What Are the Economic Consequences of Aligning Policies with Public Opinion?

Abstract

What are the economic consequences of policies that follow public opinion? We combine international survey data with fiscal statistics, and find that the public generally favors increased spending on most areas and lower taxes for most citizens. Consequently, in countries where policy follows public opinion, deficits grow and debt accumulates. The results do not mean that the public necessarily is irrational, as these surveys do not task respondents with balancing the budget. However, they do illustrate the limits of democratic models that uncritically value strict congruence between public opinion and policy.