Social Policy in the European Public Opinion: An Implicit Contract between State and Society

Abstract

Using the cross-country ESS (2008) data file, the author explores welfare attitudes of population of European countries, the demand for social policy, the willingness to participate in its financing, and the difference between these two parameters. The paper argues that expectations associated with social policy and willingness to accept higher taxation in order to receive more benefits as well as the gap between these two depend on institutional characteristics of the countries that constitute the factors of fiscal illusion. Poor institutions and the lack of transparency in fiscal and social policies feed corruption and fiscal illusion, therefore generating misperceptions and free rider behavior.