Journal of Economic Perspectives: Vol. 9 No. 4 (Fall 1995)


Quick Tools:

Print Article Summary
Export Citation
Sign up for Email Alerts Follow us on Twitter


JEP - All Issues

The Flypaper Effect

Article Citation

Hines, James R., and Richard H. Thaler. 1995. "The Flypaper Effect." Journal of Economic Perspectives, 9(4): 217-226.

DOI: 10.1257/jep.9.4.217


What happens to a state's spending when it receives an unconditional grant from the federal government? The standard theoretical analysis predicts that the increase in spending will be the same as that generated by an equivalent increase in local incomes--or roughly 5-10 percent for most states. In contrast, numerous empirical analyses have found that spending increases by much more, with some estimates near 100 percent. This result is known as the 'flypaper effect,' since the money appears to 'stick where it hits.' The authors review this evidence as well as other studies that find similar behavior in firms.

Article Full-Text Access

Full-text Article (Complimentary)


Hines, James R. (John F Kennedy School of Government, Harvard U and NBER)
Thaler, Richard H. (U Chicago and NBER)

JEL Classifications

H77: Intergovernmental Relations; Federalism; Secession


View Comments on This Article (0) | Login to post a comment

Journal of Economic Perspectives

Quick Tools:

Sign up for Email Alerts

Follow us on Twitter

Subscription Information
(Institutional Administrator Access)


JEP - All Issues

Virtual Field Journals

AEA Member Login:

AEAweb | AEA Journals | Contact Us