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In a recent issue of this journal, professor Daniel Morgan presented several measures of state fiscal neglect or exploitation and concluded that regardless of the measure used the State of Texas neglects or exploits its urban areas. This comment points up serious conceptual, methodological flaws in Morgan's actual benefit measures and shows that these shortcomings may strongly affect the findings. All the exploitation or neglect measures developed by Morgan depend critically upon the actual benefit estimates, and the first also depends upon the distribution of actual taxes paid. The article cites an unpublished version of the study as the source of the methodology for attributing benefits and taxes to areas. The un-published paper clearly states that the actual benefit estimates reflect where the state facility is located or where the money is spent, rather than where the recipients of the service benefits reside. Attributing benefits to where the dollars are spent rather than where the beneficiaries reside may be criticized on two bases i.e. it views benefits as accruing to places rather than to people, and it focuses attention on inputs rather than on outputs. These conceptual shortcomings are related.

There has been a continuing debate in Texas and other states about the availability and cost of home insurance to residents of inner city and minority neighborhoods. Consumer and community advocates contend that insurers engage in redlining, or unfair discrimination against minority areas, by charging excessive prices and limiting the supply of insurance. Unfortunately, insurance redlining allegations have been largely based on simple comparisons of minority and nonminority areas that do not consider the influence of other factors. In this article, the authors build on a more rigorous vein of research by using econometric analysis to identify measurable factors that affect urban homeowners insurance markets. While this study cannot conclusively prove or disprove the presence and negative effect of unfair discrimination, it assesses whether significant statistical evidence exists for such behavior. The authors conclude that no statistical evidence of redlining exists and that the risk of loss and the demand for insurance appear to primarily drive the terms of insurance transactions. This conclusion implies that measures directed toward enhancing safety and bettering economic conditions offer the best prospects for improving urban insurance markets. [ABSTRACT FROM AUTHOR]