Objectives. Do large concentrations of elderly represent a “gray peril” to maintaining adequate educational expenditures? The gray peril hypothesis is based on an assumption of instrumental self-interest in political behavior. In contrast, we argue that loyalty to community schools competes with economic self-interest and that older citizens are heterogeneous in their preferences.
Methods. We test these arguments and their implications for public school finance using a data set of more than 9,000 school districts.
Results. The data show that longstanding older residents represent a source of support for educational expenditures while elderly migrants lower spending. Further, this divide among the elderly and their impact on policy outputs depends on how states finance local public education and on aspects of state and local tax policy.
Conclusions. Elderly concentrations are a financial asset for a school district unless the senior community includes a large number of new arrivals. The design of tax policy can have enormous impact on the depth of political cleavages and their ultimate impact on public policy. The results are consistent with the idea that loyalty—an emotional bond between residents and their community's institutions—competes with and often trumps instrumental self interest.