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Research by Turner College's Center for Economic Education Examines Prevalence of State-Level Sovereign Wealth Funds in the U.S.

On February 3, 2025, U.S. President Donald J. Trump signed Executive Order 14196 titled “A Plan for Establishing a United States Sovereign Wealth Fund.” The announcement, conducted before a worldwide television and internet audience, sent people around globe scrambling for an explanation of “sovereign wealth fund,” as evidenced by Google Trends data on the day of the announcement. Many of the internet searches described above likely led to Investopedia, which defines a sovereign wealth fund as a state-owned investment fund comprised of money and other assets emanating from a variety of sources and used for a variety of purposes. New research by Center for Economic Education Director Frank Mixon and the University of New Haven's Kamal Upadhyaya asserts that, at the time of the announcement, most Americans did not know that the U.S. is home to more than 20 domestic sovereign wealth funds, with the first being the Texas Permanent School Fund, which was established in 1845 to fund K-12 education in the state and currently boasts a balance of $57.3 billion. Their research offers the first examination of why some U.S. states have established sovereign wealth funds while others have not. In doing so Mixon and Upadhyaya find that various demographic and economic variables explain this choice. More specifically, linear probability, probit and Bayesian maximum likelihood analyses indicate that less populated, high-income and land-and oil-rich states are more likely than their more populated, lower-income and resource-poor counterparts to currently possess a sovereign wealth fund. Additionally, spending on K-12 education per pupil in a state is negatively related to the likelihood the state owns a sovereign wealth fund, perhaps because states that spend more heavily on education have limited absorptive capacities relative to the scale of their resource revenues. Lastly, public finance innovations, such as the presence of lottery systems, are also negatively related to the probability of observing a sovereign wealth fund as both tend to be used to finance similar public projects.
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