Effects of per capita payments on governance: evidence from tribal casinos

Abstract

Some governments distribute profits from state-owned enterprises to citizens on a per capita basis while others do not. Does the use of per capita payments affect how governments trade off pro-economy policies with other constituent interests such as environmental quality and public health? We study that question in the context of tribal government decisions to close or keep open casinos on American Indian reservations during the COVID-19 pandemic. Relying on per capita payment data and administrative information on the operational status of over 200 tribal casinos, we investigate how the distribution of per capita payments relates to the number of days casinos were closed from February 2020 through February 2022. After controlling for casino size at the onset of COVID-19, as well as demographic, economic, and geographic characteristics of the reservations on which the casinos operate, we find that casinos governed by per capita payments remained open about 17–29% longer than other reservation-based casinos. That finding suggests that per capita payments create a pro-economy constituency and implies that the decision to pay dividends directly to citizens affects the sizes of revenues from state-owned enterprises, such as tribal-government-owned casinos, rather than merely determining how they are distributed.