Heterogeneity and collective action: Evidence from Massachusetts

In three essays, I explore the relationship between heterogeneity and collective action. The first essay reviews the theories and evidence surrounding diversity and its impact on trust, cooperation and reciprocity. The second essay begins the empirical analysis. Using 19 years of data on property tax referenda in Massachusetts, I test the idea that racial and economic heterogeneity undermine the willingness of residents to increase their own taxes and fund public services. I find little evidence to support this idea. In statistical tests, neither income heterogeneity nor racial heterogeneity exhibit an influence on the odds that a locality will propose or approve a tax increase, or collect more property tax revenue. Rather the important predictors of tax increases appear to be the level of per capita personal income, the level of per capita property wealth, and the size of the locality's population.;I also uncover considerable evidence of tax exporting; localities with a larger share of vacation homes are more likely to propose and approve tax increases (because more of their property wealth is held by nonvoters). Localities with more commercial and industrial land, by contrast, are less likely to propose and approve tax increases, largely because localities have the option of taxing commercial and industrial land at a higher rate than residential land. The findings about vacation homes and the findings about nonresidential land both highlight the importance of land use patterns in decisions about local public finance.