Both alternatives improve the allocation of resources by more closely matching the package of government activity with voter/consumer preferences. The problem, however, is that voters/consumers do not have equal abilities to relocate to a community that best matches their preferences. Other factors, including job and community ties, also affect relocation.

For example, Roland Nottingham, a long-time disgruntled citizen of Shady Valley is not particularly pleased with anything the Shady Valley city government is doing. He doesn't like the taxes imposed. He doesn't like the expenditures made.

Roland is pondering a move to nearby Oak Town, which apparently has a package of city government taxes and spending that is more to Roland's liking. Should Roland make the move to Oak Town, then he has provided a bit a support to what is termed the Tiebout hypothesis.

Voting Options

• At the Ballot Box: The standard method, of course, is to cast a vote in elections. People cast a vote for the more preferred candidate or election issue. Candidate A proposes higher taxes to be used for public education. Candidate B proposes a tax cut to encourage business activity. A citizen like Roland can then cast a vote for the most compatible candidate. If a majority of others do the same, then Roland is happy.


• With the Feet: The Tiebout method is to "vote with the feet," to "cast" a vote for the political jurisdiction with the most preferred package of government activity. City A has higher taxes that are used for public education. City B has lower taxes that encourages business activity. A citizen like Roland can then cast a "vote" for the most compatible city by moving to that city.

The Local Package

These differences then tend to be self-reinforcing. As people vote with their feet, they relocate to areas that are more compatible. Doing so strengthens and reinforces the voting majority who have a preference for the local package.

One of Many

In contrast, a person like Jonathan McJohnson cannot move to another city quite as easily. He has a job with OmniConglomerate, Inc. that keeps him in Shady Valley. He has a wife and children, all of whom enjoy living in Shady Valley and don't care to leave. He owns a nice house in the suburbs, which he had custom built and doesn't want to sell.