Friday, August 05, 2016

Young, red states are the most solvent; old, blue states the least so

The Mercatus Center at GMU recently released a report on the fiscal health of each of the states--or more precisely, the fiscal health of each state's government. The methodology looks sophisticated and reasonable. Since the report wasn't commissioned to be evaluated on the factors I'm evaluating it on, I'm comfortable using it as a plausible proxy measure for actual state government solvency.

On social science measures like these--IQ, health, standard-of-living, etc--that's unusual. The Dakotas do well on most things, but Mississippi and Alabama don't. Massachusetts tends to turn in a good performance, but California usually doesn't.

So what caught my attention immediately is how red states do noticeably better than blue states. Puerto Rico wasn't included in the analysis, but it would've fit the framework perfectly.

The correlation between fiscal health and Romney's share of the '12 vote is an impressive .42 (p = .002). The contrasts between demographically similar but politically dissimilar states like the Dakotas-v-Minnesota and Indiana-v-Illinois put in stark relief the tendency for red states to be in better fiscal shape than blue states.

Another strong (inverse) correlation exists between fiscal health and median age, .44 (p = .001). Old states are in more trouble than young states are. This isn't surprising because one of the largest liabilities states face comes in the form of state employee pensions. In older states more people are getting to the point where they're able to draw on them and many more already are drawing on them and have been doing so for years or even decades.

Average IQ and the percentage of the population that is non-Hispanic white don't correlate with fiscal health at the state level, inversely and positively at just .08 and .10, respectively. The percentage of the population that is black and foreign-born are only modestly more telling, correlating inversely at .21 and .23 (p = .15 and p = .12), respectively. So while it's not that pronounced, it is still the case that while diversity is strength... it's also fiscal insolvency.

The so-called 'resource curse'--which is mostly just a convenient explanation blank slatists superficially plug in when it works (Saudi Arabia) but ignore when it doesn't (Norway)--is nowhere to be found. Or rather it's there, but it takes the form of a resource boon. North Dakota and Alaska are energy producing machines and are also among the most fiscally sound states in the country.

2 comments:

Dan said...

Isn't Puerto Rico the red 51 in the lower right corner? I'm too lazy to look up the original study for a chart/table/appendix.

Audacious Epigone said...

Dan,

Yes. I didn't have all of the available metrics to correlate it with the rest of the states, but it is the worst shape by far.

Here's to Puerto Rican independence!