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Does CAP spending reflect taxpayer preferences? An analysis of expenditures for public goods and income redistribution in relation to preference indicators

Felix Schläpfer and Ivo Baur

No 261105, 2017 International Congress, August 28-September 1, 2017, Parma, Italy from European Association of Agricultural Economists

Abstract: Public support for agriculture in the European Union (EU) and other European countries targets two main objectives: providing public goods and securing a fair standard of living for farmers. However, whether the current level of spending on measures targeting these two goals reflects taxpayer preferences is unknown. We used a cross-section of countries to explore how levels of support relate to likely indicators of taxpayer demand. The indicators were derived from theoretical considerations, empirical literature on the demand for public goods, and opinion research about specific policy preferences. We evaluated eleven expectations concerning the relationships between these indicators and spending on direct payments (pillar 1), total payments for voluntary measures (pillar 2) and agri-environment measures in the reference year 2012. We found that spending on public goods was consistently related to variations in income and other indicators of willingness to pay. Spending on income support, in contrast, did not show the expected relations with preference indicators. Furthermore, the study revealed that reliable information about parameters of taxpayer preferences for agricultural support is currently largely lacking. More decentralized and participatory processes in agricultural policymaking would improve our knowledge about taxpayer preferences, and reduce the information needs of policy makers.

Keywords: Agricultural and Food Policy; Community/Rural/Urban Development (search for similar items in EconPapers)
Date: 2017-08-28
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Persistent link: https://EconPapers.repec.org/RePEc:ags:eaae17:261105

DOI: 10.22004/ag.econ.261105

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