Public Preferences for Economic Reforms Are Shaped More by Design Than Cost

Christopher Hoy, Yeon Soo Kim, Saad Imtiaz, Ana Maria Rojas Mendez, Moritz Meyer, Gustavo Canavire-Bacarreza, Lydia Kim, William Hutchins Seitz, Imane Helmy, Ikuko Uochi, Sering Touray, Juni Singh, Bambang Suharnoko Sjahrir, Utz Pape, Alan Fuchs, Trang Van Nguyen, Defne Gencer, Min A Lee, Akiko Sagesaka and Ivette Contreras

Melbourne Institute Working Paper Series from Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Abstract: Public opposition is a major barrier to economic reforms, such as subsidy removal.Using multilayered, randomized survey experiments with 10,000 respondents across ten surveys in five countries, this paper shows that opposition to energy price reforms is shaped more by design and communication than by cost. Around 70 percent of respondents strongly opposed a 100 percent immediate price increase, but resistance was nearly halved when reforms were phased in, targeted at high-energy consumers, or paired with compensation. Informational messages also reduced opposition by as much as halving the price increase. An expert prediction survey revealed systematic misunderstandings: specialists underestimated the influence of design features and greatly misperceived coping strategies and compensation preferences. These findings demonstrate that behavioral biases—such as present bias, loss aversion, and fairness heuristics—are as influential as economic costs in shaping people’s opposition to economic reforms, underscoring the importance of careful design and communication of politically sensitive reforms.

Keywords: Political Economy; Public Finance; Subsidies; Climate Change; Energy Policy (search for similar items in EconPapers)
JEL-codes: D04 D80 D90 H20 H30 H50 (search for similar items in EconPapers)
Pages: 107pp
Date: 2025-10
New Economics Papers: this item is included in nep-dcm, nep-ene, nep-exp and nep-reg
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Working Paper: Public Preferences for Economic Reforms Are Shaped More by Design Than Cost (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:iae:iaewps:wp2025n14

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