¹ See Russett, Bruce, ‘Who Pays for Defense?’, American Political Science Review, LXIII (1969), 412–26CrossRefGoogle Scholar; and Wilensky, Harold, The Welfare State and Equality (Berkeley: University of California Press, 1975), pp. 79–80.Google Scholar

² Baran, Paul and Sweezy, John, Monopoly Capital (New York: Monthly Press, 1966)Google Scholar; Heclo, Hugh, Modern Social Politics in Britain and Sweden: From Relief to Income Maintenance (New Haven, Conn.: Yale University Press, 1974), pp. 89–90Google Scholar; Rimlinger, Gaston V., Welfare Policy in Europe, America and Russia (New York: Wiley, 1971), PP. 59–60.Google Scholar

³ Gouldner, Alvin W., The Coming Crisis of Western Sociology (New York: Basic Books, 1970).Google Scholar

⁴ Eckstein, Otto, ‘Discussion’, in Abshire, David and Allen, Richard V., eds., National Security: Political, Military, and Economic Strategies in the Decade Ahead (New York: Praeger, 1963).Google Scholar

⁵ For studies which conclude for the most part that no defence-non-defence tradeoff occurs, see Pryor, Frederic, Public Expenditures in Communist and Capitalist Nations (London: Allen and Unwin, 1968)Google Scholar; Caputo, David, ‘New Perspectives on the Public Policy Implications of Defense and Welfare Expenditures in Four Modern Democracies: 1950–1970’, Policy Sciences, VI, 423–46Google Scholar; Ames, Barry and Goffman, Ed, ‘Education and Defense Expenditures in Latin America: 1948–1968’ in Liske, Craig et al. , eds., Comparative Public Policy (New York: Halstead Press, 1975)Google Scholar; Hayes, Margaret Daley, ‘Policy Consequences of Military Participation in Politics: An Analysis of Tradeoffs in Brazilian Federal Expenditures’Google Scholar in Liske, , Comparative Public PolicyGoogle Scholar; Taylor, Charles and Hudson, Michael, World Handbook of Political and Social Indicators II (New Haven: Yale University Press, 1972).Google Scholar

For studies which indicate the existence of a tradeoff, see Russett, , ‘Who Pays for Defense?’Google Scholar; Wilensky, , The Welfare State and EqualityGoogle Scholar; Peroff, Kathleen, ‘The Warfare-Welfare Tradeoff: Health, Public Aid, and Housing’, Journal of Sociology and Social Welfare, IV (1977), 46–55.Google Scholar

⁶ Special Study Group, Report from Iron Mountain on the Possibility and Desirability of Peace (New York: Dial Press, 1967), p. 91.Google Scholar

⁷ Benoit, Emile, ‘The Monetary and Real Costs of National Defense’, American Economic Review, LVIII (1968), 398–416.Google Scholar

⁸ Russett, , ‘Who Pays for Defense?’Google Scholar; Hollenhorst, and Ault, , ‘An Alternative Answer to: ‘Who Pays for Defense?’, American Political Science Review, LXV (1971), 760–3.CrossRefGoogle Scholar

⁹ Pechman, Joseph, Federal Tax Policy (New York: W. W. Norton, 1971), p. 102.Google Scholar

¹⁰ See Pryor, , Public Expenditures, p. 121Google Scholar, and Taylor, and Hudson, , World Handbook of Political and Social Indicators II, p. 34.Google Scholar

¹¹ For a description of the Cochrane-Orcutt procedure, see Johnston, J., Econometric Methods, 2nd edn. (New York: McGraw-Hill, 1972), pp. 262–3.Google Scholar

¹² Hayes, , ‘Policy Consequences of Military Participation’, p. 28.Google Scholar

¹³ See Hollenhorst, and Ault, , ‘An Alternative Answer’, pp. 61–2.Google Scholar

¹⁴ It is possible to conduct the same test by estimating a single equation with both linear and quadratic terms. In this case, the choice of the functional form only depends on which estimate(s) is/are significant. While this procedure gains in parsimony, the resulting multicollinearity in our equations raised problems for significance testing.

¹⁵ Bolton, Roger, Defense Purchases and Regional Growth (Washington, D.C.: Brookings, 1966), pp. 60–3.Google Scholar

¹⁶ Blechman, Barry, Gramlich, Edward M. and Hartman, Robert W., Setting National Priorities: the 1976 Budget (Washington, D.C.: Brookings, 1975), pp. 18–19.Google Scholar

¹⁷ The data for creating the public funding scores were obtained from the following sources: United States Department of Commerce, Bureau of the Census, Statistical Abstract of the United States for the fiscal years 1929–1974Google Scholar (Washington, D.C.: Government Printing Office, 1930–75 annually).

¹⁸ An important piece of legislation in the case of health construction was the Hill-Burton Act of 1946 (Hospital Survey and Construction Act). This legislation, which initiated federal grants to assist states in hospital construction, should have positively affected private sector activities in this area. However, we do not test for this in the health construction tradeoff equation since the equation is based on data from the years 1948–74. To assess the programme's impact would require a longer expenditure series extending several years prior to 1946. This would allow an examination of before and after behaviour of these private expenditures. Unfortunately, such data do not exist for the years prior to 1948.

¹⁹ Pryor, Frederic, ‘Elements of a Positive Theory of Government Expenditures’, Finanzarchiv N.F. Band 26 (12), 405–30, p. 410.Google Scholar

²⁰ To obtain these expenditure data, the following sources were used: United States Office of Management and Budget (formerly Bureau of the Budget), The Budget of the United States Government for fiscal years 1929–74 (Washington, D.C.: Government Printing Office, 1929–1974 annually)Google Scholar; Message of the President of the United States Transmitting the Budget for fiscal years 1929–1974 (Washington, D.C.: Government Printing Office, 1929–74 annually)Google Scholar; United States Department of Health, Education and Welfare, Social Security Administration, Office of Research and Statistics, Cooper, Barbara S., Worthington, Nancy L., and McGee, Mary F., Compendium of National Health Expenditures Data (Washington, D.C.: Government Printing Office, 1973)Google Scholar; United States Department of Health, Education and Welfare, Social Security Administration, Office of Research and Statistics, Merriam, Ida C. and Skolnick, Alfred, Social Welfare Expenditures Under Public Programs in the United States, 1929–1966 and Appendices (Washington, D.C.: Government Printing Office, 1968, 1973, 1975).Google Scholar

²¹ For an equation based on an N of 44 with six independent variables, the lower boundary of the Durbin-Watson is about 1·23 and the upper value is 1·84. Any value above 1·84 indicates no first-order serial correlation at the ·05 level of significance.

²² Since these equations have not been estimated by ordinary least squares, the R ² values are biased and should be interpreted with more than normal caution.

²³ Equations were also estimated which contained interaction terms for the Korean and Vietnam Wars in order to test for differences in tradeoffs during these years but the estimates were insignificant, suggesting no changes in the tradeoff. Since this could have been the result of multicollinearity, bivariate estimates were obtained. Again, no differences between years of war and years of peace were revealed. In the light of our small sample size and problem of multicollinearity, these two terms were therefore dropped from the final equation in Table 5.

²⁴ Russett, , ‘Who Pays for Defense?’Google Scholar; Wilensky, , The Welfare State and EqualityGoogle Scholar; Eckstein, , ‘Discussion’Google Scholar; Gouldner, , The Coming Crisis of Western SociologyGoogle Scholar; Rimlinger, , Welfare Policy in Europe, America, and Russia.Google Scholar