Does the Broad Public Want to Consolidate Public Debt? – The Role of Fairness and of Policy Credibility

28 Pages Posted: 8 Jan 2013

See all articles by Helmut Stix

Helmut Stix

Oesterreichische Nationalbank - Economic Studies Division

Date Written: February 2013

Abstract

This paper employs information obtained from a public opinion survey to analyze why voters differ in their demand for fiscal consolidation, i.e. why some voters support and others oppose a reduction of public debt levels. Results demonstrate that preferences for consolidation vary considerably across individuals along economically informed dimensions. First, voters behave rationally in the sense that self‐interest matters. Second, voters care for their children (but this motive seems less important than one might presume). Third, voters care strongly for how the consolidation burden is distributed among the current generation – this is at least as important as the intergenerational aspect. Forth, the lack of credibility of fiscal policy plans is a serious impediment to voters' support for consolidation. These results imply that fiscal consolidation plans should be “fair” and that the imposition of credible fiscal policy rules could increase voters' support of consolidations.

Suggested Citation

Stix, Helmut, Does the Broad Public Want to Consolidate Public Debt? – The Role of Fairness and of Policy Credibility (February 2013). Kyklos, Vol. 66, Issue 1, pp. 102-129, 2013, Available at SSRN: https://ssrn.com/abstract=2197662 or http://dx.doi.org/10.1111/kykl.12013

Helmut Stix (Contact Author)

Oesterreichische Nationalbank - Economic Studies Division ( email )

Otto-Wagner Platz 3
POB 61
Vienna 1011
Austria

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