Opinion Survey and Econometric Analysis of the Benefit of Public Spending and the National Burden

Author Name TACHIBANAKI Toshiaki  (Faculty Fellow, RIETI / Graduate School of Economics, Kyoto University) /OKAMOTO Akira  (Okayama University) /KAWADE Masumi  (Niigata University) /HATANO Toshiya  (Meiji University) /MIYAZATO Naomi  (Nihon University)
Creation Date/NO. December 2006 06-J-058
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Japan's fiscal conditions are the most severe of any industrialized nation, moreover, the aging of Japanese society will continue, and an increase in the national burden is inevitable. In part because of the view that the burden of taxes and of social security has a negative impact on the incentive to work and thereby impedes the vitalization of the economy, reforms of public spending and the social security system are being implemented continuously for the purpose of avoiding increases in the national burden rate (or potential national burden rate) as much as possible. That notwithstanding, the fact remains that people derive certain benefits from aspects of the social security system, such as health care, pensions, and nursing care, and there exists social capital beneficial to both current and future generations. Consequently, when discussing the optimal level of the national burden rate, it is also important to consider the benefits received from public spending and the social security system. We conducted a survey from this perspective, and considered the results of the survey through the use of principal component analysis and other methods.

From this examination of the survey findings, we found that people hold high expectations of the social security system, but on the other hand they also consider public services to be inefficient. We were also able to infer that people place greater importance on avoiding aging-related risks and the risk of illness than on avoiding the risk of fluctuations in their income and assets by means of redistribution measures.

From the principal component analysis, we found that men are more concerned about insurance than are women, and also place a higher value on non-insurance aspects of the social security system. We also found that men are negative toward the contraction of the social security system, and that they desire the development of social capital to be reduced and made more efficient. Women, on the other hand, are more inclined toward small government, and tend to want, among other things, a social security system in which benefits and burdens are brought in line with each other rather than a system redistributionist in character. Nevertheless, we also observed a tendency to desire greater government spending on education and the environment. With regard to annual household income, we also discerned that the lower people's incomes, the more negative they are toward small government. The analysis also showed that, the higher the level of people's academic attainment the more positive they tend to be toward big government, though they desire government services to be reduced and their efficiency enhanced.