Is the welfare state sustainable? Experimental evidence on citizens' preferences for redistribution
Neustadt, Ilja ; Zweifel, Peter
CESifo - Munich
2010
33 p.
income distribution ; statistics ; welfare state ; social inequality
CESifo working paper
3148
Income distribution
English
Bibliogr.
"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."
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