A recent study published in the Japanese Economic Review reveals that increased understanding of public goods significantly impacts American citizens’ support for government spending. This innovative work was directed by a collaborative research team headed by Dr. Matsumoto. It makes clear the critical role of popular public goods in making pro-tax policies politically palatable in today’s divided American political landscape.
We selected the U.S. as the focus of this research due to its unique characteristics. These factors include extreme levels of political polarization and an unusual government size for a country in the Organization for Economic Co-operation and Development (OECD). To better understand how American citizens view these issues, the team designed an online survey that attracted about 3,000 U.S. citizen respondents. Participants were given content that broke down the value that public goods, like our transportation infrastructure and public sanitation, bring to communities.
To evaluate the impacts of this information on public opinion, the research team randomized attendees into treatment and control groups. The information group received three types of data: specific costs and expenditure amounts related to public goods, evidence of efficiency demonstrating a lack of waste, and clear benefits that individuals receive from these services. The findings were substantial.
Support for a bigger government jumped by 10 percentage points among people randomed to see information on the impact of a 1 percentage point tax hike. This dramatic change in sentiment supports Hypothesis 1 of the study. By contrast, Hypothesis 2 predicted that awareness of public goods would lower the likelihood of supporting a progressive tax. The effect was very small – only a 1.9pp difference between the informed and uninformed groups – showing no meaningful impact.
When we tested Hypothesis 3, we found the unexpected. The message policy information category matched a 3.8 percentage point decrease in support for using additional tax revenues solely to aid the impoverished, demonstrating that learning about the government’s responsibilities in supplying public goods made a difference.
Dr. Matsumoto remarked on the broader implications of these findings, stating, “Inequality has been steadily growing for nearly half a century.” This comment shows how important it is to make progress on inequality by spending government resources more effectively to deliver great public goods equitably.
The research suggests that the treatment effects observed in hypotheses 1 through 3 are independent of socioeconomic status and political ideology, underscoring a universal impact of understanding public goods on public opinion in a highly polarized and unequal nation.
The researchers are clear that more research is needed. They’d like to find out if all of these strangely encouraging results hold up for other countries and cultural contexts, too. Their emphasis on American citizens offers important lessons on how engaged citizens can shape the debate over tax policy.