The Flypaper Effect: Methods, Magnitudes, and Mechanisms

abstract: The flypaper effect exists if intergovernmental aid worth $1 to voters has a larger impact on public service demand than $1 of household income. In this paper, we review the methodology required to estimate flypaper effects in the demand for local public education, provide new flypaper effect estimates, and survey behavioral explanations for the flypaper effect. We estimate a flypaper effect of 12 for state aid to education, which implies that $1 of aid leads to $0.15 more education spending and $0.85 in property tax relief. We decompose the standard flypaper effect into one for key measures of student performance and another for other measures of school quality that voters care about. We also find that the flypaper effect is influenced by framing and by the salience of certain property tax provisions.