Why do American state economies grow at such vastly different rates and manifest such wide differences in living standards? Volatile States identifies the sources of rising living standards by examining the recent economic and fiscal history of the American states. Delving deeply into the historical data to provide new insights about the factors that contribute to state economic success, the book departs from traditional analyses of economic performance with its emphasis on the role of volatility. In addition to identifying institutions and policies that are key determinants of economic success, Volatile States illustrates the considerable promise of a two-dimensional or mean-variance criterion for assessing state economic performance. The mean-variance perspective amends applications of growth models that rely on the mobility of productive factors keyed to income levels alone. Just as rates of return by themselves provide an incomplete basis for gauging portfolio performance, the level of growth in state economies reveals an incomplete and perhaps distorted picture of performance. Taking the volatility of state economies explicitly into account refines the whole notion of "economic success