Policy Diffusion and Polarization across U.S. States

Economists have studied the impact of numerous state laws, from welfare rules to voting ID requirements. Yet for all this policy evaluation, what do we know about policy diffusion--how these policies spread from state to state? We present a series of facts based on a data set of over 700 U.S. state policies spanning the past 7 decades. First, considering the introduction of new laws, state capacity seems to have a small role, in that larger and richer states are only slightly more likely to innovate policy. Second, the diffusion of policies from 1950 to 2000 is best predicted by proximity: a state is more likely to adopt a policy if nearby states have already done so. Third, instead since 2000, political alignment outperforms geographic proximity in predicting diffusion. Fourth, the diffusion of COVID state policies, as opposed to vaccination mandates since the 1970s, follows similar patterns of political polarization. Models of learning and correlated preferences could account for these patterns, including the decreased role of geography over time, if ideas spread more easily and preference correlation has become more political than geographical. We document, however, a role for party control: similarity in state party control predicts policy adoption in the last two decades, even controlling for voter political preferences. We conclude that party polarization has emerged as a key factor recently for policy adoption. Finally, building on these results, we broadly classify the patterns of policy diffusion in a set of difference-in-differences papers