Between Beveridge and Bismarck: Preferences for redistribution through public pensions

Citizens and politicians rely on their knowledge of a pension system, particularly its redistributive features, when forming their preferences and evaluating its fairness. Taking advantage of the Bismarckian rule of proportionality in Germany, we provide experimental and survey-based evidence indicating that voters and politicians adjust their preferences and perceptions of fairness when new information becomes available. Information on the proportional character of the pension system increases perceived fairness and decreases redistributive demands, whereas information about inequalities in life expectancy between beneficiary groups lowers perceived fairness and increases the demand for redistribution. Both citizens and politicians reject the Bismarckian principle of strict proportionality between lifetime contributions and pension benefits in favor of more redistribution from high to low earners in the retirement phase. Our design utilizes a representative survey of citizens and state politicians in 2020-22.