7 - Fiscal Stress and the Erosion of Social Solidarity

Summary

Two groups display the highest support for generous redistribution to policies: (1) low-income beneficiaries, irrespective of their reciprocity beliefs, and (2) high-income contributors who trust that these policies benefit deserving recipients. This coalition is held together by redistribution to policies’ asymmetric economic implications. For low-income beneficiaries, redistribution to policies are high stakes, explaining high baseline support irrespective of reciprocity beliefs. In contrast, the uncertainty over the costs to high-income contributors of more generous redistribution to policies favors fairness reasoning, explaining higher than expected support within this group. Chapter 7 argues that fiscal stress, in the form of fiscal adjustment, can introduce a wedge in this pro-redistribution to coalition. Indeed, when the tax implications of generous social spending are no longer a hypothetical, it becomes much easier for people to reason from the perspective of their own pocketbook. In such a context, high-income respondents will react by choosing to concentrate financial efforts on social programs they directly benefit from, at the expense of redistribution to policies.