Policy Studies Journal, Vol. 24, No. 2,1996 (321-326)

The States and Policy InnovationResearch: Lessons From the Past andDirections for the Future

Scott P. Hays

Steven D. Gold (Ed.), The Fiscal Crisis of the States: Lessons for the Future.Washington, DC: Georgetown University Press, 1995. $19.95 paper"$42.50 hardcover. 396 pages.

David C. Nice, Policy Innovation in State Government. Ames, IA: Iowa StateUniversity Press, 1994. $32.95 hardcover. 169 pages.

Matthew E. Wetstein, Abortion Rates in the United States. Albany: StateUniversity of New York Press, 1996. $16.95 paper; $49.50 hardcover.153 pages.

In recent years, state policy research has returned to issues surrounding statepolicy innovation. For example, recent research utilizing event history analysisallows researchers to model how changes in state characteristics over time,particularly increasing adoptions among neighboring states, stimulate policyadoption (Berry & Berry, 1990; Berry, 1994). Further, research on the evolution ofinnovations as they diffuse, known as policy reinvention, demonstrates that later-adopting states leam from earlier adopters and that states adapt innovations to theirown circumstances as they diffuse (Mooney & Lee, 1995; Clark, 1985; Glick &Hays, 1991; Glick, 1992; Hays, 1996). Three new books offer both theoretical andmethodological insights for innovation research. This essay examines these threebooks, considering tlieir contribution to the growing body of innovation researchand to the study of state policy more generally.

Innovation research often classifies states according to their degree of"innovativeness." Over the years, research has identified several dimensions ofinnovativeness. The first is whether or not a state adopts an innovation: Aninnovative state is one that adopts an innovation. This approach is characterized byDavid C. Nice's book. Policy Innovation in State Government. The seconddimension concerns when the state adopts an innovation: An innovative state isamong the first to adopt an innovation. This approach is characterized by theseminal work of Walker (1969), Gray (1973), and Savage (1978). Their researchutilizes a state innovativeness index based on the dates of adoption of a number ofpolicies among states. The third dimension is the character of the innovation itself:An innovative state adopts a more comprehensive version of an innovation (Downs& Mohr, 1976). This approach is characterized by recent research on policyreinvenuon (Mooney & Lee, 1995; Clark, 1985; Glick & Hays, 1991; Glick, 1992;Hays, 1996) and to some extent by the works of Wetstein and Gold reviewed here.

From a methodological standpoint, innovation studies utilize a variety ofapproaches. Innovation research, and state policy research more generally, focuseson four types of variation: State characteristics vary, the impact of thesecharacteristics on different state policies varies, the content of particular statepolicies varies, and each of these factors may vary temporally. Studies of statepolicy adoption vary in their approach, and the studies reviewed here are noexception. Gold examines the variation in policy responses to fiscal crisis over aperiod of four years; Nice examines the different state characteristics that impact the

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adoption of various state policies; Wetstein examines state characteristics that leadto variation in state abortion policies, and the impact of policies on the behavior ofcitizens.

Moreover, different studies rely on different units of analysis, and the booksreviewed here provide examples of various approaches. Utilizing a case studyapproach that focuses on six states. Gold compares the situations that have led tothe fiscal crisis currently experienced by each state and its policy responses to thiscrisis. Nice utilizes a cross-sectional design and a quantitative, 50-state comparativeapproach, comparing the different causal factors that stimulate state adoption ofdifferent policies. However, Nice does not examine the resultant differences inpolicy among the states. Focusing on the variation in a single policy area—abortion—^Wetstein examines both the causal processes leading to different abortionpolicies and the effect of both policy and public opinion on abortion rates.

Steven Gold's lesson, in The Fiscal Crisis of the States, could be that ifnecessity is the mother of invention, then fiscal crisis is the mother of policyinnovation. Gold's edited work examines the fiscal crisis in separately-authoredchapters through detailed case studies of California, Connecticut, Florida,Massachusetts, Michigan, and Minnesota. Each author outlines the factors leadingup to the fiscal crisis in each state, discusses both the revenue and expenditureresponses to the crisis, and details innovations that states have adopted as a responseto, or in some cases in spite of, the crisis.

The primary contribution of this work lies in connecting crisis andresponse and in illustrating the varied state responses to similar crises (althoughcertainly the extent of the crisis varies among these states). For example,Connecticut adopted its first income tax, but Massachusetts and Michigan avoidednew taxes, relying instead on spending cuts with significant efforts at increasingprivatization. Florida adopted no new taxes, relying on incremental adjustments,while adopting several policy and procedural innovations. Califomia engaged in amajor realignment effort of state and local relations. While the crisis did not affectMinnesota as severely as it did the other states, Minnesota continued in itsinnovative tradition by adopting significant reforms in schools, health care, andwelfare.

Responses to the fiscal crisis consisted basically of two strategies—budgettrickery and innovation. Budget tricks included relying on a federal Medicaidloophole to qualify for greater federal funds, and one-shot budget reductions to keepstate budgets balanced during the period of fiscal crisis. Innovations includedadopting school choice in education, and comprehensive welfare reform focusing onchild care, health care, training, and eamings retention. Other innovations, derivedfrom the Osbome and Gaebler book. Reinventing Government (1992), focused onorganizational restructuring to increase efficiency.

The primary limitation of this work is that readers will be left aching toknow about the success of these various state innovations. What Gold does have tosay is not especially encouraging in this regard: "... over and over we have foundeither that celebrated departures were not as far-reaching as rhetoric implied or that itwas too soon to tell how successful they will be. The quest for a magic bullet isfruitless (page 380)." Ultimately, then, reading Gold is like a cliffhanger, leavingthe reader craving for the sequel: What happens in these states? If the lessons of thepast are in fact lessons for the future, as the subtitle suggests, the answer would beto expect only marginal change.

As it relates to innovation diffusion. Gold's book is primarily a vehicle fordiffusing information about state responses to fiscal crisis. Although the book

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shows that different states may respond to crisis in dramatically different ways, thesesix states, "with the best reputations for being innovative or abandoning business asusual" (page 380) do provide guideposts for states to observe and consider foradoption in their own state. Thus, Gold's book ultimately may be most useful toactual policymakers, rather than to those interested in building theories of theadoption or implementation of innovations.

David Nice's book. Policy Innovation in State Government, integratesvarious previous research projects Nice has conducted. For him, the adoption ofpolicy innovation is both dichotomous and cross-sectional. Property tax relief isthe only policy innovation for which Nice considers the differences among specificstate adoptions, and even there the coding is a trichotomy, rather than a dichotomy.Nice utilizes a comparative method, examining the causal processes underlying theadoption of eight quite distinct policy innovations. Policy adoption usually wasmeasured as of the early- to mid-1980s. These include teacher competency testing,ratification of the Balanced Budget Amendment to the United States Constitution,sunset laws, public financing of election campaigns, rail passenger service, propertytax relief, deregulation of intimate behavior, and state ownership of freight railroads.For many years, it has been clear that different causal processes underlie differentpolicies, yet precious few state policy studies integrate a variety of different singlepolicies into one analysis and draw comparisons among them as Nice does.

For Nice, adoption of a policy innovation is a function of the problemenvironment, slack economic resources, and a state's general orientation towardgovernment activity and change, specifically political ideology and generalinnovativeness. Consistent with the major thrust of Gold's book, Nice finds that astate's problem environment stimulates policy innovation; for five of hisinnovations, the problem environment creates a significant stimulant for policyinnovation. In contrast to one of Jack Walker's (1969) key findings, Nice findslittle support for the role of slack economic resources for any of his eight policies.Finally, ideological liberalism generally did not create a supportive orientation forpolicy adoption, as Nice hypothesizes, but did create a supportive atmosphere foradoption where the policies were more liberal in nature—for example, property taxrelief, public financing of elections, and the repeal of sodomy laws. However, asidefrom these, few broad generalizations about the factors infiuencing innovation werepossible. Indeed, one of the primary contributions of the Nice book is to point tothe different causal processes that underlie the adoption of different policies.

One limitation to Nice's work is the dichotomous operationalization of thepolicy adoption variable. This work fails to recognize both recent and older researchsuggesting that the key dependent variable in innovation should be the extent ofadoption rather than simply whether a state adopts (Downs & Mohr, 1976).Second, suggesting that greater policy or ideological liberalism creates a moresupportive "orientation toward govemment power and change," and thus stimulatesinnovation, is a dubious proposition at best. Certainly, Gold's book implies thatconservatives derive just as many policy innovations (i.e., privatization, schoolchoice, tax reform) in response to fiscal crises as do liberals. Previous researchsuggests that the third factor stimulating innovation should be obstacles toinnovation (Downs & Mohr, 1976; Berry & Berry, 1990), something that Nicediscusses but does not integrate into his model. Finally, Nice fails to integrateother factors into his analysis, including the role of pressure groups (Ringquist,1993), neighboring states (Berry & Berry, 1990; Berry, 1994) and more recentresearch on the role of policy entrepreneurs in stimulating policy innovation(Mintrom, 1994).

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Matthew E. Wetstein's book. Abortion Rates in the United States, doesnot deal with policy innovation directly, but the method and findings do haveimplications for innovation research. Wetstein's work represents a significantexpansion of Nice's analysis in two ways: (1) by assessing the stringency of stateabortion laws, rather than merely dichotomous adoption, and (2) by looking at theimplementation of abortion policy through its impact on abortion rates. This bookfollows a relatively recent and welcome development in the policy literature—connecting policy and other societal variables directly to policy outcomes(Ringquist, 1993; Meier, 1994). Moreover, Wetstein's study—an excellent exampleof multimethod research—utilizes a variety of quantitative techniques, fromtraditional legal analysis, to autoregressive-integrated moving average (ARIMA)time series modeling, to linear structural relations (LISREL) models, in examiningstate abortion politics from several angles.

Wetstein finds higher abortion rates in states where mass publics andgovernments promote access and choice, and lower abortion rates where masspublics and govemment favor more traditional, pro-life values. This evidence of alinkage among opinion, policy, and actual behavior is indeed a welcome addition tostate policy research. Moreover, the influence of Catholicism leads to a morerestrictive abortion law, thus restricting access to abortion and leading to fewerabortions. Religious fundamentalism has a similar effect.

Two contributions of Wetstein include the multimethod approachmentioned earlier and the measurement of the dependent variable. Wetslein considersand compares several operationalizations of the dependent variable of abortionpolicy, which in itself recognizes the varied nature of state policy responses toabortion. To an extent, even recognizing this variation is a contribution toinnovation research.

The primary drawback to Wetstein's study is the nongeneralizability ofabortion politics to other policy areas. In fact, while Wetstein makes much offinding evidence supporting the opinion-policy connection, I would argue that thisis rather unsurprising given the high salience of abortion politics to individuals. Asecond critique is that, while the chapter on the United States Supreme Court's rolein abortion policy is interesting, it is not well-integrated into the rest of the book.Indeed, the role of state courts as players in abortion politics, while hinted at inchapter 3, subsequently is ignored in the rest of the book.

All three books contribute in various ways to theory-building regardinginnovation in state politics. First, Nice and Gold demonstrate clearly thatinnovation is a response to problem environments. Second, Gold and Wetsteinspeak to the adaptation of policies in particular states, by taking policy adoptionbeyond the dichotomous operationalization common to much innovation research.Third, Nice demonstrates that different forces drive the innovation process fordifferent policies. Thus, in the debate on the generalizability of innovativeness as astate characteristic, Nice supports the findings of Gray (1973) that innovation maybe policy-specific. Perhaps another contribution of Nice is the chapter on sodomylaws. This indicates that innovation could consist of repealing an anachronistic law,just as well as it could be the adoption of a new law. Perhaps more work should bedone on policy repeal as innovation.

Wetstein's work, the only one of these three to consider policyimplementation directly, suggests another unexplored linkage for innovationresearch: that is, the link between implementation and future policy change. Forexample, if an innovative policy does not have the desired implementation impact,how do policymakers alter the innovation in the future?

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More generally, these books also offer a somewhat ambiguous conclusionabout the impact of economic factors in state politics. Since he focuses on theimpact of fiscal crisis. Gold suggests a much greater influence of fiscal resourcesthan does Nice. While Nice's findings downplay the role of "organizational(meaning economic) resources," the dependent variable for Nice is not inherentlyfiscal in nature. And, Wetstein suggests a role for socioeconomic variables ininfluencing both abortion policy and abortion utilization, which is primarily aregulatory, and not a fiscal, policy. Here we can offer no hard and fast conclusionregarding economic determinism.

On a further, more quantitative note, Nice's work points clearly to thevalue of comparative state policy research and of integrating several quite variedpolicies into a single theoretical framework. Wetstein, focusing on only a singlepolicy, demonstrates the utility of a multimethod approach relying on a variety ofquantitative techniques. Finally, Gold reveals lessons to be learned from careful,qualitative case study research.

In short, while each of these works sheds light on parts of the innovationpicture, none offers the definitive conclusions that researchers often seek. But, byshedding the light they do, they reveal important parts of the picture and focus thedirection for future research. Gold suggests a need for evaluations of currentinnovations to structure the direction of future innovation. Nice suggests a need formore thorough comparative analysis, and Wetstein suggests increased importance forthe role of public opinion and the impact of opinion and policy on rates of policyimplementation. None of these books should be ignored by those interested ininnovation or other state policy research.

Scott P. Hays is an assistant professor of political science at SouthemIllinois University. He has published in the area of state policy innovation, with aninterest in policy reinvention. His work has appeared in The Journal of Politics andPolitical Research Quarterly.

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