Mass Support for Financial Bailouts

The global financial system is in the midst of its most severe crisis in the post-War era, with countries such as Greece, Portugal, Ireland, Spain and Italy facing possible sovereign defaults. To prevent an economic catastrophe, European leaders announced the creation of a bailout fund with a lending capacity of over €1 trillion. This fund was put in place primarily in order to invest in, and insure against sovereign debt. While the long-term impact of this agreement remains in question, most observers agree that further bailouts are needed if the European Union's embattled economies and those of its trading partners are to overcome this crisis.

The situation confronting the eurozone and the attempts to coordinate international transfers of such magnitude are an unprecedented phenomenon in the post-War era. The financial rescues face significant opposition in donor countries, where citizens remain reluctant to send taxpayers' money to finance the debts of other countries. Likewise, the bailouts have provoked even stronger opposition, including mass demonstrations and some violent protests, in some receiving countries, where citizens reject the austerity conditions imposed by the donor countries in exchange for loans from the bailout fund. A central question now confronting the eurozone is whether skeptical publics in donor and receiving countries will provide sufficient political backing to allow further bailouts. Since Switzerland heavily depends on trade with the EU, whether European countries will succeed in tackling the debt crisis will also have an important impact on the Swiss economy.

This proposed project will be the first large scale effort to identify the individual-level and policy-specific factors that affect mass opinion on the bailouts. We seek to evaluate the empirical validity of prominent explanations for the formation of public attitudes on the bailouts. To get at these issues empirically, we will field surveys in four countries central to the crisis (France, Greece, Portugal, and Spain) to produce novel data from which we can learn about the factors that shape individual support for financial rescues in both donor countries and recipient countries. In the second major part of the project we will examine the extent to which public support for a bailout program depends on its specific features, such as its size, the distribution of costs across participating countries, and the specific conditions imposed on the receiving country. To that end, we will employ a novel experimental approach we designed to estimate the sensitivity of voters' attitudes to specific bailout policy features. In sum, this project will offer the first systematic, multi-country analysis of the factors that shape mass opinion over the eurozone bailouts, arguably one the most important political-economic issues currently facing the global economy with far-reaching economic and political consequences for both eurozone countries and trading partners like Switzerland.