Constructing and validating a best-fit economic well-being index for urban U.S. counties: a Tiebout model approach

This study builds on the history of economic well-being (EWB) index construction to develop such an index for urban U.S. counties (population > 62,437). Unlike previous studies, we rely on external validation of economic well-being to construct a best-fit index, where our external validation appr...

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Bibliographic Details
Published inPublic choice Vol. 199; no. 1-2; pp. 45 - 63
Main Authors Ehrlich, Justin, Medcalfe, Simon, Sanders, Shane
Format Journal Article
LanguageEnglish
Published New York Springer US 01.04.2024
Springer Nature B.V
Subjects
Counties
Demographic change
Economic wellbeing
Economics
Economics and Finance
Estimates
GDP
GNI
Gross Domestic Product
Gross National Income
Hypotheses
Indexes
Life expectancy
Mortality
Per capita
Political Science
Public Finance
Quality of life
Standard of living
Transparency
Validity
Variables
Index validation
Tiebout hypothesis
Composite indicators
Economic well-being
Tiebout sorting
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Summary:This study builds on the history of economic well-being (EWB) index construction to develop such an index for urban U.S. counties (population > 62,437). Unlike previous studies, we rely on external validation of economic well-being to construct a best-fit index, where our external validation approach follows the Tiebout Hypothesis. We estimate a best-fit, linear regression-based index, in which lagged features of economic well-being are weighted based on ability to explain subsequent county population change. Compared to an arbitrarily equally-weighted model using a composite index a model using lagged weighted EWB individual variables provide greater transparency while also explaining substantially more variation in population change across urban counties (19.9% vs. 15.7%).
ISSN:0048-5829
1573-7101
DOI:10.1007/s11127-023-01055-y