Beliefs About Public Debt and the Demand for Government Spending

87 Pages Posted: 6 Mar 2017 Last revised: 30 Jan 2020

See all articles by Christopher Roth

Christopher Roth

University of Warwick, Faculty of Social Studies, Department of Economics, Students

Sonja Settele

University of Copenhagen; CEBI

Johannes Wohlfart

University of Copenhagen

Multiple version iconThere are 3 versions of this paper

Date Written: January 24, 2019

Abstract

We examine how beliefs about the debt-to-GDP ratio affect people's attitudes towards government spending and taxation. Using representative samples of the US population, we run a series of experiments in which we provide half of our respondents with information about the debt-to-GDP ratio in the US. Based on a total of more than 4,000 respondents, we find that most people underestimate the debt-to-GDP ratio and reduce their support for government spending once they learn about the actual amount of debt, but do not substantially alter their attitudes towards taxation. The treatment effects seem to operate through changes in expectations about fiscal sustainability and persist in a four-week follow-up.

Keywords: Government Debt, Political Attitudes, Beliefs, Expectations, Information

JEL Classification: P16, E60, Z13

Suggested Citation

Roth, Christopher and Settele, Sonja and Wohlfart, Johannes, Beliefs About Public Debt and the Demand for Government Spending (January 24, 2019). Available at SSRN: https://ssrn.com/abstract=2927483 or http://dx.doi.org/10.2139/ssrn.2927483

Christopher Roth (Contact Author)

University of Warwick, Faculty of Social Studies, Department of Economics, Students ( email )

Coventry, CV4 7AL
United Kingdom

Sonja Settele

University of Copenhagen ( email )

Germany

CEBI ( email )

Denmark

HOME PAGE: http://https://www.econ.ku.dk/cebi/

Johannes Wohlfart

University of Copenhagen ( email )

Øster Farimagsgade 5
Building 35
Copenhagen, DK-1353
Denmark

HOME PAGE: http://https://sites.google.com/site/johanneswohlfartecon/home

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
343
Abstract Views
2,312
Rank
115,234
PlumX Metrics