We Cannot Disagree Forever! Reality Polarization and Citizens’ Post-Pandemic Fiscal Adjustment Preferences

Abstract

Recent studies have found considerable partisan polarization of both reality and policy preferences in the US. Furthermore, this polarization is so entrenched that it is immune to the provision of factual information. Has the COVID-19 pandemic, which affects citizens unequally, reproduced or disrupted these polarization patterns? To answer this question, we conducted a US-wide conjoint survey experiment with embedded information treatments. We focus on citizens’ fiscal adjustment preferences given the (anticipated) lasting fiscal COVID-19 legacy. We find that both reality perceptions regarding the pandemic and policy preferences over post-COVID-19 fiscal adjustment are polarized along familiar partisan lines, but map less well onto traditional socio- economic cleavages. However, we find that the partisan policy polarization largely disappears when citizens are exposed to information on predicted COVID-19 deaths and income losses. This de-polarizing effect is due to synchronous movement by both Democrats and Republicans, which bridges the policy gap between them. Importantly, such information has the additional re-set effect of shifting fiscal adjustment preferences towards a greater reliance on wealth and corporate taxes. We find further evidence that a US-wide consensus over a post-pandemic fiscal policy ’New Deal’ is feasible and potentially lasting.

Keywords: COVID-19, fiscal adjustment, conjoint experiment, polarization, policy preferences, partisanship

JEL Classification: C90, D72, D83, H20, H30, Z13