Preferences For Public Spending Research Articles

Government spending preferences over the life cycle

AbstractDo seniors have different public spending preferences than younger people? The literature on this topic has been limited so far to a few policies or to short periods of time, which makes it difficult to provide a comprehensive answer to this question. Using data from Canadian surveys conducted between 1987 and 2019 and covering fifteen policies, this paper shows that seniors, as compared to younger adults, are slightly more favourable to the status quo when it comes to government spending. Results also show that support for education spending decreases extensively over the life cycle, while support for environment spending decreases until middle age, then stabilizes. In contrast, support for transportation spending is more widespread in older age, while support for elderly services takes an inverted U-shape over the life cycle. These findings broaden our understanding of the influence of age on government spending preferences and allow us to reflect on the consequences of a growing senior electorate on government budgets.

Demand for Government Spending: Do Our Beliefs About Public Debt Matter?

Abstract Macroeconomic expectations play a major role in predicting individual choices and behavior. This paper examines the effects of public debt expectations and knowledge on demand for government spending measured by individual preferences. Using a unique survey dataset applied in Central and Eastern Europe, the results show that the most knowledgeable citizens tend to support the increase in public spending. Debt expectations also have a significant impact on public spending preferences: citizens who have negative debt expectations are less likely to support public spending increases. The results shed light on the importance of economic knowledge and information provision for shaping public attitudes about future taxation.

Form of government and voters’ preferences for public spending

This paper examines the effect of local political decision-making institutions (i.e., citizens assembly vs. representative democracy) on citizens’ preferences toward public spending. Exogenous variation in institutions comes from a regression discontinuity design, which exploits a discrete change in the probability that a municipality has representative democracy based on a legally stipulated population threshold in the Swiss canton (state) of Vaud. Policies preferences by municipality are measured by vote shares on Swiss national referendums and initiatives that, if approved, would have increased public spending. Relative to direct democracy, representative democracy reduces vote shares in favor of spending by around 5 percentage points. The effect is unlikely due to sorting on other observables or to feedback from changes in local policies. These findings demonstrate the importance of preferences as a channel through which political decision-making institutions can affect public policies.

Women Heads of State and Covid-19 Policy Responses

ABSTRACT Anecdotal media reports suggest that countries led by women politicians have had better outcomes from combating the COVID-19 pandemic. This paper systematizes the evidence by using data on the presence of women heads of state and COVID-19 related infection and death rates in 144 countries. The regression results show that: (1) there is a negative and statistically significant correlation between COVID-19 outcomes and the presence of a woman head of state; (2) there is no evidence that countries led by women responded faster than countries led by men in implementing social distancing measures to “flatten” the infection curve; and (3) countries led by women have a higher rate of universal healthcare coverage than countries led by men; if the countries led by men had comparable levels of investment in a widely available healthcare system, their outcomes from fighting the pandemic would be similar. HIGHLIGHTS Countries with women heads of state report fewer cases and deaths related to COVID-19. These states also have higher rates of universal healthcare coverage. Women’s preferences for public spending on healthcare made these countries better prepared for the pandemic. There is no evidence that women leaders were faster to implement social distancing measures. Countries led by men could have similar outcomes with investment in higher healthcare coverage.

Policy choices in assembly versus representative democracy: Evidence from Swiss communes

This paper investigates whether the form of the legislative institution - citizen assembly versus elected parliament - affects the level and composition of local public expenditure. Our empirical analysis focuses on medium-sized and mostly German-speaking communes in Switzerland that switched from assembly to parliament between 1945 and 2010. Event study estimates suggest that parliament adoption increases total spending by about 6% and that this increase is driven mostly by general administration and education spending. To understand potential mechanisms at play, we run a survey among assembly participants and document a sizeable under-representation of 20- to 40-year-olds, as well as of women in assemblies compared to both voters in elections and to the electorate at large. Since these two demographics have relatively strong preferences for public spending on education in our setting, switching from citizen assembly to parliament likely increased their representation in the political process.

Voting, taxes, and heterogeneous preferences: Evidence from Swedish local elections

AbstractIn this paper, we investigate whether voters' reactions to tax changes depend on their preferences for public spending, in order to increase our understanding of the relationship between accountability and the formation of public policy. Utilizing high‐quality survey data, we find that voters who, ex ante, prefer a small public sector punish incumbents who raise taxes, while voters who prefer a large public sector reward tax hikes. Our results indicate that Swedish voters do not necessarily consider tax hikes to be an indication of misbehaving incumbents and that public policy is formed as a result of competing interests between voters with different policy preferences, rather than only as a conflict between rent‐seeking politicians and voters.

Climate Change, Population Ageing and Public Spending: Evidence on Individual Preferences

Economic theory as well as empirical research suggest that elderly people prefer public spending on policies yielding short-term benefits. This might be bad news for policies aimed at combating climate change: while the unavoidable costs of these policies arise today, the expected benefits occur in the distant future. Drawing on data from over 12,000 households and using the ordered logit and the generalized ordered logit model, we analyze whether attitudes towards climate change and climate policies as well as public spending preferences differ with respect to age. Our estimates show that elderly people are less concerned about climate change, but more concerned about other global challenges. Furthermore, they are less likely to support climate-friendly policies, such as the subsidization of renewables, allocate less public resources to and have lower willingness-to-pay for environmental policies. Thus, our results suggest that the ongoing demographic change in industrialized countries may undermine climate policies.

Climate Change, Population Ageing and Public Spending: Evidence on Individual Preferences

Economic theory, as well as empirical research, suggest that elderly people prefer public spending on policies yielding short-term benefits. This might be bad news for policies aimed at combating climate change: while the unavoidable costs of these policies arise today, the expected benefits occur in the distant future. Drawing on data from over 12,000 households and using the ordered logit and the generalized ordered logit model, we analyze whether attitudes towards climate change and climate policies, as well as public spending preferences, differ with respect to age. Our estimates show that elderly people are less concerned about climate change, but more concerned about other global challenges. Furthermore, they are less likely to support climate-friendly policies, such as the subsidization of renewables, and allocate less public resources to environmental policies. Thus, our results suggest that the ongoing demographic change in industrialized countries may undermine climate policies.

Should the Carbon Price Be the Same in All Countries?

International di¤erences in fuel taxation are huge, and may be justi…ed by different local negative externalities that taxes must correct, as well as by di¤erent preferences for public spending. In this context, should a worldwide uniform carbon tax be added to these local taxes to correct the global warming externality? We address this question in a second best framework a la Ramsey, where public goods have to be …nanced through distortionary taxation and the cost of public funds has to be weighted against the utility of public goods. We show that when lump-sum transfers between countries are allowed for, the second best tax on the polluting good may be decomposed into three parts: one, country-speci…c, dealing with the local negative externality, a second one, country-speci…c, dealing with the cost of levying public funds, and a third one, global, dealing with the global externality and which can be interpreted as the carbon price. Our main contribution is to show that the uniformity of the carbon price should still hold in this second best framework. Nevertheless, if lump-sum transfers between governments are impossible to implement, international di¤erentiation of the carbon price is the only way to take care of equity concerns. keywords: carbon price, second best, Pigovian taxation

Public–private political cleavage: what happens after retirement?

Political preferences of public employees differ from those of workers in the private sector. The former are more likely to vote for left-wing parties and orient themselves ideologically towards the left. This political cleavage can be understood as the result of occupational incentives, or alternatively, as ideological self-selection whereby individuals favoring government solutions seek employment in the public sector. We test the selection hypothesis by estimating the effects of public versus private occupational sector on political preferences before and after retirement. The data are from the Norwegian Election Surveys and cover nine national elections between 1977 and 2009. The research design addresses a series of cross-sectional data and the key challenge of endogenous retirement is handled with instrumental variables. Party choice, ideological orientation, and public spending preferences are shown to change following retirement, and former private and public employees converge. The results reject selection based on ‘hard-wired’ political preferences.

Information and Preferences for Public Spending: Evidence from Representative Survey Experiments

The electorates’ lack of information about the extent of public spending may cause misalignments between voters’ preferences and the size of government. We devise a series of representative survey experiments in Germany that randomly provide treatment groups with information on current spending levels. Results show that such information strongly reduces support for public spending in various domains from social security to defense. Data on prior information status on school spending and teacher salaries shows that treatment effects are strongest for those who initially underestimated spending levels, indicating genuine information effects rather than pure priming effects. Information on spending requirements also reduces support for specific education reforms. Preferences on spending across education levels are also malleable to information.

Information and Preferences for Public Spending: Evidence from Representative Survey Experiments

Information and Preferences for Public Spending: Evidence from Representative Survey Experiments

Measuring public spending preferences using an interactive budgeting questionnaire

This paper considers an innovative approach to measuring public spending preferences using an interactive budgeting questionnaire. After being presented with the President’s requested budget for the upcoming fiscal year, survey respondents were asked to adjust spending levels in line with their personal preferences, subject to budgetary trade-offs. An analysis of survey results reveals that responses sharply contrast with those recovered by traditional survey measures. The results are then used to examine the relationship between fiscal preferences and self-reported ideology, and to explore the structure of budgetary preferences. It is found that preferences scale to two substantive dimensions: the first measures the trade-off between security and non-security spending and strongly correlates with self-reported ideology; and the second reveals a crosscutting cleavage that has attracted little, if any, attention in previous research. Specifically, it measures each respondent’s relative preference for rival...

Preferences, Problems and Representation

Scholars studying opinion representation often rely on a survey question that asks about the “most important problem” (MIP) facing the nation. While it is known that MIP responses reflect public priorities, less is known about their connection to policy preferences. This article directly addresses the issue. First, it conceptualizes policy preferences and MIP responses, specifically considering the possibility that the latter may be either policy or outcome based. Second, using aggregate-level data from the United States and the United Kingdom, it then examines the correspondence between public spending preferences and MIP responses over time. The results indicate that MIP responses and spending preferences tap very different things, and that using MIP responses substantially understates the representational relationship between public opinion and policy.

Partisan Differences in Spending Preferences after theNew Democrat and New Labour Transformations of Party Images

In this paper we wonder whether the efforts of the New Democrats and New Labour to alter their parties’ images with respect to public spending mute the differences (or lack thereof) in their supporters’ preferences for public spending between their respective major parties as observed by Lewis [1] in the UK case and Lowery and Sigelman [2] in the US case. We address this question by constructing matching UK and US data on aggregate public opinion on public spending at four points since 1980, treating the Clinton New Democrat and the Blair New Labour transformations as interventions that might be expected to alter the preferences of partisans for public spending. We find support for the thermostatic model of preferences for spending [3,4] a result that raises questions about the power of party elites to shape the preferences of their supporters in the battle over the size of government.

Does aging affect preferences for welfare spending? A study of peoples' spending preferences in 22 countries, 1985–2006

A recurrent assertion is that aging will intensify age-related conflict over public budget allocation. If people are led by their self-interest, the young will prioritize public education services, while the elderly will demand better pensions and health-care services. Addressing this issue requires longitudinal survey data and estimation of age (life-cycle), period and cohort effects. Except for a few of studies based on US data, such analyses are non-existent.We use repeated cross-section survey-data for 22 countries. Respondents are classified into ten-year age-groups and birth decades, and we estimate a regression model explaining respondents' public spending preferences. When period and cohort effects are taken into account, elderly people want less education spending, and more health care and pension spending. These life-cycle effects vary considerably between countries, but are generally quite small. Preferences also appear mostly unrelated to left–right party choice.

La taxe carbone doit-elle être la même dans tous les pays?

Cet article reexamine de facon theorique la question de l'unicite du prix du carbone au niveau international. Tous les pays doivent-ils payer le meme taux de taxe carbone pour lutter contre le changement climatique ? L'argument qui permet de repondre par l'affirmative est un argument d'efficacite productive : l'unicite du prix induit l'egalisation des couts marginaux de reduction des emissions entre tous les emetteurs, ce qui permet d'atteindre a moindre cout un objectif donne de reduction d'emissions. Parmi les arguments en sens contraire qui peuvent etre avances, nous nous interessons a celui de l'existence prealable de taxes sur les energies fossiles tres differentes selon les pays. Nous montrons qu'en depit de ces taxes preexistantes, destinees a corriger des pollutions locales et a financer des depenses publiques, le prix du carbone doit etre le meme dans tous les pays a condition que des transferts forfaitaires entre pays soient possibles, pour prendre en compte les questions d'equite. Si ces transferts ne peuvent etre mis en place, les prix du carbone doivent etre differencies.

Crosscutting Preferences Over Federal Spending on Rival and Non-Rival Public Goods and Services: Measuring Citizen Ideology with Results from an Interactive Questionnaire on Public Spending Preferences

This paper analyzes the relationship between fiscal preferences and ideology using an innovative survey methodology. An interactive questionnaire presented respondents with the President's requested budget for FY 2006 and asked them to adjust spending levels with respect to their personal preferences. By incorporating tradeoffs between spending dimensions, the responses capture the non-separable nature of the issue space and do so without compromising cardinality. As a result, each personally crafted budget has a straightforward interpretation as an ideal point. I first use the data to establish a relationship between fiscal preferences and self-reported ideology. I then perform dimensional analysis. Preferences scale to two substantive dimensions. The first measures the trade-off between security and non-security spending and is highly correlated with self-identification on the liberal-conservative dimension. The second dimension reveals a crosscutting cleavage that has attracted little, if any, attention in previous research. Specifically, it measures each respondent's relative preference for rival and non-rival government goods and services.

Welfare and Distribution Effects of Bank Secrecy Laws

We analyze an overlapping-generations world comprising two groups of small countries whose preferences for public spending differ. Key steady-state effects from introducing bank secrecy and a withholding tax in countries with low government spending are: a reduction of global capital and income, a shift of wealth towards bank-secrecy countries, and falling consumption, welfare and government spending despite rising tax rates in the rest of the world. Qualitative results are robust to changes in tax-payer honesty, the Leviathan effect (permitting governments to drive public spending higher than citizens prefer), and the fraction of withholding taxes repatriated to countries of residence.

Modeling Direction and Intensity in Semantically Balanced Ordinal Scales: An Assessment of Congressional Incumbent Approval

Public opinion researchers frequently work with semantically balanced ordinal scales, such as five-point Likert scales. These items are used to measure candidate evaluations, public spending preferences, positions on social issues, and candidate and party placement, for example. Because the items are semantically balanced about a midpoint or implied midpoint, researchers may be interested in both the tendency to respond above versus below a midpoint (the response direction) and the tendency to choose extremal categories above or below a midpoint (the response intensity). While political analysts are commonly interested in both response intensity and direction, traditional methods used for modeling semantically balanced ordinal scales do not address these issues well. In this paper, we discuss adjacent category logit models that allow researchers to simultaneously model direction and intensity in ordinal scales with midpoints or implied midpoints. We apply the models to data on approval ratings of House incumbents, finding that the tendency to evaluate incumbents favorably increases through the 1980s (peaking in the late eighties) and declines thereafter until 1 996 (the last year for which we have data). We also find that respondents, both favorable and unfavorable, express stronger opinions during most presidential.election cycles than in midterm election years. odeling trends, cycles, or temporal change in public opinion is commonplace in political analysis. Researchers have devoted a great deal of attention to understanding how the public's ideological predilections, policy preferences, or approval functions vary over time. At the core of this literature is the notion that public opinion shifts or changes over time are politically meaningful, translatable into public policy outcomes, and bear on issues of democratic governance. To address the issues above, researchers often use ordinal scales semantically balanced about a midpoint or implied midpoint (for example, a scale with categories strongly = 1, = 2, neither approve nor = 3, disapprove = 4, strongly = 5 or a scale with categories strongly = 1, 2, disapprove 3, strongly = 4). In analyzing such items, researchers sometimes assign equal interval scores to the scale categories and inappropriately use ordinary least squares regression to model the scale as a function of covariates. Analysts also sometimes combine scale categories above and below the midpoint or implied midpoint. This approach is problematic because in combining, for example, strong approvers with approvers, and strong disapprovers with disapprovers, the intensity of the response is lost. In contrast, researchers occasionally fold semantically balanced ordinal scales about the midpoint or implied midpoint, combining strong approvers with strong disapprovers and approvers with disapprovers. In this approach, respondents on different sides of an issue (direction) are grouped together, and it is therefore not possible to assess whether or not the approvers or disapprovers are more (less, equally) intense in their opinions. Sometimes, analysts will model the item using the proportional odds