Skip to main content Accessibility help

How do Economic Circumstances Determine Preferences? Evidence from Long-run Panel Data

  • Tom O’Grady


Preferences for redistribution and social spending are correlated with income and unemployment risk, but it is unclear how these relationships come about. I build a theory emphasizing that only large changes in economic circumstances provide the information and motivation needed for people to change their preferences. Stable long-run preferences are shaped mainly by early socialization, which includes economic and ideological influences from the family, and early labor market experiences. Enduring shocks, low intergenerational mobility and the tendency of left-wing parents to be poorer generate correlations between circumstances and preferences. Because preferences are stable, greater inequality may not increase aggregate support for redistribution. Support is found for the theory with panel data from Switzerland, using a range of empirical tests.



Hide All

Department of Political Science, University College London, United Kingdom (Email: I wish to thank the editor, three anonymous reviewers, Ben Ansell, Adam Berinsky, Charlotte Cavaille, Tom Cusack, Jeremy Ferwerda, Jens Hainmueller, Torben Iversen, Dan de Kadt, Dean Knox, Stephanie Rickard, David Singer, Kathy Thelen and Teppei Yamamoto for useful suggestions and comments. This study uses data collected by the Swiss Household Panel (SHP), which is based at the Swiss Centre of Expertise in the Social Sciences (FORS). The SHP is financed by the Swiss National Science Foundation. The data are available for free download from FORS with a data use contract, which can be obtained at Data replication sets are available in Harvard Dataverse at: and online appendices at:



Hide All
Aaroe, Lene, and Petersen, Michael B.. 2014. Crowding Out Culture: Scandinavians and Americans Agree on Social Welfare in the Face of Deservingness Cues. Journal of Politics 76 (3):684697.
Alesina, Alberto, and Glaeser, Edward. 2005. Fighting Poverty in the US and Europe: A World of Difference. Oxford: Oxford University Press.
Alesina, Alberto, and La-Ferrara, Eliana. 2005. Preferences for Redistribution in the Land of Opportunity. Journal of Public Economics 89 (3):897931.
Allison, Paul. 2009. Fixed Effects Regression Models, Quantitative Applications in the Social Sciences Series no. 160. Thousand Oaks, CA: Sage Publications.
Alwin, Duane F., and Krosnick, Jon A.. 1991. Aging, Cohorts, and the Stability of Sociopolitical Orientations over the Life Span. American Journal of Sociology 97 (1):169195.
Armingeon, Klaus. 2005. Institutionalizing the Swiss Welfare State. West European Politics 24 (2):145168.
Barber, Benjamin, Beramendi, Pablo, and Wibbels, Erik. 2013. The Behavioral Foundations of Social Politics: Evidence from Surveys and a Laboratory Democracy. Comparative Political Studies 46 (10):11551189.
Blekesaune, Morten. 2006. Economic Conditions and Public Attitudes to Welfare Policies. European Sociological Review 23 (3):393403.
Borjas, George. 2003. The Labor Demand Curve Is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market. Quarterly Journal of Economics 118 (4):13351374.
Browning, Martin, and Crossley, Thomas F.. 2001. The Life-Cycle Model of Consumption and Saving. Journal of Economic Perspectives 15 (3):322.
Campbell, Andrea. 2002. Self-Interest, Social Security, and the Distinctive Participation Patterns of Senior Citizens. American Political Science Review 96 (3):565574.
Cavaille, Charlotte, and Trump, Kris-Stella. 2015. The Two Facets of Social Policy Preferences. Journal of Politics 77 (1):146160.
Chong, Dennis, Citrin, Jack, and Conley, Patricia. 2001. When Self-Interest Matters. Political Psychology 22 (3):541570.
Corneo, Giacomo, and Gruner, Hans-Peter. 2002. Individual Preferences for Political Redistribution. Journal of Public Economics 83 (1):83107.
Cusack, Tom, Iversen, Torben, and Rehm, Philipp. 2006. Risks at Work: The Demand and Supply Sides of Government Redistribution. Oxford Review of Economic Policy 22 (3):365389.
Dinas, Elias. 2013. Opening ‘Openness to Change’: Political Events and the Increased Sensitivity of Young Adults. Political Research Quarterly 66 (4):868882.
Feldman, Stanley. 2003. Values, Ideology and the Structure of Political Attitudes. Pp. 477--508 in Oxford Handbook of Political Psychology, edited by D. Sears, L. Huddy and R. Jervis. Oxford: Oxford University Press.
Feldman, Stanley, and Steenbergen, Marco. 2001. The Humanitarian Foundation of Support for Social Welfare. American Journal of Political Science 45 (3):658677.
Finseraas, Henning. 2009. Income Inequality and Demand for Redistribution: A Multilevel Analysis of European Public Opinion. European Sociological Review 32 (1):94119.
Finseraas, Henning. 2017. The Effect of a Booming Local Economy in Early Childhood on the Propensity to Vote: Evidence from a Natural Experiment. British Journal of Political Science 47 (3):609629.
Georgiadis, Andreas, and Manning, Alan. 2012. Spend it Like Beckham: Inequality and Redistribution in the UK, 1983–2004. Public Choice 151 (3):537563.
Giuliano, Paola, and Spilimbergo, Antonio. 2014. Growing up in a Recession. Review of Economic Studies 81 (2):787817.
Green, Donald, and Gerken, Ann-Elizabeth. 1989. Self-Interest and Public Opinion Toward Smoking Restrictions and Cigarette Taxes. Public Opinion Quarterly 53 (1):116.
Gregg, Paul, and Tominey, Emma. 2005. The Wage Scar from Male Youth Unemployment. Labour Economics 12 (4):487509.
Hainmueller, Jens, and Hiscox, Michael J.. 2010. Attitudes toward Highly Skilled and Low Skilled Immigration: Evidence from a Survey Experiment. American Political Science Review 104 (01):6184.
Iversen, Torben, and Soskice, David. 2001. An Asset Theory of Social Policy Preferences. American Political Science Review 95 (4):875893.
Jenkins, Stephen P. 2000. Modelling Household Income Dynamics. Journal of Population Economics 13 (4):529567.
Jennings, M. Kent, and Markus, Gregory B.. 1984. Partisan Orientations over the Long Haul: Results from the Three-Wave Political Socialization Panel Study. American Political Science Review 78 (4):10001018.
Jennings, M. Kent, Stoker, Laura, and Bowers, Jake. 2009. Politics across Generations: Family Transmission Reexamined. Journal of Politics 71 (3):782799.
Kahn, Lisa. 2010. The Long-Term Labor-Market Consequences of Graduating from College in a Bad Economy. Labour Economics 17 (2):303316.
Kelly, Nathan J., and Enns, Peter K.. 2010. Inequality and the Dynamics of Public Opinion: The Self-Reinforcing Link between Economic Inequality and Mass Preferences. American Journal of Political Science 54 (4):855870.
Kuklinski, James H., Quirk, Paul J., Jerit, Jennifer, and Rich, Robert F.. 2001. The Political Environment and Citizen Competence. American Journal of Political Science 45 (2):410424.
Lane, Jan-Erik, and Maeland, Reinert. 2001. The Growth of the Public Sector in Switzerland. West European Politics 24 (2):169190.
Luttmer, Erzo F. P., and Singhal, Monica. 2011. Culture, Context, and the Taste for Redistribution. American Economic Journal: Economic Policy 3 (1):157179.
McCall, Leslie, and Kenworthy, Lane. 2008. Inequality, Public Opinion, and Redistribution. Socio-Economic Review 6 (1):3568.
Margalit, Yotam. 2013. Explaining Social Policy Preferences: Evidence from the Great Recession. American Political Science Review 107 (1):80103.
Meltzer, Allan H., and Richard, Scott F.. 1981. A Rational Theory of the Size of Government. Journal of Political Economy 89 (5):914927.
Moene, Karl Ove, and Wallerstein, Michael. 2001. Inequality, Social Insurance and Redistribution. American Political Science Review 95 (4):859874.
Mroz, Thomas, and Savage, Timothy. 2006. The Long-Term Effects of Youth Unemployment. Journal of Human Resources 41 (2):259293.
Neundorf, Anja, Smets, Kaat, and Garcia-Albacete, Gema. 2013. Homemade Citizens: The Development of Political Interest During Adolescence and Young Adulthood. Acta Politica 48 (1):92116.
Obinger, Herbert, Starke, Peter, Moser, Julia, Bodegan, Claudia, Gindulis, Edith, and Liebfried., Stephan 2010. Transformations of the Welfare State: Small States, Big Lessons. Oxford: Oxford University Press.
O’Grady, Tom. 2017. “Replication Code for: How do Economic Circumstances Determine Preferences? Evidence from Long-run Panel Data”,, Harvard Dataverse, V1.
Oreopoulos, Philip, Wachter, Til Von, and Heisz, Andrew. 2012. The Short- and Long-Term Career Effects of Graduating in a Recession. American Economic Journal: Applied Economics 4 (1):129.
Prior, Markus. 2010. You’ve Either Got it or You Don’t: The Stability of Political Interest over the Life Cycle. Journal of Politics 72 (3):747766.
Rehm, Philipp. 2009. Risks and Redistribution: An Individual-Level Analysis. Comparative Political Studies 42 (7):855881.
Rehm, Philipp. 2011. Social Policy by Popular Demand. World Politics 63 (02):271299.
Rehm, Philipp, Hacker, Jacob S., and Schlesinger, Mark. 2012. Insecure Alliances: Risk, Inequality, and Support for the Welfare State. American Political Science Review 106 (2):386406.
Rehm, Philipp, Hacker, Jacob S., and Schlesinger, Mark. 2013. The Insecure American: Economic Experiences, Financial Worries, and Policy Attitudes. Perspectives on Politics 11 (1):2349.
Sears, David O., and Funk, Carolyn L.. 1990. The Limited Effect of Economic Self-Interest on the Political Attitudes of the Mass Public. Journal of Behavioral Economics 19 (3):247271.
Sears, David O., and Funk, Carolyn L.. 1999. Evidence of the Long-Term Persistence of Adults’ Political Predispositions. Journal of Politics 61 (1):128.
Sears, David O., Lau, Richard R., Tyler, Tom R., and Allen, Harris M.. 1980. Self-Interest vs. Symbolic Politics in Policy Attitudes and Presidential Voting. American Political Science Review 74 (3):670684.
Simon, Herbert. 1982. Models of Bounded Rationality. Cambridge, MA: MIT Press.
Soroka, Stuart, and Wlezien, Christopher. 2005. Opinion-Policy Dynamics: Public Preferences and Public Expenditure in the United Kingdom. British Journal of Political Science 35 (4):665689.
Stegmueller, Daniel. 2011. Apples and Oranges? The Problem of Equivalence in Comparative Research. Political Analysis 19 (4):471487.
Stegmueller, Daniel. 2013. Modeling Dynamic Preferences: A Bayesian Robust Dynamic Latent Ordered Probit Model. Political Analysis 21 (3):314333.
Stevenson, Randolph. 2001. The Economy and Policy Mood: A Fundamental Dynamic of Democratic Politics? American Journal of Political Science 45 (3):620633.
Svallfors, Stefan. 2003. Welfare Regimes and Welfare Opinions: A Comparison of Eight Western Countries. Social Indicators Research 64:495520.
Tversky, Amos, and Kahneman, Daniel. 1974. Judgement Under Uncertainty: Heuristics and Biases. Science 185 (4157):11241131.
Van Oorschot, Wim. 2006. Making the Difference in Social Europe: Deservingness Perceptions among Citizens of European Welfare States. Journal of European Social Policy 16 (1):2342.


Related content

Powered by UNSILO
Type Description Title
Supplementary materials

O’Grady Dataset

Supplementary materials

O’Grady supplementary material
Figures S1-S5 and Tables S1-S7

 PDF (161 KB)
161 KB

How do Economic Circumstances Determine Preferences? Evidence from Long-run Panel Data

  • Tom O’Grady


Altmetric attention score

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed.