The Welfare State or the Economy? Preferences, Constituencies, and Strategies for retrenchment

The assumption that voters systematically defend the welfare state is challenged by recent research showing that parties are on average not punished and sometimes even rewarded for welfare state retrenchment. We work to understand better the micro-foundations for this finding of non-punishment by exploring individuals’ preferences over social policy. In particular, we distinguish general support for redistribution from views that existing levels of government spending strains the economy. Since voters value economic stability in addition to equality, they are hypothesized to tolerate or support retrenchment when they feel that there are economic costs at stake. Analyzing a sample of 13 European societies with data from the European Social Survey Round 4, our results show that only welfare state supporters who do not believe that the welfare state hampers the economy punish retrenching governments. This finding helps explain the lack of more widespread electoral punishment following retrenchment, although other results suggest that retrenchment involves a rather delicate process of juggling the preferences of quite diverse constituencies.