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Connecticut continues to boast the nation’s highest per capita income, but the state is among the bottom four in the percentage of that income used to fund state and local public services, according to a report in the latest edition of The Connecticut Economy: A University of Connecticut Quarterly Review.

In a study seeking to empirically determine the optimal amount of funding states should devote to public services without adversely affecting a state’s economy, Steven P. Lanza, executive editor of the magazine, collected 16 years (1993-2008) of personal income and government spending data for the 50 states from the U.S. Bureau of Economic Analysis and the U.S. Census of Governments. He finds that Connecticut under-spends on most government activities, including education and infrastructure, while spending more than the optimal amount on health care.

“Public spending in the Nutmeg state averaged just 17.6 percent of income in the years surveyed, more than six points below the optimal share,” Lanza writes. “With such a lean public sector, Connecticut essentially forfeited an additional 1.2 percent in yearly income it would otherwise have earned, had it adopted the optimal mix,” because public services could have been added that would have helped the private sector grow. According to the study, the optimal share of non-federal public spending is about 24 percent of income, somewhat higher than the 50-state average of 22 percent, and well above the figure for Connecticut.
Lanza also points out that public opposition in Connecticut to the expansion of government services may reflect dissatisfaction with the present tax mix, which seems to rely too heavily on property taxes and too little on “other revenue”—a category that includes tolls, excise taxes, or other special revenue sources.

The Connecticut Economy’s other editors, Prof. Dennis Heffley and emeritus Prof. Arthur W. Wright also weigh in with articles based on recent research. Wright considers whether the recent downturn in casino revenues can be staunched, and Heffley examines teacher salaries in Connecticut.

In addition to briefly tracing the history of Connecticut casinos—Foxwoods and the Mohegan Sun—and their significant contribution to state and local revenues since the early 1990s, Wright examines the impact of the recent recession on this source of public funding. He also considers how the anticipated rebound in casino gaming revenue in Connecticut might be affected by the expansion or development of new casinos in surrounding states.

Professor Heffley compares the annual wages of teachers—pre-school, kindergarten, elementary, middle school, and high school—across states and finds that Connecticut ranked 9th, 4th, 3rd, 1st, and 4th, respectively, in May 2009. But, according to the same data from the Bureau of Labor Statistics, Connecticut also ranked 2nd in annual wages across all occupations. Relative to the all-occupation figure, Connecticut ranks 41st, 15th, 5th, 6th, and 17th in teacher pay for the five categories. At the March 15th press release, it was also noted that, relative to other states, Connecticut has been falling in the rankings of teacher pay over the last decade.

Read the complete issue of The Connecticut Economy here.

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There have been some rough times: lots of nights sleeping in a homeless shelter and quite a bit of time in jail. But in the end it’s worked out well, and now we’re comfortably settled in a small but very pleasant apartment in Brooklyn Heights.

This year I’ve cut down to one night a month at the homeless shelter, but when one of the other volunteers doesn’t show up, I may put in an extra night on short notice. I can’t say it’s fun, setting up cots for the “guests” and serving dinner, then sleeping on a cheap cot in an overheated hallway where there’s always a light on, and then getting up at 5:30 a.m. But there’s considerable satisfaction in knowing that I’m playing a small part in providing a safe, warm, dry night to some people who’ve had bad luck.

Let me explain about the time I spent in jail. My part in a project to study average time from arrest to arraignment in Manhattan started with a phone call from a consulting firm in Cambridge. Over a period of about 20 years, I had worked frequently with this firm to develop software intended to optimize patrol patterns for police cars in urban areas. In this new project for the New York City Office of Criminal Justice, we were asked to create a computer simulation of the steps taken from the time an arrest is made until the accused is brought before a judge. In New York, the law says that arraignment before a judge must occur no more than 24 hours after an arrest. During that time quite a lot has to happen: finger prints must be taken and sent to Albany and to the FBI, a database of arrest warrants must be searched to find out if the accused is wanted in another part of the state or in any of the other 49 states, the Attorney General’s office must decide whether to recommend bail and must write up formal charges, an affidavit has to be written and signed by the arresting officer, in many cases a Legal Aid attorney must be called in, … The amount of paperwork is substantial and the appropriate documents must be in the right place at the right time. Then, too, the prisoner must be in the right place at the right time, and that involves moving him or her from the scene of the offense to the precinct to holding cells to the courtroom. All of this has to be completed within 24 hours or the Civil Liberties Union gets upset. (Sometimes, on a busy day, the 24-hour limit is exceeded.)

The purpose of our simulation is to give criminal justice planners a tool that lets them do what-if analysis: what would happen to the process if more fingerprint clerks were hired? suppose we increase the number of printers available for downloading warrants from Albany? would it matter if we did the medical exam after the fingerprinting instead of before? would the whole process be faster if we built more holding cells under the courthouse? Experimenting with the virtual reality of this analytical tool is an alternative to actually hiring more people, really changing procedures, or physically building more cells. The goal is to find the most effective, and least expensive, modifications to a set of interconnected queues so as to reduce the total time a prisoner is in the system.

In order to create an accurate simulation, we needed to have a very complete understanding of how the system works. We spent months studying every detail. Since I live in New York, I was part of the team that spent a lot of time behind bars, mostly in the basement of Manhattan’s central courthouse. Now that our project is finished, I don’t spend any time in jail, but there were many days when I was in fact inside. To step through those metal gates and hear them snap closed behind me was a sobering experience, even though I was pretty sure that they would let me out. We also sat behind a judge in a courtroom as he dealt with a rapid-fire series of defendants, lawyers, and Assistant Attorneys General. All of this was a real education for me, endlessly fascinating.

I realize now that I haven’t said anything about how I spend most of my time in retirement. But that must be obvious if you know that I live in New York city, where there’s theatre, concerts, movies, museums, readings, ethnic neighborhoods to explore, Brooklyn’s magnificent Promenade to stroll along, swimming (yes, there are swimming pools in New York city), yoga classes, … Retirement is terrific. Everyone should do it.

I miss Storrs and the people there. But I’m glad that we have made this big move. Living in New York continues to be an exciting adventure. Occasionally, we get back to Connecticut for a visit and sometimes old friends come to New York. Most important, making new friends here didn’t take as long as I had feared, even in a city of eight million people.

I’ve been asked to let you know what’s been going on since I left the Department. This is the first in what may turn out to be occasional “where-are-they-now” entries from emeritus professors. If you have read this UConn Econ Blog much, you know it’s usually written in the third person (it’s not so much a blog as a bulletin board). Writing in the third person is good for keeping up with those who don’t want to toot their own horn (or who don’t want to appear to be tooting their own horn). But the first person works better for me.

Even though I taught more than ten thousand students at UConn and worked alongside more than one hundred TAs, I am probably a stranger to current students. So please bear with me through this one paragraph of background. In 1973 Dennis Heffley and I joined the faculty. Bill Lott had already been on board three years. In 1981, I was appointed the Department’s first official Director of Graduate Studies. One promising graduate applicant at the time was a Wesleyan student named Thomas Miceli. He turned down our fellowship offer, choosing Brown instead. (Mmmm…I wonder what ever happened to him?) I regularly taught the graduate course in State and Local Finance. Students taking that course included Rex Santerre, now a UConn finance professor, John DeStefano, now New Haven’s long-serving mayor, Barry Feldman, now UConn’s VP and COO, and David Stockton, now head of research for the Federal Reserve Board in Washington, where he oversees a dozen divisions and more than a hundred Ph.D.s. Along the way, I also received the UConn Alumni Association’s Distinguished Public Service Award and later its Excellence in Undergraduate Teaching Award.

I decided to retire from UConn after my wife left me. But let’s back up a bit. In the late 1990s, Pat had a wonderful opportunity to run Aetna’s Hong Kong insurance business, an operation with thousands of employees and some interesting challenges in light of Hong Kong’s reversion from Great Britain to China. But I was then in the middle of several projects and couldn’t leave. So we agreed that she would move to Hong Kong, I would remain in Connecticut, and we would have a commuter marriage.

One good thing about living twelve time zones apart is that we could meet at either end or anywhere in between. Besides reunions in Hong Kong and Connecticut, we got together in Orlando, Las Vegas, Phoenix, London, and Tokyo. But all that jet-setting gets old fast when you want to be together (parting may be “sweet sorrow,” but it’s still parting and still sad). So in 2000, I decided to take early retirement to join Pat in Hong Kong. It wasn’t that I disliked my teaching, my research, my students, or my colleagues. We just wanted to be together.

We lived in a high rise on Hong Kong Island, within walking distance to just about everything (the only thing within walking distance of our Willington home was the mail box, and that was some walk). One opportunity turned into another for Pat, and she joined Sun Life Insurance as head of investments for its Asia operations. She was based in Hong Kong and responsible for company investments there as well as Mainland China, India, Indonesia, and the Philippines (all developing economies, to be sure, but they comprise more than a third of the world’s population). She traveled a lot to those countries on business, and together we traveled for fun to Mainland China, Taiwan, India, Vietnam, Thailand, Singapore, Indonesia, and Japan. We also flew to Egypt and cruised down the Nile.

Hong Kong was a once-in-a-lifetime experience, but the longer we were away, the more we missed America, especially the clearer air (pollution poured into Hong Kong from factories in Southern China). So after Pat had spent about six years in Hong Kong (and I, about four and a half), we decided to return to the United States. But where to live? Our Hong Kong experience framed that choice—warm climate, high-rise living, and within walking distance of most activities. Because Pat, who grew up in Arizona, had spent nearly three decades braving New England winters with me, we decided on a warmer climate in general and on Phoenix in particular. We returned to the U.S. in 2007 and now live on the 12th floor of a high-rise condominium in the Biltmore area of Phoenix.

We love it here. I’m attaching a photo taken just as we were leaving for Starbucks, which is only a hundred yards away. Sure the summers are hot, but that’s a good time to travel, and the low humidity makes it more hospitable for us than in Hong Kong, which at times could be really oppressive. Again, it’s all framing. We still run for an hour six mornings a week and try to stay in working order.

Pat is now on what she calls a “career break,” and she enjoys the free time. Since leaving UConn, I revised my principles of economics textbook for seventh and eighth editions and am now beginning a ninth. I continue writing The Teaching Economist, my newsletter for college teachers, and I’ve managed to publish some other research. Also, my National Tax Journal piece on the median-voter model was selected for inclusion in the edited volume Public Choice Economics published by the University of Michigan Press (others in that volume include some heroes of mine—Mancur Olson, Ray Fair, Avinash Dixit & Barry Nalebuff, Gordon Tullock, James Buchanan, and Dennis Mueller).

My principles textbook has been translated into Chinese, Bahasa Indonesia, and Spanish (twice), and an Australian adaptation is in its third edition. Micro and Macro versions of the book were also selected as the economics principles entries for Cengage Learning’s Four Letter Press series (they had a dozen principles books to choose from). I worked on those adaptations, which just appeared in second editions as ECON Micro 2 and ECON Macro 2. Finally, shortly after I left UConn, I was asked to write a principles textbook for high school students; I did that and later revised the book for a second edition; a third edition is scheduled for 2011.

I try to keep in touch with colleagues and former students, but I could do a lot better. I’d be glad to hear from you at william.mceachern@uconn.edu. Also look for Pat and me at the January ASSA meetings in Atlanta.

What an interesting time to be an economist!

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