Monday Map: State Revenue Volatility
June 20, 2011
Today’s Monday Map shows volatility in state revenues over the past decade. The volatility score is expressed as a percentage of the top state, which is Alaska.
A note on methodology: To calculate the revenue volatility, we start by looking at per capita revenues in real 2009 dollars, from 2000 to 2009. We then fit an exponential trendline through the ten data points, calculate the standard deviation, and divide that number by the average revenue of all ten points. For Alaska, this number is 0.454 (i.e., the standard deviation from an exponential fit is equal to 45.4% of the average revenue over the time period.) Other states are expressed as a percentage of Alaska’s score (i.e. Alaska = 100.) Alaska’s volatility is high because the state is heavily dependent on oil revenues, which are more volatile than more conventional sources of state revenue.