Why Austerity? The Mass Politics of a Contested Policy

55 Pages Posted: 25 Nov 2019

See all articles by Kirk Bansak

Kirk Bansak

University of California, San Diego

Michael M. Bechtel

Washington University in St. Louis

Yotam Margalit

Tel Aviv University

Date Written: November 13, 2019

Abstract

The merits of austerity as a response to economic crisis are widely contested. Critics contend that public spending cuts and tax hikes inflict more pain and are less effective than the alternative of fiscal stimulus. Nonetheless, governments routinely adopt austerity in response to sharp economic downturns. We explore this puzzle by focusing on public opinion as a key component of understanding governments' choices. Using original survey data from five European countries, our analysis demonstrates that austerity is in fact the preferred response among most voters. We then test potential explanations for this seemingly surprising preference using experiments. The results suggest that voters' ideology and reliance on partisan signals are an important part of the answer. Moreover, support for austerity is highly contingent on the specific features of the policy. We devise a novel approach to predict support for historical austerity programs and find that public approval of austerity likely reflects governments' strategic crafting of policy packages.

Keywords: austerity, economic crises, public opinion, policy design, redistribution, public spending, taxes, budegt deficit, self-interest, policy preferences, survey, ideology, randomized experiment, conjoint, partisanship

JEL Classification: G01, H12, H51, H61, P16

Suggested Citation

Bansak, Kirk and Bechtel, Michael M. and Margalit, Yotam, Why Austerity? The Mass Politics of a Contested Policy (November 13, 2019). Available at SSRN: https://ssrn.com/abstract=3486227 or http://dx.doi.org/10.2139/ssrn.3486227

Kirk Bansak

University of California, San Diego ( email )

9500 Gilman Drive
La Jolla, CA 92093
United States

Michael M. Bechtel (Contact Author)

Washington University in St. Louis ( email )

Campus Box 1063
One Brookings Drive
Saint Louis, MO 63130-4899
United States

Yotam Margalit

Tel Aviv University ( email )

Tel Aviv
Israel

HOME PAGE: http://www.ymargalit.net

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