Wulf Gaertner (LSE): “Burden Sharing in Deficit Countries: A Questionnaire-Experimental Investigation”

Abstract: Background for this study on how to share a burden is the most recent economic situation in several countries in Southern Europe and in Ireland. These countries were forced to introduce severe budget cuts after the collapse of Lehman Brothers in 2008 which had unleashed a financial crisis in many industrialised countries of the Western world. We do not ask how the burden was actually split in each country examined but how the burden should have been shared among different income groups of society. In order to answer this question, a questionnaire-experimental investigation was run among students from Cyprus, Greece, Ireland, Italy, Portugal, and Spain. Our study offered the students seven different schemes of taxation amongst which we had specified a proportional rule and two progressive schemes of differing severity. A key result within our investigation is the finding that a large majority of students in all countries involved did not opt for a proportional rule of burden sharing but picked one of the two progressive schemes instead. The other rules received only minor support.

Time permitting, we shall also present first results on our experimental “game of losses” that we ran so far at two German universities as well as in Galway and Madrid.

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