Grapevine

For metro governments, bigger may not be economically better

When big cities gobble up smaller ones nearby, residents often are told a consolidated government is more efficient, providing improved services and other economic benefits.

But new research from Texas McCombs questions that bigger-is-better paradigm. By some key economic measures, more fragmented local governments lead to better outcomes for residents, finds John Hatfield, a professor of finance. The paper is published in the journal Public Choice.

With Luke Rodgers of Florida State University and Katrina Kosec of the International Food Policy Research Institute, Hatfield analyzed 2012 data for the 201 largest metropolitan areas, home to 77% of the U.S. population.

Using the number of county governments as an index of fragmentation, they found that for every standard deviation more counties in a metro area:

Housing values were 11% higher than average.