Fiscal policy preferences, trade-offs, and support for social investment

Abstract

A common finding in the literature is that social investment policies are broadly popular among citizens but still politically difficult to implement. This article provides a partial answer to this puzzle by exploring the fiscal trade-offs associated with such a recalibration. Based on survey data from eight Western European countries, it first explores citizens' fiscal policy preferences with regard to the preferred size of the public sector and the distribution of spending across different subsectors. These preferences are then shown to be significantly associated with attitudes towards fiscal trade-offs regarding the expansion of social investment policies. The results reveal a political dilemma for policy-makers keen on expanding social investment: People who traditionally support a large public sector and more welfare state spending tend to oppose redistributing spending towards social investment, whereas support for such a recalibration is higher among those who have a sceptical view on public spending.