Effects of Public Programs for Outdoor Recreation on Personal Income Distribution

Abstract

IN view of the multidimensional nature of the social welfare function, concern for the economically efficient provision of public goods and services should be coupled with equal concern for the equity effects of that provision [4]. More specifically, the personal income distribution effects of a project or program, as well as other equity considerations, must be analyzed if the planning process is to provide the information flows necessary for making public decisions consistent with the general welfare. Quantification of such effects make the trade-offs that exist between governmental objectives more explicit and point up the equity impact of programs undertaken wholly or partially for other reasons. The Study This paper reports on portions of an empirical study carried out with the use of fiscal 1968 data on New York State administered outdoor recreation expenditures [1]. Several different conceptual approaches were used and compared. The first utilizes a classical flow of funds form of analysis, tracing the redistribution effects of all state revenue devoted to outdoor recreation in a given year. In this approach, recreation expenditures were treated as gross transfer payments and, for each income class, were netted against tax and fee burdens imposed. The second approach analyzes the present value equity impact of incremental state investment in recreation facilities. Projected annual benefits, measured by a proxy for willingness to pay and converted to a present value basis, were used to estimate gross equity impacts and, for each income class, were netted against discounted costs. Empirical considerations dictated that the income base used be household income before taxes, as defined for the National Recreation Surveys (NRS) [2, 3], and that the class definitions be: under $3,000; $3,0005,999; $6,000-9,999; $10,000-14,999; $15,000 and over. The distribution of households within these classes was taken from the Current Population Survey. Data from the NRS were used to estimate the proportion of user days consumed by each income class for any given activity. These proportions, when multiplied by the total dollars spent by the state on that activity or LEONARD A. SHABMAN is a graduate research assistant and ROBERT J. KALTER is assistant professor of resource economics at Cornell University. 1516