3.1 Four variables characterizing the municipality: MRS, MSiz, MPF, MRef
MRS represents the full information non-strategic setup. Citizens believe that the home municipality has reduced the service level if the municipality actually has reduced the service level. We expect a negative coefficient expressing that larger negative values of service level increase will raise the tendency to perceive cut in service level.
MSiz represents the idea that large municipalities are more making it more difficult for the individual citizen to see through the bureaucracy and to know all local activities. Such impenetrable municipalities could possibly cause citizens to misinterpret actual changes. Thus, if large municipalities alienate citizens we expect a negative coefficient.
MPF measure the political fragmentation in the municipalities. The hypothesis states that a high degree of fragmentation is related to the perception of service-level cuts, because increased fragmentation implies strong political competition and a strong political opposition arguing that the majority coalition cut down the service level offered to citizens.
MRef represents the municipal structural reform. It measures the number of former municipalities that have been merged into the present one. The number range from 1 to 7. As a consequence of the merger the service level in the former municipalities was homogenized. If the new level became the average level, this creates losers and gainers. However, if there was economics of scale, and due to the rise in the average level in 2007, to make the reform palatable, the number of losers was smaller than the winners. If the variable gets a negative coefficient as we suspected this points to a status quo bias.
We now turn to 9 variables characterizing the citizens.
3.2. Citizens (1). The ideology and stakeholder variables: Pol1, Pol2, WC1, WC2
The Pol-variables express opposition to prevailing politics at the national and municipal level.
Pol1 measures the opposition to the Center-Right government, i.e., the respondent supports the Center-Left parties, from the Social Democratic party and further to the left.[1] The key political propaganda item of the opposition is precisely the Center-Right government undermines the Welfare State by incessant cuts in the welfare provisions. If the supporters of the opposition believes that, or vice versa, we should find a positive coefficient to Pol1.
Pol2 is the corresponding variable for opposition to the municipal leader, the mayor. Those opposing the mayor probably believe that the mayor perform poorly in his/her job, and as the question actually deals with the municipal provisions of goods we expect.
The two Welfare Coalition variables, WC, model the idea (from Christoffersen and Paldam 2003)[2] that people receiving their income from the public sector form an implicit coalition for the expansion of this sector. Their stakeholder interests consequently cause them to be against cuts the public sphere, and hence to be suspicious of anything that may lead to such cuts. The WC variable has two parts:
WC1 is the fraction of the inhabitants that is employed in the public sector, of which about half work in the municipality where they are polled.
WC2 is the fraction of the inhabitants that receives (income compensating) public transfers. These transfers are by national rates, and thus independent of the municipal level of service provision.
3.3 Citizens (2). User interests: Ufe, UAE, Uag1-4, UInc1-8
Our data does not include detailed information about the specific use of welfare services among the individual respondents. However, it contains the usual variables characterizing the background of the respondents. Therefore formulate four hypotheses dealing with citizen characteristics which we believe can be linked to relatively strong interest in a high standard of welfare service provision in the home municipality:
UFe covers the idea that women generally may focus more on public service than men, as the service provided often replace the serviced they provided in the traditional division of labor. Although most of that division is now gone it may still have left an asymmetric interest. Also, it appears that (Danish) women have a much smaller interest than men in the economy and hence may be more susceptible to fiscal illusion.[3]
UAE measures the fraction of citizens with an education at university level. It should be easier for such citizens to acquire (process) information, and they do have mure knowledge about the economy.
The 4 UAg variables cover 4 age groups, which also represent groups with different user patterns in relation to the municipal service provision. Young families are in direct contact with the municipal service delivery system during day care and schools and old people use care services in own home or in residential homes for the elderly whereas middle aged people generally have weaker user contact with the municipal service delivery system. Therefore we expect to see a U-curve correlation between age and belief in budget cuts.
The 8 UInc variables cover 8 income groups, that describe the respondent’s budget restriction and consumer power. The hypothesis which will be tested is that the citizens become more critical in relation to the municipal budget situation with higher income.
3.3. Citizens (3). Service illusion: SLev
SLev tests the hypothesis that the level of expenditures expressed as total expenditures compared to total needs influences the citizen understanding of development of the welfare level in the municipal service provision. Our idea is that citizens in municipalities with high expenditures compared to needs feels a larger risk of losing welfare than citizens in municipalities characterized by a lower level of expenditures and that this will lead citizens in high expenditure municipalities to be more inclined to feel budget cuts.
4. The service dimension that failed: Perceived service quality and actual expenditures
It is sometimes argued that the reason people perceive a fall in the public service provision is because the quality falls. The poll does not fully cover the quality dimension, which is difficult to measure anyhow. However our poll dealt with service quality and asked the respondents if they were satisfied with the quality of the service provide on a 5 point scale.
Table 3. The relation between perceived quality and actual expenditures