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

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

Economic Well-Being, Social Mobility, and Preferences for Income Redistribution: Evidence from a Discrete Choice Experiment

In this paper, preferences for income redistribution in Switzerland are elicited through a Discrete Choice Experiment (DCE) performed in 2008. In addition to the amount of redistribution as a share of GDP, attributes also included its uses (working poor, the unemployed, old-age pensioners, families with children, people in ill health) and nationality of beneficiary (Swiss, Western European, others). Willingness to pay for redistribution increases with income and education, contradicting the conventional Meltzer-Richard (1981) model. The Prospect of Upward Mobility hypothesis [Hirschman and Rothschild (1973); Benabou and Ok (2001)] receives partial empirical support.Income redistribution, preferences, willingness to pay, discrete choice experiments, stated choice, economic well-being, social mobility

Income redistribution: how to divide the pie?

In this paper, we elicit preferences of Swiss citizens for the allocation of income redistribution to different uses through a Discrete Choice Experiment performed in 2008. Neustadt and Zweifel (2009} provide an estimate of the total desired amount of income redistribution as a share of disposable income. Here, we estimate marginal willingness-to-pay values for types of recipients (old-age pensioners, people with ill health, the unemployed, working poor, and families with children) and their nationality (Swiss, citizens of western European countries, others). Hypotheses derived from the insurance motive for redistribution receive some empirical support.Income redistribution, preferences, willingness to pay, discrete choice experiments, conjoint analysis, social status

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

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

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

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.income redistribution, welfare state, sustainability, preferences, willingness to pay, discrete choice experiments

Promoting renewable electricity generation in imperfect markets: price vs. quantity policies

The search for economically efficient policy instruments designed to promote the diffusion of renewable energy technologies in liberalized markets has led to the introduction of quota-based tradable ‘green’ certificate (TGC) schemes for renewable electricity. However, there is a debate about the pros and cons of TGC, a quantity control policy, compared to guaranteed feed-in tariffs, a price control policy. In this paper we contrast these two alternatives in terms of social welfare, taking into account that electricity markets are not perfectly competitive, and show that the price control policy dominates the quantity control policy in terms of social welfare.Tradable green certificates, Renewable portfolio standard, Quota target, Feed-in tariff, Cournot duopoly

Why does the amount of income redistribution differ between the United States and Europe? The Janus face of Switzerland

Abstract. In this paper, the amount of income redistribution in the United States, the European Union, and in Switzerland is compared and empirically related to economic, political, and behavioral determinants elaborated in the literature. Lying in between the two poles, data on Switzerland provides evidence about the relative merits of competing hypotheses. It tips the balance against the economic explanation, which predicts more rather than less income redistribution in the United States compared to the EU in general. It only weakly supports the political model linking proportional representation and multiparty structure (which also characterize Switzerland) to redistribution; yet the Swiss share of transfers in the GDP is low. Behavioral explanations receive a good deal of support from the case of Switzerland, two countries that share with the United States the belief that hard work rather than luck, birth, connections, and corruption determine wealth. In this way, the Janus faces of Switzerland may help to explain the difference in the amount of U.S. and EU income redistribution.Keywords. Income redistribution, Income mobility, Openness, Proportional representation, Beliefs, Religiosity.JEL. D31, D63, H53, I31

Redistribution in Whose Favor? Preferences with Regard to Nationality and Type of Beneficiaries

In this paper, we elicit preferences for the allocation of income redistribution to different uses through a Discrete Choice Experiment performed with a representative sample of Swiss citizens. The total desired amount of income redistribution is estimated as a share of disposable income. Further, we estimate marginal willingness-to-pay values for recipients' nationalities (Swiss, citizens of western European countries, citizens of other countries) as well as their types (old-age pensioners, people with ill health, the unemployed, working poor, and families with children). Swiss citizens are found to have a positive willingness to pay for a reallocation of social expenditure in favor of themselves or Western European citizens to the detriment of citizens of other countries, who are perceived to be culturally distant

Redistribution in Whose Favor? Preferences with Regard to Nationality and Type of Beneficiaries

We elicit preferences for the allocation of public budget to groups of recipients through a discrete choice experiment performed with a representative sample of Swiss citizens. The total desired amount of income redistribution as a share of GDP and its allocation across groups of recipients are related to a citizen's income tax as a share of disposable income. We estimate citizens' willingness-to-pay values in favor of recipients' types (old-age pensioners, people with ill health, the unemployed, working poor, and families with children) and their nationalities (Swiss, citizens of Western European countries, citizens of other countries). The 'pocketbook' view that respondents demand redistribution in favor of their own group is confirmed for families with children, only partially confirmed for the unemployed and people with ill health but rejected for old-age pensioners. The view of income redistribution as a way of insurance against risks received substantial empirical support. Swiss citizens exhibit a positive willingness to pay in favor of themselves or Western European citizens to the detriment of citizens of other countries, who are perceived to be culturally distant