Future Self-Benefits, Fiscal Risk, and Support for the Social Security System

• In Event: Poster Session: Comparative Politics I & II
  In Poster Session: Poster Session: Comparative Politics II

Abstract

The political economy literature has shown that people may support the social security system regardless of socioeconomic positions because it helps them mitigate their own future risks. A typical case is the universal medical insurance system from which every citizen would receive benefits when they become old. However, people are not necessarily familiar with government activities, leading them to underestimate such self-benefits from the social security system, which could hinder the government from sustaining the social security system.


Motivated by this observation, we hypothesize that realizing future self-benefits from the social security system increases the support for increasing their payment for the social security system. However, this effect may cancel when people know their government fiscal unsustainability because future benefits are no longer credible.

To test these hypotheses, we conduct an online survey experiment with 4367 respondents in Japan. Japan introduces the universal medical insurance system and has huge fiscal deficits, making it an ideal case to test our hypotheses. The experiment randomly provides information that emphasizes the self-benefits of the universal medical insurance programs in Japan. The treatment group receives the correct amount of benefits an elderly receives from the medical insurance system. The treatment group is divided into sub-groups along whether to provide the information about their government's fiscal unsustainability.

According to our data, 79.0% of the respondents, 3451 respondents, underestimated their future benefits from the public health insurance system, which is the target of our study and examine the effect of our information treatment that leads to an upward revision of their expected self-benefits.

On average, these treatments have no influence on their support for tax increase for medical insurance. Nevertheless, dividing the sample into those who are aware/unaware of the government fiscal risk, we confirm our hypothesis for the unaware respondents. Moreover, we found the heterogeneity of the treatment effects depending on time and risk preferences.

Authors

• Daiki Kishishita, Tokyo University of Science

• Tomoko Matsumoto, Tokyo University of Science