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

Session Submission Type: Full Paper Panel

Session Description

The 2008 global financial and fiscal crisis has been a focal point in the evolution of welfare states across advanced democracies; it disclosed the consequences of the “politics of social welfare state retrenchment” and rekindled debates about cuts in welfare transfers. Growing public debt levels caused a fiscal crisis on various European countries and forced governments to consider far-reaching unpopular austerity measures and cuts in their welfare policies. Some scholars have argued that voters might be able to access to bank credit in order to cope with shrinking welfare transfers in order to smooth consumption (e.g. Rajan, 2010); that squares with the empirical observation that private households’ debt levels are rising as fiscal redistribution decreases. Yet, the financial crisis has demonstrated that bank credit and debt expose voters to the developments at financial markets; for instance, in the US, many households had to declare insolvency when housing markets crashed.

A buoying literature studies the political drivers that cause welfare states to shrink (e.g. Hacker, 2004), household debt levels to rise (e.g. Prasad, 2012, Krippner 2011), and consumer credit to expand (e.g. Ahlquist & Ansell, 2017). But we know little about the demand side, in particular voters’ preferences about welfare state reforms, how growing asset and debt levels influence their economic insecurity and political preferences, and whether voters regard bank credit as a substitute for welfare spending. These are crucial factors to understand the popular backlash against the establishment as the structural shifts in welfare regimes have generated new societal cleavages between those who can obtain bank credit and thus buy higher education and those who are financially excluded. In that way, the panel discusses topics that are central for the theme of this year’s APSA conference: “Populism and Privilege”.

The papers in this panel shift the focus from the supply to the demand side and examine voters’ attitudes about the recalibration of welfare regimes, growing student debt, and bank credit as a coping strategy to deal with a shrinking welfare state, and present findings on households’ behavioral responses by studying their balance sheets. Bremer and Bürgisser study voters’ attitudes toward fiscal austerity measures in various welfare spending areas using conjoint analyses in three countries and find that attitudes towards welfare state spending are distinctively different from attitudes towards welfare state recalibration. Hariri, Jensen, Lassen, and Wiedemann conduct an original survey in nine OECD countries and collect information on household assets and liabilities as well as individuals’ economic worries and political preferences; using this unusually fine-grained data, they analyze the degree to which welfare states and credit markets are mediators between voters’ balance sheets, economic insecurity, their attitudes toward social policies. Ballard-Rosa shows how individuals’ student debt levels alter their political attitudes toward publicly-provided welfare; he finds that student loan exposure is associated with demands for targeted government policies that help individuals facing labor-market trouble. In that way, he sheds light upon a central characteristic of many countries, namely privatized tertiary education and rising debt levels of the young and educated. Finally, Markgraf and Rosas focus on the role of bank credit for voters to cope with decreasing welfare transfers; they empirically test an implicit claim in the literature, namely that voters accept credit as a substitute for publicly-provided welfare and conduct a conjoint analysis in the UK to study the tradeoff between bank credit and fiscal redistribution.

Sub Unit

• DIVISION 15: European Politics and Society

Individual Presentations

• Public Opinion on Welfare State Recalibration: Evidence from Survey Experiments - Björn Kristen Bremer, Max Planck Institute for the Study of Societies; Reto Bürgisser, University of Bern

• How Personal Finances Affect Economic Worries and Social Policy Preferences - Andreas Wiedemann, Princeton University; Jacob Gerner Hariri, Department of Political Science, University of Copenhagen; Amalie Sofie Jensen, Princeton University; David Dreyer Lassen, University of Copenhagen

• The Albatross of Education: Personal Student Debt & Preferences for Redistribution - Cameron Ballard-Rosa, University of North Carolina, Chapel Hill

• Bank Credit and Redistributive Preferences: Experimental Evidence from the UK - Jonas Markgraf, University of Oxford; Guillermo Rosas, Washington University in St. Louis

Chair

• Jane R. Gingrich University of Oxford

Discussant

• Jane R. Gingrich University of Oxford