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

Author

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  • Ilja Neustadt

    () (Socioeconomic Institute, University of Zurich)

  • Peter Zweifel

    () (Socioeconomic Institute, University of Zurich)

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.

Suggested Citation

  • Ilja Neustadt & Peter Zweifel, 2010. "Is the Welfare State Sustainable? Experimental Evidence on Citizens’ Preferences for Redistribution," SOI - Working Papers 1003, Socioeconomic Institute - University of Zurich.
  • Handle: RePEc:soz:wpaper:1003
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    References listed on IDEAS

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    Cited by:

    1. Elsayyad, May & Konrad, Kai A., 2012. "Fighting multiple tax havens," Journal of International Economics, Elsevier, vol. 86(2), pages 295-305.
    2. 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.
    3. Pfarr, Christian & Schmid, Andreas & Ulrich, Volker, 2013. "You can't always get what you want - East and West Germans' attitudes and preferences regarding the welfare state," MPRA Paper 47240, University Library of Munich, Germany.
    4. Pfarr Christian & Ulrich Volker, 2011. "Discrete-Choice-Experimente zur Ermittlung der Präferenzen für Umverteilung," Review of Economics, De Gruyter, vol. 62(3), pages 232-262, December.
    5. Peter Zweifel & Ilja Neustadt, 2013. "Why Does Income Redistribution Differ Between Countries? Comparative Evidence From Germany and Switzerland," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 11(3), pages 39-47, October.
    6. Pfarr, Christian, 2012. "Meltzer-Richard and social mobility hypothesis: revisiting the income-redistribution nexus using German choice data," MPRA Paper 43325, University Library of Munich, Germany.
    7. Pfarr, Christian & Schmid, Andreas & Mørkbak, Morten Raun, 2015. "Latent characteristics and preferences for income redistribution," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113001, Verein für Socialpolitik / German Economic Association.
    8. Musharraf Rasool Cyan & Jorge Martinez-Vazquez & Violeta Vulovic, 2014. "New approaches to measuring tax effort," Chapters,in: Taxation and Development: The Weakest Link?, chapter 2, pages 27-68 Edward Elgar Publishing.
    9. Neustadt, Ilja & Zweifel, Peter, 2011. "Income redistribution: how to divide the pie?," MPRA Paper 35427, University Library of Munich, Germany.
    10. Pfarr, Christian & Schmid, Andreas & Mørkbak, Morten Raun, 2014. "Identifying latent interest-groups: An analysis of heterogeneous preferences for income-redistribution," MPRA Paper 58823, University Library of Munich, Germany.
    11. repec:ces:ifodic:v:11:y:2013:i:3:p:19099103 is not listed on IDEAS

    More about this item

    Keywords

    Income redistribution; preferences; willingness to pay; welfare state; sustainability; discrete choice experiments;

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H29 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other

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