Reward or Punish? Understanding Preferences toward Economic or Regulatory Instruments in a Cross-National Perspective

Abstract

This study is interested in cross-national differences in public preferences toward different forms of political steering. Using data from the International Social Survey Programme it was found that there is quite substantial variation between countries in policy preferences. It is suggested that this variation can be explained by the variation in the quality of public institutions (i.e. Quality of Government, QoG). Low QoG is associated with a preference for coercive regulatory instruments and an aversion toward reward-based instruments. The explanation provided is that low QoG is correlated with low social trust, which produces suspicion of defection and an urge to punish free-riders with strong or coercive instruments. Meanwhile, the aversion toward reward-based instruments decreases as the level of QoG increases. The public administration then has the bureaucratic capacity to deal with policies that demand bureaucratic discretion and actors are less likely to free-ride, generating a preference for reward-based incentives and less need for regulation.