Do Citizens Care About Government Debt? Evidence from Survey Experiments on Budgetary Priorities

Abstract

In the wake of the European sovereign debt crisis, governments across the continent pursued fiscal consolidation. Existing research claims that fiscally conservative citizens support such fiscal policies. However, this literature largely ignores that fiscal consolidation carries substantial trade-offs. In hard times, governments have to cut spending or raise taxes to reduce government debt. We account for these trade-offs by using a split-sample and conjoint survey experiment conducted in four European countries. The results show that fiscal consolidation is not a priority for citizens: When forced to make a choice, support for reducing debt at the cost of lower spending or higher taxes is smaller than in an unconstrained setting. Revenue-based consolidations are especially unpopular, but expenditure-based consolidations are also contested. Moreover, the public has a clear priority order: People do not favor lower debt and taxes, but they support more progressive taxes to pay for higher government spending.

Governing for Future Generations: How Political Trust Shapes Attitudes Towards Climate and Debt Policies

“…An important difference between climate change and debt reduction policies, for our purposes, is that in many countries the former are more popular among individuals on the political left, while the latter are somewhat more supported by the right (e.g., Kohut, 2012;Bremer and Bürgisser, 2021). Also importantly, attitudes toward policies for reducing public debt have no direct relationship with beliefs about global warming, or about other environmental problems or issues.…”

Are governments paying a price for austerity? Fiscal consolidations reduce government approval

“…For example, austerity policies have been found to increase social unrest (Ponticelli and Voth, 2020) and to reduce stated vote intentions for the government (Talving, 2017). In addition to these observational studies, survey experiments also indicate that voters dislike austerity policies (Bremer and Bürgisser, 2019; Hübscher et al , 2020). Finally, detailed studies of specific austerity policies in a single country show an electoral reaction among those regions and those individuals most directly affected by austerity (Fetzer, 2019).…”

“…Indeed, spending-based consolidations increase income inequality more than tax-based consolidations (Mulas-Granados, 2006; Agnello and Sousa, 2014). Bremer and Bürgisser (2019) find that tax increases on high-income individuals are particularly popular, while general support for tax-based consolidation is lower than for spending-based consolidation. Alpino et al (2020) find that consolidations often lead to an increase in top tax rates.…”

Trade-offs between redistribution and environmental protection: the role of information, ideology, and self-interest

“…They demonstrated that a positive orientation towards single policies -such as broad support for generous pensions -does not entail that citizens opt for this policy when they learn that they have to pay its price through higher taxes or social security contributions. Such hard choices and their determinants have moved to the center of recent analyses of social and fiscal policies (Häusermann et al 2019, Busemeyer 2017, Busemeyer and Garritzmann 2017, Bremer and Bürgisser 2019a, 2019b.…”