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Tuesday, June 12, 2007

New paper about the Cowboys Stadium Referendum

Colleague Mike Ward and ex-colleague Carolyn Dehring and myself have recently submitted the second of potentially three papers concerning the November 2004 Cowboys Stadium referendum in Arlington. The second paper available here at SSRN focuses on the impact of the potential stadium on local property values and how those impacts influenced precinct-level support for the stadium vote.

We find fairly compelling evidence that precincts in which property values increased with the probability that the stadium would be built in Arlington provided more support for the stadium referendum - what we claim is a direct test of the so-called Homevoter Hypothesis.

Here are the details:

A Direct Test of the Homevoter Hypothesis

We propose a methodology that facilitates a direct test of the homevoter hypothesis, which posits that homeowner/voter support for a public good project is positively related to the project’s expected effect on property values. First, we estimate how events that indicate an increasing probability that the public good project will be undertaken impact local residential property values before the referendum is held. These pre-vote impacts are considered noisy signals to homeowners about the market’s assessment of the net marginal benefits of the project. Second, we aggregate these market signals to the precinct level and relate them to precinct-level voting results concerning the proposed project. We apply this method to the 2004 referendum in Arlington, Texas, concerning a publicly subsidized stadium to host the NFL Dallas Cowboys. The analysis supports the homevoter hypothesis and establishes a possible methodology for future evaluations in this small but growing empirical literature.

The first paper available here investigates the impact of the pending stadium referendum on property values in Arlington relative to the surrounding areas.

Cross posted at Division of Labour

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