Populist attitudes, fiscal illusion and fiscal preferences: evidence from Dutch households

Jante Parlevliet, Massimo Giuliodori () and Matthijs Rooduijn
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Jante Parlevliet: Netherlands Bureau for Economic Policy Analysis (CPB)
Massimo Giuliodori: Universiteit Van Amsterdam (UvA)
Matthijs Rooduijn: Universiteit Van Amsterdam (UvA)

Public Choice, 2023, vol. 197, issue 1, No 7, 225 pages

Abstract: Abstract It is well documented that the public is often poorly informed about the economy. In the domain of fiscal policy, this may make voters susceptible to favour spending, while underestimating its costs (fiscal illusion). While politicians may have more information to judge the need for prudent economic policies, voters may be less inclined to support prudent fiscal policy if they do not believe that these politicians act in their best interest—an idea that in recent decades has become more prevalent. Using a novel dataset from the Netherlands, this paper examines whether strong populist ideas lead to more expansionary fiscal preferences, thereby reinforcing the risk of fiscal illusion. The findings indicate that respondents' populist attitudes significantly predict their fiscal preferences. Additionally, higher literacy and information provision contribute to more prudent fiscal preferences. However, the impact of literacy is conditioned by the level of populist sentiment. Poorly literate respondents show higher support for tax relief only when holding strong populist attitudes, not when expressing lower levels of populist sentiment.

Keywords: Fiscal preferences; Literacy; Information; Fiscal illusion; Populism (search for similar items in EconPapers)
JEL-codes: D72 D74 D83 E62 F52 G53 H23 H31 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11127-023-01101-9

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