Bank Credit and Redistributive Preferences: Experimental Evidence from the UK

• In Event: Voting for Welfare: New Economic Risks and Voters’ Demands for Social Policies

Abstract

Do voters see credit supply as an acceptable substitute for welfare? The ‘demand side’ of credit expansions in advanced democracies has raised academic interest and come under increased scrutiny. And while previous scholarship has provided important insights from observational data showing that better access to financial markets is associated with lower levels of redistributive demands, those studies face two important caveats: (1) they cannot rule out concerns about endogeneity and (2) they rarely distinguish between the ‘insurance’ and ‘redistribution’ role of the welfare state.
We add to this literature by using a survey-experimental design that warrants a cleaner identification strategy to verify the existence of a causal credit access effect on preferences for redistribution. We conduct a conjoint analysis in the United Kingdom that allows to trace who is willing to accept facilitated access to bank credit as a substitute for the welfare state; it moreover enables us analyze whether voters see bank credit is as a substitute for redistributive policies or for social insurance aspects of the welfare state.

Authors

• Jonas Markgraf, University of Oxford

• Guillermo Rosas, Washington University in St. Louis