Topics as Outcomes: Modeling the Influence of Intergovernmental Grants on Policy Diffusion

ABSTRACT Intergovernmental grants stimulate the diffusion of policy reforms, as the federal government provides states with a financial incentive to adopt policies aligned with federal priorities. Less is known about the extent to which these grants also stimulate horizontal diffusion across states. To investigate the effects of intergovernmental grants on horizontal policy diffusion, we use structural topic modeling to construct a new measure of diffusion based on the prevalence of policy topics across introduced legislation. We demonstrate the utility of this measure using a case study of 4500 bills that US state legislatures introduced during and after the Race to the Top (RTTT) grant competition. We apply dyadic event history and temporal exponential random graph models to investigate the spread of RTTT‐related topics over time. We find that as grants were awarded, states emulated grant awardees in order to maximize their chances of receiving a future award. These findings highlight important implications for the design and effectiveness of intergovernmental grants.