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


Neustadt, Ilja; Zweifel, Peter (2010). Is the Welfare State Sustainable? Experimental Evidence on Citizens' Preferences for Redistribution. Working paper series / Socioeconomic Institute No. 1003, 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 bene?ciary. Estimated marginal willingness to pay (WTP) is positive among those who deem bene?ts too low, and negative otherwise. However, even those who state that government should reduce income inequality exhibit a negative WTP on average. The major ?nding 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.

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 bene?ciary. Estimated marginal willingness to pay (WTP) is positive among those who deem bene?ts too low, and negative otherwise. However, even those who state that government should reduce income inequality exhibit a negative WTP on average. The major ?nding 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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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Socioeconomic Institute (former)
Dewey Decimal Classification:330 Economics
JEL Classification:C35, C93, D63, H29
Language:English
Date:March 2010
Deposited On:29 Nov 2011 15:09
Last Modified:17 Feb 2018 19:00
Series Name:Working paper series / Socioeconomic Institute
OA Status:Green
Official URL:http://www.econ.uzh.ch/wp.html

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