Knowledge that Transforms

Historically, Michigan has relied more heavily than most other states on local taxes and property taxes as sources of education finance. In the 1990-1991 school year, Michigan was third among states in the share of school spending financed locally (65.2 percent).1 Over the past two decades there have been more than ten propertytax-cut initiatives placed on statewide ballots. In the summer of 1993 the legislature passed a bill that abolished, with no source of revenue replacement specified, all use of local property taxes (at the time, over $6 billion) for school operating expenditures. In late December, both houses passed, and the governor signed, a financing bill that contained two options for voters to choose from, either of which would have replaced approximately all of the lost revenue. Here are the main provisions of the new system, as passed by the voters in March, 1994: (i) a combination of an increased state sales tax, a statewide property tax on all property, a (nearly) required local property tax on nonhomestead property,2 a sharp increase in the tobacco tax, and a real-estate transfer tax; (ii) a system of state foundation grants to school districts that would, when fully implemented, put a floor under spending of $5,000 per pupil in 1994-1995, while preserving nominal differences in spending per pupil among districts that currently spend $5,000 per pupil or more; (iii) strengthened requirements for an academic core curriculum, pupil performance standards, and minimum numbers of school days; (iv) provisions for authorizing charter schools, schools of choice that would be subject to the statewide curriculum and testing requirements but would not have to use certified teachers. (A Michigan court ruled these schools unconstitutional, but the legislature has since rewritten the law to meet the court's objections.) Thus, the new law switched Michigan from a modified powerequalization system to a modified foundation system.

Wolfgang Mayer (1984) applied Duncan Black's (1948) median-voter theorem to investigate endogenous tariff formation under direct democracy. This paper extends Mayer's model from direct to representative democracy.' The extension from direct to representative democracy is straightforward if candidates possess perfect information. One can still apply the median-voter theorem, for a candidate in a two-party representative democracy also chooses the most preferred tariff of the median voter. Mayer (1984) himself fully recognized this direct extension.2 Nevertheless, if candidates possess imperfect information, which is believed typical in the real world, how the medianvoter outcome might alter or be modified remains unanswered. The purpose of the current paper is to answer the question. That candidates are something more than simply policy surrogates is the highlight of the article by James M. Enelow and Melvin J. Hinich (1982). In contrast to direct democracy in which only policies matter in voter choices, in a representative democracy candidates are thought to be judged by voters on the basis of both nonpolicy candidate characteristics and proposed policies. In this paper I adopt the view of Enelow and Hinich (1982) and combine it with candidate uncertainty. More specifically, I consider a model incorporating candidates' lack of information regarding voters' nonpolicy preferences. The model gives rise to probabilistic rather than deterministic voting.3 I show that, in such a framework, the equilibrium tariff is no longer dictated by the most preferred tariff of the median voter, but is a weighted mean or even the mean of voters' most preferred tariffs; moreover, the income distribution resulting from the equilibrium tariff tends to be more equalized than that from free trade. The plan of the paper is as follows. Section I introduces the model of the paper. It consists of an economic and a political structure. Section II characterizes the equilibrium tariff and discusses its implications for income distribution. Concluding remarks are presented in Section III.

The norming of the third edition of the Test of Understanding College Economics (TUCE III) has produced a valuable data set (Phillip Saunders, 1994). These data describe 93 introductory macro and 96 introductory microeconomics classes taught by 131 different instructors at 53 U.S. colleges and universities in 1989-1990. It is tempting to use this sample to investigate how class size influences learning. The nonexperimental nature of the data, however, raises the possibility of an endogeneity problem: department chairs may assign better teachers to larger classes, and those teachers, in turn, may attract even greater numbers of students. Teaching quality, therefore, may be higher in larger classes. Thus, the discovery from these data of any deleterious effect on learning from larger classes may be only a lower bound. The education literature, admirably surveyed by Wilbert J. McKeachie (1990), suggests that learning is not much affected by class size. One reason for this result may be that instructors do not adjust their teaching methods to class size. In this paper we use the TUCE III data to examine whether introductory economics instructors vary pedagogy with class size. I. The Role of Instructor Behavior