DP5319 Does Information Increase Political Support for Pension Reform?

Author(s): Tito Boeri, Guido Tabellini
Publication Date: October 2005
Keyword(s): information, pension reform, policy opinions
JEL(s): D8, H55, J26
Programme Areas: Labour Economics, Public Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=5319

An opinion poll on a representative sample of Italian citizens suggests that it does. We focus on reforms that would lengthen retirement age and/or cut pension benefits. After controlling for individual features of the respondent, we find that individuals who are more informed about the costs and functioning of the Italian pension system are more willing to accept reforms. This result holds also using non-parametric methods, such as propensity-score matching. However, the data also suggest that information is endogenous, and jointly determined with policy opinions. We therefore estimate a causal effect of information, with joint maximum likelihood and instrumental variables. These different methods all confirm a positive and significant causal effect of better information on the willingness to accept reforms that reduce the generosity of the pension system. Finally we do not find that exposure to media coverage of pension issues significantly improves information, possibly because individuals read newspaper articles or watch TV programs on these issues just to confirm their priors.