The social desirability of social democracy

by John Quiggin on May 9, 2004

Recent opinion polls in Australia have shown overwhelming majorities in favour of devoting any additional resources to improvements in public services, particularly health and education, rather than to tax cuts. Discussing these results, Andrew Norton notes that some people may be “giving the socially acceptable answer, rather than what they really want” (see also here)[1]. I think he’s probably right, and I certainly hope so.

The reason I think Norton is probably right is that the majorities are so overwhelming (75-22 in this Nielsen poll and even more in others) that a fair number of people in the majority (people on above-average incomes with below-average needs for services) would almost certainly be worse off in a narrow personal sense. While some of these may be consistently altruistic, others may want to appear altruistic in a poll but might actually prefer the cash. Taking account of these responses would produce a less lopsided majority for services, but still a majority, as is shown by Labor’s electoral dominance at the state level.

The reason I hope he’s right is that it means that social democracy has won the public debate, at least for the moment. After all, if everyone believed that tax cuts would benefit, not merely a subset of high-income earners but the entire community, then the socially acceptable answer would be to support tax cuts. That certainly seemed to be the way things worked during the tax revolt of the 1970s and 1980s. At that time, opposing tax cuts was socially unacceptable. Well into the 1990s, anyone who advocate higher taxes was treated as a heretic (I should know!). Obviously, this has changed, though the political parties have been slower to catch up than the commentariat.

fn1. There are some other issues to do with “status quo bias”. People are more willing to express preferences for change in relation to the allocation of “extra” money than to support a change in the status quo, such as an increase in taxes to fund new services, or a reduction in services to fund tax cuts. But in the terminology of Kahneman and Tversky, this is essentially a quesiton of “framing”.