The Design of Welfare: Unraveling Taxpayers' Preferences

papers.ssrn.com

2009

textabstractThe aim of this research is to better understand what is meant by general support for the welfare state. At the start of this study, I observed an alleged discrepancy between people’s preferences and welfare state policies. Whereas on the one hand various studies demonstrate that public support for generous welfare state arrangements remained high or in some countries increased across time, actual policy designs changed in the opposite direction and became increasingly sober and conditional. This mismatch between preferences and welfare state transformations has led me to research in detail whether and why the public continues to support welfare state arrangements. In general, this study reveals three conclusions that extend previous research in the field. First, welfare state support and real welfare policies are inextricably intertwined. Individual welfare preferences cannot sufficiently be understood if the reform of various welfare state policies is not considered si...

2003

The public choice literature urges the welfare economist to anticipate how political forces will shape the levels of new policy instruments when government intervenes in a new way. This paper argues that the welfare economist should also recognize that new interventions may impact the politically determined levels of existing policy instruments. It shows how the introduction of a new instrument can lead to shifts in political coalitions or compromises in existing areas of conflict that can produce significant changes in existing policies. Such spillover effects can provide new arguments for introducing particular policy interventions. Even a policy instrument without an obvious welfare economic rationale can change voter coalitions and shift the policy equilibrium in a welfare improving direction.

The Elgar Companion to Public Choice, Second Edition

In the 25-year period between 1960 and 1985, social insurance and transfer programs expanded greatly in all Western countries. The fraction of GDP accounted for by government expenditures approximately doubled in much of Europe and grew by 40% to 50% in most other OECD nations. After 1985, there has been relatively little growth in the scope of the welfare state relative to other parts of the economy. This chapter summarizes public choice and related research on the political economy of the welfare state. There are essentially two strands of the literature. One stresses the extent to which institutions, voter interests, and ideological shifts account for the period of rapid growth. The other emphasizes the importance of interest groups, who lobby for extensions of the welfare state in order to profit from larger budgets, more generous transfers, or new spending by those receiving the transfers. This chapter suggests that ideas as well as conventional economic interests also played a role in the twentieth century expansion of the welfare state.

Policy & Politics, 2015

Since the mid-1980s, welfare state arrangements have become increasingly conditional and austere. Simultaneously, deservingness perceptions have become increasingly important. This paper examines preferences as to which social categories contemporary welfare state reforms should target. Using unique data from a 2006 Dutch survey, the results reveal that the Dutch discern two principles of welfare state reforms -the first tapping into distributive reforms -decreasing redistribution, the latter tapping into commodifying reforms -increasing recommodification. Moreover, the level of people's identification with social categories explains why the public prefers commodifying reform to be intensively targeted at some social categories, but not at others.

Public Choice, 1989

Most analyses of preferences for government-supplied goods disregard the fact that in a democratic society, these preferences are revealed by an individual choice: the vote. In this paper this is taken account of in a model, explaining the dynamics in voting behavior in a multi-party system. The model assumes that voters may be categorized into K groups of individuals, pursuing the same interests, who remember how parties do in representing these interests (given the level to which they are held responsible for government policy). The model allows one to estimate party identification, sensitiveness to economic performances, time preference, and relative preferences for public versus private goods, all for each of the groups. Furthermore, the model allows for an estimation of the level to which various parties are held responsible for government policies. An empirical application of the model to the Netherlands is presented, albeit that data restrictions did not allow a distinction of more than one group. The results in terms of significance of the coefficients as well as the interpretation of the original parameters are promising. The two main conclusions are that the relative preference for private versus collective consumption is lower than the existing ratio in the Netherlands, and that two parties forming a government coalition are not held equally responsible for the policies.

The aim of this paper is to explore whether support for the welfare state is lower if people are made aware of its costs. Using data from a series of survey experiments in the German Internet Panel, we analyse individual spending preferences for different areas of the welfare state and support for redistribution. Tax constraints lead to lower support for unemployment benefits and for redistribution. Tax constraints do not affect support for more spending on pensions, healthcare, and long-term care. We consider whether the effect of tax constraints varies with pre-existing political attitudes or with individual material circumstances. We find little evidence that a political ideology makes respondents more responsive to tax constraints. However, we find some support that low income respondents are less responsive to the tax constraint and maintain their high support despite its costs. Attitudes towards the welfare state are not independent of attitudes towards taxation, and we conclude that our understanding of public attitudes might considerably benefit from combining these different strands of the literature.

Economic Inquiry, 2007

This article reports the results of a set of experiments designed to examine whether a taste for fairness affects people's preferred tax structure. Using the Fehr and Schmidt model, we devise a simple test for the presence of social preferences in voting for alternative tax structures. The experimental results show that individuals demonstrate concern for their own payoff and inequality aversion in choosing between alternative tax structures. However, concern for redistribution decreases as the deadweight loss from progressive taxation increases. Our findings have important implications for tax policy design. (JEL C92, D63, H21, H23)

Journal of Social Policy, 2011

Keywords << public opinion; old and new politics; institutions; welfare legitimacy>> Word count <<7,005>> Abstract A major shortcoming in the existing literature on welfare state legitimacy is that it cannot explain when social policy designs follow public preferences and when public opinion follows existing policy designs and why. Scholars examining the influence of public opinion on welfare policies as well as scholars investigating institutional influences on individual welfare attitudes find empirical evidence to support both relationships. While a relationship in both directions is plausible, scholars have yet to thoroughly investigate the mutual relationship between these two. Consequently, we still do not know under which circumstances welfare institutions invoke public approval of welfare policies and under which circumstances public opinion drives welfare policy. Taking a quantitative approach to public opinion and welfare state policies in the Netherlands, this paper addresses this issue in an attempt to increase our understanding of welfare state legitimacy. The results show that individual opinions influence relatively new policies, policies which are not yet fully established and where policy designs are still evolving and developing. Social policy, on the other hand, is found to influence individual opinions on established and highly institutionalised policies, but does not influence individual opinions in relatively new areas of social policy.

Comparative Political Studies, 2013

The dominant theoretical approaches in the comparative political economy of the welfare state provide alternative accounts for why some governments spend more on social policies than others. In the first, poor voters seek to increase their current income by taxing the rich, and social policy serves to redistribute income from the rich to the poor. In the second account, voters seek social insurance against future job loss, and social policy serves as an insurance mechanism rather than a redistributive one. Both of these accounts share the assumption that voters can clearly distinguish between the redistributive and insurance elements of public policy and, therefore, that individual-level characteristics (income, labor market risks) systematically shape preferences over social policy. Our goal is to examine the soundness of that behavioral assumption. We do so with a laboratory experiment that involves economic production, voting on taxation and fiscal transfers. We treat subjects wi...