What drives public acceptance of reforms? Longitudinal evidence from the run-up of the increase of the Dutch retirement age

Governments often find it hard to pursue economic reforms, even if they will eventually benefit a majority of voters. The literature is inconclusive about the drivers of public acceptance of reforms. While some scholars stress the role of economic interests, dividing the young and the old in the case of pay-as-you-go pensions, others stress the role of poor information or ideology. This paper attempts to disentangle these various factors by focusing on a successful recent reform trajectory: the 2012 increase of the Dutch statutory retirement age from 65 to 67 (and increasing with life expectancy thereafter). We exploit a unique longitudinal dataset on attitudes of Dutch households on pension reform in the 2003-2013 period. Our findings offer various new insights. First, we find that education, occupational status and psychological traits are the most systematic drivers of acceptance of reform, while age has only a limited impact. Second, and importantly, we find that year effects are the main drivers of respondents’ acceptance of reform. We interpret the pattern of the year effects as evidence of a collective learning process where households gradually update their expectations and reform preferences to new information and communication.
 
Keywords: pension reform; political economy; public opinion; information.
JEL classifications: D72, D83, H55, P16.

Working paper no. 492.