A Direct Test of the Homevoter Hypothesis

We propose a methodology that facilitates a direct test of the homevoter hypothesis, which posits that homeowner/voter support for a public good project is positively related to the project’s expected effect on property values. First, we estimate how events that indicate an increasing probability that the public good project will be undertaken impact local residential property values before the referendum is held. These pre-vote impacts are considered noisy signals to homeowners about the market’s assessment of the net marginal benefits of the project. Second, we aggregate these market signals to the precinct level and relate them to precinct-level voting results concerning the proposed project. We apply this method to the 2004 referendum in Arlington, Texas, concerning a publicly subsidized stadium to host the NFL Dallas Cowboys. The analysis supports the homevoter hypothesis and establishes a possible methodology for future evaluations in this small but growing empirical literature.