Beliefs About Public Debt and the Demand for Government Spending

88 Pages Posted: 26 Feb 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 30, 2020

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 30, 2020). Available at SSRN: https://ssrn.com/abstract=3528060 or http://dx.doi.org/10.2139/ssrn.3528060

Christopher Roth

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 (Contact Author)

University of Copenhagen ( email )

Nørregade 10
Copenhagen, København DK-1165
Denmark

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