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Is the Welfare State Sustainable? Experimental Evidence on Citizens' Preferences for Redistribution

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  • Ilja Neustadt
  • Peter Zweifel

Abstract

The sustainability of the welfare state ultimately depends on citizens’ preferences for income redistribution. They are elicited through a Discrete Choice Experiment performed in 2008 in Switzerland. Attributes are redistribution as GDP share, its uses (the unemployed, old-age pensioners, people with ill health etc.), and nationality of beneficiary. Estimated marginal willingness to pay (WTP) is positive among those who deem benefits too low, and negative otherwise. However, even those who state that government should reduce income inequality exhibit a negative WTP on average. The major finding is that estimated average WTP is maximum at 21% of GDP, clearly below the current value of 25%. Thus, the present Swiss welfare state does not appear sustainable.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3148.

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Date of creation: 2010
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Handle: RePEc:ces:ceswps:_3148

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Keywords: income redistribution; welfare state; sustainability; preferences; willingness to pay; discrete choice experiments;

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References

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Cited by:
  1. Elsayyad, May & Konrad, Kai A., 2012. "Fighting Multiple Tax Havens," Munich Reprints in Economics 13964, University of Munich, Department of Economics.
  2. Pfarr, Christian & Ulrich, Volker, 2011. "Discrete-Choice-Experimente zur Ermittlung der Präferenzen für Umverteilung
    [Discrete-Choice-Experiments to elicit individuals' preferences for redistribution]
    ," MPRA Paper 31707, University Library of Munich, Germany.
  3. Musharraf Cyan & Jorge Martinez-Vazquez & VIoleta Vulovic, 2013. "Measuring tax effort: Does the estimation approach matter and should effort be linked to expenditure goals?," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1308, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  4. Neustadt, Ilja & Zweifel, Peter, 2011. "Income redistribution: how to divide the pie?," MPRA Paper 35427, University Library of Munich, Germany.

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