TY - JOUR

T1 - Beliefs about public debt and the demand for government spending

AU - Roth, Christopher

AU - Settele, Sonja

AU - Wohlfart, Johannes

N1 - Funding Information: The experiment is registered in the AEA RCT Registry as trial 1960 available at: https://www.socialscienceregistry.org/trials/1960. The experimental instructions are available at: https://www.dropbox.com/s/9o0a5gk14x8c19m/01_instructions_v3.pdf?dl=0. Ethics approval was obtained from the University of Oxford. The activities of CEBI are funded by the Danish National Research Foundation, Grant DNRF134. The usual disclaimer applies.We would like to thank the editor and two anonymous referees for helpful comments and suggestions. We would also like to thank Jan Bakker, Jon de Quidt, Alexis Grigorieff, Olga Goldfayn, Thomas Graeber, Michalis Haliassos, Johannes Haushofer, Lukas Hensel, Johannes Hermle, Chaning Jang, Yigitcan Karabulut, Hannah Paule-Paludkiewicz, Simon Quinn as well as seminar participants in Frankfurt and Mannheim. This paper was previously circulated under the title ?Public Debt and the Demand for Government Spending and Taxation?. Financial support from Goethe University Frankfurt and from CEBI is gratefully acknowledged. Johannes Wohlfart thanks for support through the DFG project ?Implications of Financial Market Imperfections for Wealth and Debt Accumulation in the Household Sector?. The activities of the Center for Economic Behavior and Inequality (CEBI) are funded by the Danish National Research Foundation, Grant DNRF134. Funding Information: The experiment is registered in the AEA RCT Registry as trial 1960 available at: https://www.socialscienceregistry.org/trials/1960 . The experimental instructions are available at: https://www.dropbox.com/s/9o0a5gk14x8c19m/01_instructions_v3.pdf?dl=0 . Ethics approval was obtained from the University of Oxford. The activities of CEBI are funded by the Danish National Research Foundation, Grant DNRF134 . The usual disclaimer applies. Funding Information: We would like to thank the editor and two anonymous referees for helpful comments and suggestions. We would also like to thank Jan Bakker, Jon de Quidt, Alexis Grigorieff, Olga Goldfayn, Thomas Graeber, Michalis Haliassos, Johannes Haushofer, Lukas Hensel, Johannes Hermle, Chaning Jang, Yigitcan Karabulut, Hannah Paule-Paludkiewicz, Simon Quinn as well as seminar participants in Frankfurt and Mannheim. This paper was previously circulated under the title “Public Debt and the Demand for Government Spending and Taxation”. Financial support from Goethe University Frankfurt and from CEBI is gratefully acknowledged. Johannes Wohlfart thanks for support through the DFG project “Implications of Financial Market Imperfections for Wealth and Debt Accumulation in the Household Sector”. The activities of the Center for Economic Behavior and Inequality (CEBI) are funded by the Danish National Research Foundation , Grant DNRF134. Publisher Copyright: © 2021 Elsevier B.V.

PY - 2022/11/1

Y1 - 2022/11/1

N2 - 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.

AB - 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.

KW - Beliefs

KW - Expectations

KW - Government debt

KW - Information

KW - Political attitudes

U2 - 10.1016/j.jeconom.2020.09.011

DO - 10.1016/j.jeconom.2020.09.011

M3 - Journal article

AN - SCOPUS:85101864007

VL - 231

SP - 165

EP - 187

JO - Journal of Econometrics

JF - Journal of Econometrics

SN - 0304-4076

IS - 1

ER -