Why Austerity? The Mass Politics of a Contested Policy
55 Pages Posted: 25 Nov 2019
Date Written: November 13, 2019
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: Suggested Citation