You Can't Always Get What You Want - East and West Germans' Attitudes and Preferences Regarding the Welfare State

Abstract

More than twenty years after the fall of the iron curtain, do citizens from former Communist countries still exhibit attitudes and preferences with regard to the welfare state and income redistribution that differ from those in the West? This paper seeks to answer this question for Germany after reunification using not only survey data on attitudes but also evidence on preferences from a discrete choice experiment, both based on a representative sample. In a first step, we revisit the empirical evidence, compare our results to those of Alesina and Fuchs-Schundeln (2007) and test whether convergence of attitudes has yet been achieved. In a second step, we apply an advanced method to investigate preferences for redistribution in terms of willingness to pay. This framework is more in line with standard public choice theory as individuals are forced to overcome trade-offs and are exposed to take their inherent budget constraint into account when voicing their opinion on redistribution. The results are quite mixed. While East Germans seem to desire a higher amount of redistribution than West Germans, they are not willing to contribute more through taxation. This finding has important implications for social policy in reunified Germany.