Public Preferences for Redistribution and Policy Outcomes - Comparative Study

Chen Sharony (Ben-Gurion University of the Negev)
Shlomo Mizrahi (Ben-Gurion University of the Negev)
Miki malul (Ben-Gurion University of the Negev)

Abstract: What are the factors affecting the gap between preference for income redistribution and policy? There is a mismatch between public preferences and policy in this field in some countries. That is, in some countries the public shows high demand for redistribution, but the government's social spending is low or vice versa. This study is a comparative study which uses panel data from 24 OECD countries, from different years (1990-2012). Public preferences were measured by value surveys and policy was measured by social expenditure and GINI index. The study has 2 phases: 1. measuring the gap between public preference and actual policy. 2. Regressions assessing the factors affecting this gap. The proposed sources for the gap are: social capital, ethnic heterogeneity, low level of perceived government effectiveness and high level of corruption. We calculated 2 kinds of gaps: 1. between preference and policy intentions (measured by social spending). 2. between preference and policy outcomes (measured by the level of income inequality). Results showed that most countries have small gap between public preferences and policy. A few countries (like Greece, Israel, Portugal and Spain) showed negative gap, where social spending is lower than the public preference. Other countries (like Sweden, Denmark and Luxemburg) showed positive gap, where public spending is higher than the public preference. Government effectiveness and corruption were found as the main factors affecting the gap, but in some regressions social capital also had an effect on the gap. The effect of government effectiveness on the gap may mean that the public does not demand redistribution, because they don't believe in the government's ability to perform. Another interesting finding is that a "positive gap" was found in countries considered to have high government effectiveness and low corruption. This could mean the people believe there is too much redistribution in the country.

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