality and why local governments are more likely to be efficient providers of environmental amenities. The __Homevoter Hypothesis__ thereby makes a strong case for decentralization of the fiscal and regulatory functions of government. Just as investors want the companies they hold equity in to dowell, homeowners have a financial interest in the success of theircommunities. If neighborhood schools are good, if property taxesand crime rates are low, then the value of the homeowner'sprincipal asset-his home-will rise. Thus, as William Fischel shows,homeowners become watchful citizens of local government, not merelyto improve their quality of life, but also to counteract the riskto their largest asset, a risk that cannot be diversified.Meanwhile, their vigilance promotes a municipal governance thatprovides services more efficiently than do the state or nationalgovernment. Fischel has coined the portmanteau word "homevoter" tocrystallize the connection between homeownership and politicalinvolvement. The link neatly explains several vexing puzzles, suchas why displacement of local taxation by state funds reduces schoolquality and why local governments are more likely to be efficientproviders of environmental amenities. The HomevoterHypothesis thereby makes a strong case for decentralization ofthe fiscal and regulatory functions of government Just as investors want the companies they hold equity in to do well, homeowners have a financial interest in the success of their communities. The area has a direct bearing on the value of the homeowner's property. This book analyzes the connection between homeownership and political involvement. William A. Fischel. Includes Bibliographical References (p. 293-321) And Index.