The Rural-State Myth

by Wyoming Liberty Group Staff

It is sometimes suggested that Wyoming needs more government spending per capita because we are a rural state. As recently as on July 21, the Casper Star Tribune suggested as much:

According to a 2018 analysis by USA Today, state and local government spending per capita in Wyoming is the second-highest in the nation, largely because of the small and widely dispersed population.

Let us dispel this "rural state" myth once and for all. There is, plainly, no statistical ground for making this tie between government spending and population density.

Figure 1 reports state and local government spending per capita (G/N) and population density, measured as total population over total square miles, by state. In other words, it does not adjust for federal lands ownership (that is what Figure 2 is for). As we can see, there is no obvious correlation between per-capita government spending (left axis) and a state's population density (right):

Figure 1

Sources: Census Bureau (Spending; Population; 2016 numbers); Ballotpedia (State acreage, converted to square miles)

In fact, if there is any correlation to be found, it goes in the opposite direction: the ten states with the highest population density (627.7 residents per square mile) have a per-capita government spending of $12,060. Then, as we work our way down the deciles, population density falls and state spending stays just a hair over $10,000 per year.

Until, that is, we get to the decile where Wyoming and Alaska are:

A closer look at the ten most rural states reveals that the trend of lower per-capita spending prevails, with Wyoming and Alaska being the notable exceptions:

Montana's population density is only slightly higher than ours, yet per capita they only spend 55 cents for every dollar we spend.

South and North Dakota have almost the exact same density, yet South Dakota per-capita spending is less than two thirds of what it is in its northern neighbor. Nebraska's density is 20 percent higher than Idaho's, and its spending is 66 percent higher.

Again: there is absolutely no statistical evidence suggesting that rural states need a bigger per-capita government spending. In fact, just to make sure these results are adequate, let us deduct federal lands from the acreage of each state (under the assumption that federal lands cannot be used for anything productive). Figure 2 explains:

Sources: Census Bureau (Spending; Population; 2016 numbers); Ballotpedia (State acreage, converted to square miles)

Wyoming now has a higher density than North Dakota and Montana, as well as a higher per-capita government spending than these two states.

In New York, government spends almost as much as we do per capita: 95 cents to every dollar we spend. Yet their population density adjusted for federal lands is more than 36 times ours. Almost the exact same spending in a vastly more densely populated state.

North Dakota has virtually the same population density adjusted for federal lands as we do (11.3 vs. 11.4). Government spending per capita is only 82 percent ours.

In Montana, federal-lands adjusted population density is at 10.0, compared to our 11.4, yet their state and local governments only spend 55 percent of what we do, per capita.

Plainly: there is no correlation between population density and per-capita government spending. Neither economic theory nor statistical evidence can corroborate that suggestion. Let us admit the cold, hard truth: we have an unnecessarily large government.