Does aging affect preferences for welfare spending? A study of peoples’ spending preferences in 22 countries, 1985-2006

Abstract

A recurrent assertion is that aging will intensify age-related conflict over public budget allocation. If people are led by their self-interest, the young will prioritize public education services, while the elderly will demand better pensions and health-care services. Addressing this issue requires longitudinal survey data and estimation of age (life-cycle), period and cohort effects. Except for a few of studies based on US data, such analyses are non-existent. We use repeated cross-section survey-data for 22 countries. Respondents are classified into ten-year age-groups and birth decades, and we estimate a regression model explaining respondents’ public spending preferences. When period and cohort effects are taken into account, elderly people want less education spending, and more health care and pension spending. These life-cycle effects vary considerably between countries, but are generally quite small. Preferences also appear mostly unrelated to left-right party choice.