The concept was first described in a metaphorical way by Arthur Okun in response to the research of his colleague Edward Gramlich, which was published in 1979 as The Stimulative Effects of Intergovernmental Grants.
[3] Local public resources come from both fiscal transfers from the central government in the form of grants and from the income of individuals.
This can be described as an anomaly since it is difficult to rationalize: one would expect that a government grant and an equivalent increase in local income to have the same effect.
As public officials are budget maximizers, the bureaucrats have no incentive to inform citizens about the true level of grant funding that a community receives.
[2] The original research performed by Courant, Gramlich and Rubinfeld was the first study to find an empirical result that would support the flypaper effect.