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Thursday, April 1, 2010

Statistical Analysis Shows Stimulus Dollars Were Distributed Based on Politics

While there have been rumors to this effect, this particular analysis is unique in the fact that it uses traditional statical norms to analyze which congressional district got how much funding from the stimulus plan and whether or not that allocation was politically motivated.

Veronique de Rugy of George Mason University used stimulus data from and economic and political data from the Bureau of Labor Statistics, the Census Bureau,, to compile a series of facts about stimulus spending.

What she discovered to high degree of statistical confidence that districts with Democratic congressmen revived significantly more stimulus cash and protects than Republican districts. Similarly Districts that voted for Obama in the Presidential election received significantly more monies and protects than the McCain voting districts. None of this should be surprising as it its the Chicago way:
A total of 65,084 contracts and grants totaling $170 billion were awarded in this second quarter for which reports are available. That‟s only an additional $13.6 billion reported received this quarter over the previous one, roughly $1 billion awarded each week.

The number of jobs claimed as created or saved during this period is 597,153 for the entire $170 billion expenditure—an average of $285,814.61 per job. The total number of jobs claimed shrunk from 693,000. It is important to understand this point. The total number of jobs claimed to have been created by the entire stimulus fell overall, not just in the last quarter. This apparent job destruction may have to do with the changes the White House made on how to count jobs.

The total amount awarded to public entities (such as municipalities and state agencies) is $93 billion. However, it is still the case that some of this money may have ultimately found its way to private subgrantees or subcontractors. The total amount awarded to private contractors and grantees is $78 billion. While public entities received 42 percent of the number of all awards, these awards constituted over half of the dollars awarded (55 percent). In other words, public entities are receiving fewer contracts than private (27,230 vs. 37,854), but there is a higher average dollar value on the public awards ($3,417,412 vs. $2,050,484).

Party Affiliation

For my analysis, I looked at the 435 congressional districts in the United States plus the District of Columbia, but excluded Puerto Rico and foreign stimulus recipients such as Canada and the U.S. Virgin Islands. The average number of awards per district is 148, and the average dollar amount awarded per district is $385,932,979.

In the United States there are 177 districts represented by a Republican and 259 represented by a Democrat. On average, Democratic districts received 1.53 times the amount of awards that Republicans were granted. The average number of awards per Republican district is 112, while the average number of awards per Democratic district is 171.

Democratic districts also received 2.65 times the amount of stimulus dollars that Republican districts received $122 billion vs. $46 billion). Republican districts also received smaller awards on average. The average dollars awarded per Republican district is $26 million, while the average dollars awarded per Democratic district is about $472 million. In total, Democratic districts received 73 percent of the total stimulus funds awarded and Republican districts received 27 percent of the total amount awarded.

Other Political Variables

I checked for correlation (see tables 1 and 2) and computed the predictive power of political and economic indicators on stimulus fund allocation (see table 4). A regression analysis (ordinary least squares) was used to determine whether either political factors (Republican or Democrat) or economic indicators (e.g. unemployment in a district) could predict the amount of stimulus funds distribute to a district. To estimate the influence of those two variables, I included the district representative‟s political party, tenure in office, leadership position, membership on the appropriations committee, as well as the change in district‟s unemployment from 2007 to 2008 (the last year with available unemployment data per district), mean income (i.e., the average income of a given wage earner in the district), and the percentage of employed persons working in the construction sector in 2008. The analysis finds that a district‟s representation by a Republican decreases the stimulus funds awarded to it by 41.7 percent. This result underscores the findings from the previous Stimulus Facts report.

This effect is statistically significant at the .004 level (See regression table at end of document.) The regression analysis does not seek to explain (nor does it explain) precisely how funds were allocated (my R-squared = .05). That would require a more complete dataset than has been used for these results. That is, I wanted to know how much political and economic factors could explain the distribution of funds. That is different from saying I want to know all of the factors that control distribution of the funds. I do not have that data nor is it particularly interesting for my purposes. I have confidence I know how much influence these two variables have, although I do not know how other factors influence the decisions. In my political calculation, I find that there is a slight effect on the amount of stimulus funds allocated based on whether a district voted for John McCain or Barack Obama in the 2008 presidential election.

Concretely, while $109 billion has been allocated to congressional districts that voted for President Obama (or 65 percent of the total amount allocated), $59 billion (or 35 percent) have been allocated to congressional districts that voted for McCain. It should be noted, however, that there were many more congressional districts that voted for Obama than voted for McCain. President Obama won 55.6 percent of congressional districts and McCain won 44.4 percent of these districts.

The districts that voted for President Obama received 40,037 awards (or 69 percent of the total number of awards allocated), much more than the districts that voted for candidate
McCain; they received 24,483 awards (or 31 percent of the total number of awards).

The average awarded to marginal districts—districts with votes that did not vote overwhelmingly for one candidate or another (5 percent or less difference)—is $22 million. That‟s significantly less than the average awarded to non-marginal districts of $419 million.

My regression analysis finds that the stimulus funds awarded to marginal district are decreased by 41 percent. This effect is statistically significant at the  .033 level. (See regression table at end of document.) However, as with Republican representation, the regression analysis does not seek to explain (nor does it explain) precisely how funds were allocated (my R-squared = .05).

1 comment:

Anonymous said...

lol, read this.

here's the money quote:

That de Rugy has testified before Congress on the basis of her evidence, and never paused to consider why the top five congressional districts on her list overlap with Sacramento, Albany, Austin, Tallahassee and Harrisburg, is mind-boggling. The presence of a state capital is the overwhelmingly dominant factor it predicting the dispensation of stimulus funds. This could have been discerned in literally five minutes if she had bothered to look at the apparent outliers in her dataset and considered whether they had anything in common -- a practice that should be among the first things that any researcher does when evaluating any dataset.