Provision of Public Goods in a Ratepayer Democracy: The Retrenchment Hypothesis and Local Democracy in Mid-Victorian Britain

Mid-Victorian British boroughs urgently needed to invest in local public goods, such as sanitation, clean water, and slum clearance, to improve the productivity of the urban economy and the living conditions of citizens. Local public goods were nanced by local property taxes and \u85scal decisions were made democratically by enfranchised ratepayers. We argue that reluctance of middle class ratepayers to pay the cost of pollution and poor sanitation played an important role in explaining di¤erences in provision levels. We develop a simple model of ratepayer democracy, based on the principle of no taxation without representation, that links middle class retrenchment to the extension of the municipal voting franchise. We provide sta-tistical evidence that the relationship between the voting franchise and spending on local public goods is U-shaped. This research was supported by the ESRC (grant no. L138251006). We have bene\u85ted from comment