Trends in Public Support for Welfare Spending: How the Economy Matters

Abstract

AbstractAs spending on welfare in the United States has increased over time, preferences for more spending have remained fairly stationary. Given that previous research shows that the public adjusts its welfare spending preference thermostatically in response to welfare spending, the over-time pattern of preferences implies that something must be producing an increase in public support, but what? We address this question, focusing on individuals' demographics and a set of aggregate economic variables, both macroeconomic and distributional. Results reveal that individual-level factors matter little to the temporal variation and aggregate economics matter a lot: there are pro-cyclical and counter-cyclical elements in spending preferences and a dampening effect of income inequality over time. The combination of these variables accounts for the underlying trend in welfare spending preferences in the US, and the method used to reveal these dynamics can be used to analyze preference evolution in other spending domains and countries.