Microfoundations of Debt Crises (MIDEBT)
How do citizens think about government debt? This project investigates the political roots of government debt crises by exploring the drivers of citizens’ preferences towards fiscal policies.
Government debt is rising around the world, and in some countries to unsustainable levels. At some point in the near future, many governments will have to legislate debt reduction or risk a government debt crisis. Citizens’ preferences inform policymakers’ incentives and behavior. Therefore, understanding which governments can successfully reduce their debts before a crisis requires first understanding what citizens are thinking (or not thinking) about debt policy.
Do citizens neglect debt burdens because they are myopic? Is this myopia irrational or rationally motivated? Do debt policy preferences stem from material or socio-tropic interests? How do these preferences vary based on age, class, partisanship, or other dimensions? Are preferences malleable to elite manipulation? This project seeks to answer these questions through original and innovative multi-country survey experiments that elicit the character and stability of preferences for debt reduction.