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Public Preferences for Economic Reforms Are Shaped More by Design Than Cost

Author

Listed:
  • Christopher Hoy

    (Melbourne Institute of Applied Economic and Social Research)

  • Yeon Soo Kim
  • Saad Imtiaz
  • Ana Maria Rojas Mendez
  • Moritz Meyer
  • Gustavo Javier Canavire Bacarreza
  • Lydia Kim
  • William Hutchins Seitz
  • Imane Helmy
  • Ikuko Uochi
  • Sering Touray
  • Juni Singh
  • Bambang Suharnoko Sjahrir
  • Utz Pape
  • Alan Fuchs
  • Trang Van Nguyen
  • Defne Gencer
  • Min A Lee
  • Akiko Sagesaka
  • Ivette Contreras

Abstract

Public opposition is a major barrier to economic reforms, such as subsidy removal.Using multilayered, randomized survey experiments with 10,000 respondents across ten surveys in five countries, this paper shows that opposition to energy price reforms is shaped more by design and communication than by cost. Around 70 percent of respondents strongly opposed a 100 percent immediate price increase, but resistance was nearly halved when reforms were phased in, targeted at high-energy consumers, or paired with compensation. Informational messages also reduced opposition by as much as halving the price increase. An expert prediction survey revealed systematic misunderstandings: specialists underestimated the influence of design features and greatly misperceived coping strategies and compensation preferences. These findings demonstrate that behavioral biases—such as present bias, loss aversion, and fairness heuristics—are as influential as economic costs in shaping people’s opposition to economic reforms, underscoring the importance of careful design and communication of politically sensitive reforms.

Suggested Citation

  • Christopher Hoy & Yeon Soo Kim & Saad Imtiaz & Ana Maria Rojas Mendez & Moritz Meyer & Gustavo Javier Canavire Bacarreza & Lydia Kim & William Hutchins Seitz & Imane Helmy & Ikuko Uochi & Sering Toura, 2025. "Public Preferences for Economic Reforms Are Shaped More by Design Than Cost," Melbourne Institute Working Paper Series wp2025n14, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  • Handle: RePEc:iae:iaewps:wp2025n14
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    References listed on IDEAS

    as
    1. Ilyana Kuziemko & Michael I. Norton & Emmanuel Saez & Stefanie Stantcheva, 2015. "How Elastic Are Preferences for Redistribution? Evidence from Randomized Survey Experiments," American Economic Review, American Economic Association, vol. 105(4), pages 1478-1508, April.
    2. Anit Mukherjee & Yuko Okamura & Ugo Gentilini & Defne Gencer & Mohamed Almenfi & Adea Kryeziu & Miriam Montenegro & Nithin Umapathi, 2023. "Cash Transfers in the Context of Energy Subsidy Reform," World Bank Publications - Reports 39948, The World Bank Group.
    3. Gabriela Inchauste & David G. Victor, 2017. "The Political Economy of Energy Subsidy Reform," World Bank Publications - Books, The World Bank Group, number 26216.
    4. Christopher Hoy & Franziska Mager, 2021. "Why Are Relatively Poor People Not More Supportive of Redistribution? Evidence from a Randomized Survey Experiment across Ten Countries," American Economic Journal: Economic Policy, American Economic Association, vol. 13(4), pages 299-328, November.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

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    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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