Sometimes what appears as a drop in the bucket can instead answer a big question about how our municipal governments work.
Karam Kang, the Laurits R. Christensen Professor in the Department of Economics, understands just that.
“To answer questions [about governmental units] you need to know the institution very well,” Kang says. “You need to know what each data point is actually measuring and whether the measurement is correct.”
Kang’s research has covered everything from violation enforcement at California water treatment plants, municipal bond design and the effectiveness of political lobbying. The central question that ties Kang’s expansive work together is rather straightforward: What is the objective function of the government and its policymakers?
“I explore how policies are enacted, enforced and implemented,” she says.
Americans remain largely distrustful and dissatisfied with the function of our government systems. According to a 2022 report of the Pew Research Center, just 8% of people say the federal government is responsive to the needs of ordinary Americans. But this enduring trend is not what made Kang investigate the overarching purpose of local government systems. Instead, a profound love for data led her to a treasure trove of information.
“Governments’ detailed records help us better measure and quantify the effects of government policies and the incentives of government officials,” Kang says.
This vast data provides a foundation to explore the economic interests found in regulatory processes, such as the benefits and consequences associated with a regulatory choice that ultimately impact policy decision making and its subsequent application. With this information, Kang can answer intricate questions about municipalities.
Inspired by the Flint, Michigan water crisis, Kang sought to investigate the effectiveness of government enforcement at California wastewater treatment plants. She wanted to know why regulators punished some facilities more than others — for similar violations.
Published in 2021, this study unveiled the effectiveness of enforcement in addition to the reasoning behind disparities in violation and enforcement trends. Kang found it was compliance costs, not the preferences of individual regulators, that drove disparities in penalties at water treatment plants. But this was no simple discovery.
“If you want to understand what’s really happening, you need to go to the micro level,” Kang says. “It answers the big questions.”
Kang and co-author Bernardo S. Silveira, now an assistant professor at the University of California, Los Angeles, compiled violation data from each water treatment facility, accessing the attributes of each violation, its contents and what type of enforcement actions took place, if any.
Using the complex data, the researchers were able to determine that policies that allow for regulator discretion, through which officials can penalize actions differently depending on the circumstances of a violation, can reduce government enforcement costs and increase compliance.
“That level of detailed information helps us use the economic theory and measure the governments’ incentives,” she says.
Although Kang cannot make large, overarching statements about the efficacy of all water treatment plants or all government systems, she emphasizes the importance of understanding the intricacies of specific systems to better comprehend the broader world around us.
“I don’t have a specific agenda,” Kang says. “I just want to know and document what is happening.”