ISSN:
1467-6435
Source:
Blackwell Publishing Journal Backfiles 1879-2005
Topics:
Sociology
,
Economics
Notes:
This paper deals with the occurrence of fiscal illusion and its effect on public expenditures. Fiscal illusion is here taken to be a systematic misperception by individuals of both the public revenue burden borne by them and the amount of benefit they derive from public expenditures. Taking the revenue structure and public outlays of the 110 largest Swiss cities as an example, it is shown that there is in fact empirical evidence for the existence of fiscal illusion (presently defined for the most part in the literature as a systematic underestimation of fiscal burden) and, as a result, for higher public expenditures when it occurs than when it is absent. By dividing the Swiss cities according to the degree of citizen participation in the making of public decisions, we were able to formulate hypotheses predicting to what degree fiscal burden illusion (understood as systematic underestimation) will occur under each system. These hypotheses have been empirically confirmed. Further analysis of the results has indicated that in cities in which the citizens can only indirectly participate in public decision-making, the government and public bureaucracy have more freedom to act independent of the wishes of the voters with respect to expenditures, though these are taken more and more into consideration as elections approach. This expenditure behavior and particularly the concrete manner in which expenditures are adjusted to approaching general elections leads us to the conclusion that illusion with respect to the benefit derived from public expenditures also exists.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1111/j.1467-6435.1978.tb00648.x
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