Do Small States Get More Federal Monies? Myth and Reality about the US Senate Malapportionment

We analyze the relationship between senate malapportionment and the allocation of the US federal budget to the states during the period 1978-2002. A substantial literature originating from the in�uential paper by Atlas et al. (1995), using a within estimation methodology �nds that small and overrepresented states get signi�cantly larger shares of federal funds. Revisiting the econometric speci�cation used by the current empiri- cal research, we show that the number of senators percapita is inappropriate to capture malapportionement in regressions using broad federal programs, and that the results ob- tained with this indicator are extremely non-robust to reasonable speci�cation changes. In particular, senators percapita have a signi�cant impact on federal spending only in re- gressions containing state �xed e¤ects. Furthermore, the coefficients estimated using the within methodology are statistically di¤erent across states and, therefore, cannot be used to assess spending differentials between states. The magnitude and signi�cance of those coe¢ cients suggest a within state-speci�c inverse relationship between broad spending categories and population which is not systematically related to the size of the states and seems more compatible with incrementalist theories of budget allocation.