Empiriceme · Evidence · Empirical Regularity

Director's Law

Public spending is redistributed towards the middle class, because it holds the decisive political weight.

Stigler published Director's proposition in 1970: public expenditure tends to benefit middle-income groups, while taxes are borne substantially by both lower- and higher-income groups. The political mechanism behind it is a public-choice hypothesis rather than an established finding.

In practice

  • A tax relief on mortgage interest is defended as help for ordinary families and is worth most to households well above the median.
  • A free tier of a public service is used disproportionately by those who could pay, because they know it exists.
Possible explanations
The proposed explanation is political weight: the middle holds the decisive votes, so programmes are designed to reach it, while the taxes to fund them fall on those above and below.
In its favour
The pattern fits large universal programmes in health, education and pensions, whose benefits are concentrated in the middle of the distribution, and it predicted the political durability of universal schemes.
Against it
The distributional claim depends heavily on how benefits and taxes are measured over a lifetime rather than a year, and it is a public-choice hypothesis rather than a measured regularity.
Standing
The redistribution claim is Director's proposition as published by Stigler; the political mechanism behind it is a public-choice hypothesis.
Further reading
Wikipedia
Subject
Law & Politics
Essay
What can be proved and measured about power

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