What Should We Do About Debt? Understanding How People Reason About Fiscal Stress and Debt Sustainability
There has been tons of work in CPE and IPE on individual preferences about redistribution, trade or immigration policy. A few papers are starting to pop-up on attitudes toward fiscal policy but overall, the research is pretty limited. We see this project as providing a descriptive first step covering fundamental questions such as: are debt and deficits on people’s minds? How do they make sense of it? Can we even say that they have an opinion on the issue? What are the types of ”stories,” if any, they tell themselves about deficits and debt? In the before times we would have done a few focus groups, but with the pandemic, it’s a bit more complicated and focus groups have their limits. Note that deficits and debt is an interesting policy issue in that it is highly salient (public opinion ”should” matter) and very complicated (public opinion ”should not” matter). Another important point: we have set aside the issues of bailouts for now (e.g. the EU bailing out Italy). This is ultimately where we want this project to go but we are proceeding in baby steps. We have been struggling with three main issues and would love to hear your thoughts on each (and any other thoughts you might have).
First, this is a descriptive project and describing the world in a correct and easy-to-interpret fashion is not that easy. For example, we have been debating the use of benchmark issues (e.g. policy issues that are well studied that we could compare our results to). We welcome any suggestions on relevant quantities of interest.
Second, deficits and debt sustainability is a complicated topic. The last time a macroeconomic issue has been central to CPE was in the 80s, when researchers were studying the trade-off between inflation and unemployment. Many studies collected survey evidence under the assumption that people knew about this trade-off and had an opinion on it. We want to make sure we treat people’s knowledge of and opinion on deficits and debts as an hypothesis to test and do not bias our results in favor of finding preferences where there are none.
Third, this project fits into a larger research goal of mine which is to develop and test new ways of measuring what people think about politics and policies. My co-authors share the same love-hate relationship with survey data and are on board for trying new measurement strategies. New tools are always tricky and will take years to test. I would love to hear your thoughts on how to better use QVSR (for which I have a decent amount of experience) and how to deal with Polis (a brand new tool).