Public Preferences Towards Taxation, Government Spending and Debt: Evidence from Survey Experiments

In Europe, austerity has been the predominant response to the Great Recession since 2010, defining the post-crisis political economy. The resulting political conflicts across Europe have shown that fiscal policies are not only a crucial tool for influencing the macroeconomic trajectory of countries, but that they also have significant distributive consequences for individual citizens. While citizens benefit from a large amount of government spending in advanced economies, this spending has to be financed by taxes or government debt. Fiscal policies are thus a constant source of political contestation in democratic states. However, despite living in times of ``permanent austerity'' (Pierson 1998, 2001), we know surprisingly little about the public preferences towards fiscal policies. In particular, the existing literature cannot account for the trade-offs that are inherent in designing government budgets. Most prior research studies preferences towards taxation or government spending on a single dimension, which is independent from other aspects of the government’s budget. This conception is unrealistic and risks misrepresenting the underlying preferences that citizens have towards fiscal policies. We attempt to capture the multidimensionality of fiscal policies by using an original conjoint survey experiments and a split-sample experiment in four European countries (Germany, Italy, Spain, UK) that isolate attitudes towards taxation, government spending and debt. Disentangling the preferences towards different elements of fiscal policy in this ways allows us to analyse the priorities that citizens have with respect to the composition of government budgets.