Abstract

The sustainability of the welfare state ultimately depends on citizens’ preferences for income redistribution. The major contribution of this paper is the novel elicitation of these preferences through a Discrete Choice Experiment performed in Switzerland. Attributes of the good are the share of GDP devoted to redistribution, its uses (the unemployed, old-age pensioners, people with ill health etc.), and nationality of beneficiary. Estimated marginal willingness to pay (MWTP) is positive among those who deem current social benefits too low, and negative otherwise. However, even those stating that government should reduce income inequality exhibit a negative MWTP on average. The estimated average WTP is maximum at 21 percent of GDP as of 2008, clearly below and significantly different from the current value of 25 percent. Thus, the Swiss welfare state does not appear sustainable in its present extent.

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