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The stability of stated preferences for public goods: Evidence from recent budget games

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  • Hans Groot
  • Evert Pommer

Abstract

We have investigated the stability of the individual response in recent budget games based on survey data, which is an important requirement for the reliability of this instrument. Budget games have gained popularity due to the problems encountered with alternative methods to determine preferences for public goods, such as the analysis of actual public expenditure date using median-voter theory or similar approaches. The short-term test-retest correlations (within an interval of one month) turn out to be rather low, typical around 0.3. No explanation of the test-retest differences could be found from the usual socio-economic and political characteristics of the respondents or from information characteristics of the survey design. Also, the pattern of budget-game outcomes for different countries and different periods is rather similar. The cumulative evidence suggests that the survey response to budget games is generated to a large extent by very general notions on the (un)desirability of public goods: ‘defence is bad, education and health care are good’. This implies that outcomes are often not related to the actual level and structure of public expenditure or revenues. As a result, the individual responses, even to the more sophisticated budget games, are subject to large uncertainty margins. Our results should warn researchers and, even more important, policy makers against giving too much weight to stated preferences for public expenditure or taxation levels obtained from budget games. Of course, further research is needed to obtain the precise limits of the instrument, including laboratory experimental economics. Copyright Kluwer Academic Publishers 1989

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  • Hans Groot & Evert Pommer, 1989. "The stability of stated preferences for public goods: Evidence from recent budget games," Public Choice, Springer, vol. 60(2), pages 123-132, February.
    • Handle: RePEc:kap:pubcho:v:60:y:1989:i:2:p:123-132
    DOI: 10.1007/BF00149240
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    References listed on IDEAS

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    1. Romer, Thomas & Rosenthal, Howard, 1979. "The elusive median voter," Journal of Public Economics, Elsevier, vol. 12(2), pages 143-170, October.
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    8. Hans Groot & Evert Pommer, 1987. "Budgetgames and the private and social demand for mixed public goods," Public Choice, Springer, vol. 52(3), pages 257-272, January.
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    Cited by:

    1. Kemp, Simon, 1998. "Rating the values of government and market supplied goods," Journal of Economic Psychology, Elsevier, vol. 19(4), pages 447-461, August.
    2. Kerr, Geoffrey N. & Cullen, Ross & Hughey, Kenneth F.D., 2005. "Stated Preference Evaluation of Government Budgets," 2005 Conference, August 26-27, 2005, Nelson, New Zealand 98520, New Zealand Agricultural and Resource Economics Society.
    3. Kemp, Simon & Willetts, Karyn, 1995. "The value of services supplied by the New Zealand government," Journal of Economic Psychology, Elsevier, vol. 16(1), pages 23-37, March.
    4. Kemp, Simon & Willetts, Karyn, 1995. "Rating the value of government-funded services: Comparison of methods," Journal of Economic Psychology, Elsevier, vol. 16(1), pages 1-21, March.
    5. Mahoney, Michelle S. & Kemp, Simon & Webley, Paul, 2005. "Factors in lay preferences for government or private supply of services," Journal of Economic Psychology, Elsevier, vol. 26(1), pages 73-87, February.

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