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

38 Pages Posted: 12 Aug 2010

See all articles by Ilja Neustadt

Ilja Neustadt

affiliation not provided to SSRN

Peter Zweifel

University of Zurich - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: August 11, 2010

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.

Keywords: Income Redistribution, Welfare State, Sustainability, Preferences, Willingness to Pay, Discrete Choice Experiments

JEL Classification: C35, C93, D63, H29

Suggested Citation

Neustadt, Ilja and Zweifel, Peter, Is the Welfare State Sustainable? Experimental Evidence on Citizens' Preferences for Redistribution (August 11, 2010). CESifo Working Paper No. 3148, Available at SSRN: https://ssrn.com/abstract=1656788 or http://dx.doi.org/10.2139/ssrn.1656788

Ilja Neustadt (Contact Author)

affiliation not provided to SSRN

Peter Zweifel

University of Zurich - Department of Economics ( email )

Zuerich
Switzerland

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