Revealed preferences for public goods: Applying a model of voter behavior

Most analyses of preferences for government-supplied goods disregard the fact that in a democratic society, these preferences are revealed by an individual choice: the vote. In this paper this is taken account of in a model, explaining the dynamics in voting behavior in a multi-party system. The model assumes that voters may be categorized into K groups of individuals, pursuing the same interests, who remember how parties do in representing these interests (given the level to which they are held responsible for government policy). The model allows one to estimate party identification, sensitiveness to economic performances, time preference, and relative preferences for public versus private goods, all for each of the groups. Furthermore, the model allows for an estimation of the level to which various parties are held responsible for government policies. An empirical application of the model to the Netherlands is presented, albeit that data restrictions did not allow a distinction of more than one group. The results in terms of significance of the coefficients as well as the interpretation of the original parameters are promising. The two main conclusions are that the relative preference for private versus collective consumption is lower than the existing ratio in the Netherlands, and that two parties forming a government coalition are not held equally responsible for the policies. Financial support from the Netherlands Organization for the Advancement of Pure Research is gratefully acknowledged. Previous drafts of this paper were presented at the following congresses: The European Consortium for Political Research (Amsterdam, 10–15 April 1987); the Meeting of the European Public Choice Society (Reggio Calabria, 22–25 April 1987), and the Econometric Society European Meeting (Copenhagen, 24–28 August 1987). The participants in these sessions, as well as the participants in the seminar of the Sociological Institute of the University of Milan are gratefully acknowledged for their useful suggestions. Special thanks are due to Nathaniel Beck and Friedrich Schneider for carefully reading the manuscript and presenting helpful comments. Copyright Kluwer Academic Publishers 1989