Measuring Attitudes toward Public Spending Using a Multivariate Tax Summary Experiment

Abstract

AbstractIt is difficult to measure public views on trade‐offs between spending priorities because public understanding of existing government spending is limited and the budgetary problem is complicated. We present a new measurement strategy using a continuous treatment, multivariate choice experiment. The experiment proposes deficit‐neutral bundles of changes in spending and taxation, allowing us to investigate attitudes toward modifications to the existing budget. We then use a structural choice model to estimate public preferences over spending categories and the taxation level, on average and as a function of respondent attributes. In our application, we find that the UK public favors paying more in tax to finance large spending increases across major budget categories, that spending preferences are multidimensional, and that younger people prefer lower levels of taxation and spending than older people.