Date of Original Version
Public good provision is often determined through referendums by voters, who weigh benefits against costs. We evaluate voter perceptions of the private costs of providing public goods by conducting three exit polls of New England voters and an online survey of California voters. By comparing cost perceptions to actual tax incidence, we find pervasive evidence that voters misperceive costs. Fewer than 20% of voters in our samples reported perceived costs within 25% of true costs. Further, our analysis suggests that actual costs have no statistical bearing on voter choice, but at least in the New England sample voter approval is affected by perceived costs. Thus, misperceptions of referendum costs can lead to voter choice errors, misallocation of public funds, and casts doubt on nonmarket valuation methods predicated on perfect information using voter behavior.
Lang, C., Wichman, C. J., Weir, M. J., & Pearson-Merkowitz, S. (2022). Cost Misperception and Voting for Public Goods. Environmental and Natural Resource Economics Working Papers.