Iowa and New Hampshire
Knowing that ethanol subsidies drive up the price of corn and might even harm the economy, presidential candidates tend to support them. Why? Iowa. Which early voting states receive more federal dollars after a primary election? Probably not New Hampshire. (Voters chose Hillary.)
You can see where this is going. Iowa and New Hampshire are early primary states. And, because “All Politics is Local,” the dialogue is about topics that are near and dear to the early primary states. We hear more about their issues. And, if they choose the right candidates, then they get more money afterwards. According to one academic paper, an early primary state that chose the winner got $35.29 more in “procurement per capita than if it had picked a loser.” In other words, if businesses in that state wanted a defense contract, they would probably get it. Because of its disproportionate impact on the presidential dialogue, the early state bias concerns NY Times columnist David Leonhardt.
Here, you can see the primary schedule for the 2012 presidential election.
The Economic Lesson
Urban areas dominate our economy. The main source of new ideas, our 25 largest metro areas are where 52% of our economic output and 42% of our population come from.
An Economic Question: Which specific economic issues would dominate if an urban state had an early primary?