Spending and cutting are two different worlds: experimental evidence from Danish local councils

Abstract

ABSTRACTThis article investigates politicians’ preferences for cutting and spending. The research questions are where do politicians prefer to cut, where do they prefer to spend and how is this influenced by political ideology? These questions are investigated in a large-scale survey experiment fielded to Danish local councillors, who are randomly assigned to a decision-making situation, where the block grant provided to their municipality is either increased or reduced. The results show that the politicians’ preferences for cutting and spending are asymmetric, in the sense that the policy areas, which are assigned the least cuts when the grant is reduced, are rarely the ones which are assigned extra money when the grant is increased. Areas with well-organised interests and a target group which is perceived as deserving are granted more money, whereas policy areas where the target group is perceived as less deserving receive the highest cuts. Ideology matters as left-wing councillors prefer more vague categories when cutting and prioritise childcare and unemployment policies when increasing spending. In contrast, right-wing councillors prefer to cut administration and increase spending on roads.