Media Briefings

Cultural Beliefs Shape Societies’ Demand For Social Insurance: Evidence From The Contrasting

  • Published Date: November 2011

Public support for universal healthcare or greater protection against the risk of unemployment is far stronger among Swiss citizens who speak languages derived from Latin (French, Italian and Romansh) than among German speakers. That is the central finding of research by Beatrix Eugster, Rafael Lalive, Andreas Steinhauer and Josef Zweimüller, published in the November 2011 issue of the Economic Journal.

The results of their study indicate how differences in societies’ cultural beliefs translate into differences in support for redistributive social insurance. In the case of Switzerland, it is clear that Swiss Latins are less likely than Swiss Germans to believe that hard work pays off, and perceive that they enjoy less freedom and control over their lives. The research shows that the former have voted more strongly in favour of socially insuring risks to work and health than the latter in every relevant vote since 1980.

Should a society insure individuals against economic shocks and, if yes, what is the optimal extent of government-provided social insurance? These questions are among the most hotly debated economic policy issues. Countries and individuals differ enormously in terms of their attitudes regarding the issue.

The findings of this study suggest that a society's demand for social insurance against risks to health and work are due to cultural factors. At a time where the central tenets of the welfare state are being re-examined in many countries, the researchers argue that cultural differences within the relevant societies shape the degree of social insurance – like unemployment and health insurance – to an important extent.

Switzerland provides an ideal natural laboratory to test the idea that culture matters for the demand for social insurance. German-speaking inhabitants live side-by-side with individuals who speak languages derived from Latin: French, Italian and Romansh. These two groups do not only differ with respect to language but also with respect to cultural traits and norms.

Moreover, Swiss citizens regularly vote on the size of social insurance. Voting patterns of Swiss Germans and Swiss Latins who live close to the language border separating the two groups provide insights into the role of culture. Actual levels of insurance are identical on either side of the language border whereas culturally determined attitudes to social insurance are not.

The findings indicate that Swiss Latin citizens have voted more strongly in favour of socially insuring risks to work and health than Swiss Germans in every vote about social insurance since 1980. Consider, for example, the 1994 vote on a proposal to introduce universal healthcare at the national level.

Figure 1 reports the percentage of voters favouring universal healthcare by distance to language border. The figure shows a 10 percentage point increase in support for universal health insurance directly at the language border. This shows that Swiss Latin citizens who live side-by-side with Swiss German citizens hold quite different views on public healthcare.

Importantly, both groups hold similar jobs and are eligible for the same health insurance coverage. Corrected for differences in background characteristics, the support for universal healthcare is still five percentage points higher among Swiss Latins than among Swiss Germans. This finding and similar findings for a further 11 votes provide key evidence for an important role of culture in shaping citizens’ demand for social insurance.

Social networks and ideology are two possible explanations for why cultural differences translate into support for redistributive social insurance. The findings indicate that Latin speakers have somewhat stronger ties to family and close friends, and weaker ties to colleagues and to clubs (which may provide people with informal insurance).

But these differences are so small that stronger family ties and lower club memberships are unlikely to be the main explanatory factor behind higher preferences for social insurance among Latin speakers.

A more relevant explanation is that there are major differences in ideology. Latin Swiss are less likely to believe that hard work pays off, and perceive that they enjoy less freedom and control over their lives than the Swiss Germans.

These differences in cultural beliefs are highly persistent, partly because the media market is very strongly separated by language. Hence differences in ideology and beliefs are main drivers behind the observed gap in the demand for redistribution and social insurance across language groups.

ENDS

Notes for editors: ‘The Demand for Social Insurance: Does Culture Matter?’ by Beatrix Eugster, Rafael Lalive, Andreas Steinhauer and Josef Zweimüller is published in the November 2011 issue of the Economic Journal.

Beatrix Eugster and Rafael Lalive are at the University of Lausanne. Andreas Steinhauer and Josef Zweimüller are at the University of Zurich.

For further information: contact Rafael Lalive on +41 21 692 34 31 (email: Rafael.Lalive@unil.ch); or Romesh Vaitilingam on +44-7768-661095 (email: romesh@vaitilingam.com).