House Prices, Government Quality, and Voting Behavior

The hypothesis that minority voters act in their economic self-interest in supporting municipal candidates of their own race or ethnicity has been tested using changes in municipal spending and employment. However, governments affect voter welfare in many other ways, particularly in the provision of quality public services. This paper exploits a natural experiment arising in 1995 when Congress created an appointed financial control board for the District of Columbia and gave to it many of the powers previously reserved to the local elected government. The natural experiment sets up a triple-difference research design based on changes in property values across District neighborhoods and voting behavior compared to untreated adjacent areas across the District boundary in Maryland. We find that oversight by the control board raised annual appreciation rates in the District by 178 to 254 basis points during the period from 1995 to 2001. Furthermore, effects of the intervention were uniformly positive across areas of the District that varied dramatically in their support for the incumbent administration that lost its powers. This implies, after the fact, that the administration’s supporters had not voted in accord with economic self-interest.