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The money illusion and democratic accountability: the democratic stakes of indexing government benefits
Örebro University, School of Humanities, Education and Social Sciences.ORCID iD: 0000-0003-4486-5834
2025 (English)In: European Political Science, ISSN 1680-4333, E-ISSN 1682-0983Article in journal (Refereed) Epub ahead of print
Abstract [en]

The decision whether to index government benefits can have significant economic and political implications. It can affect whether or to what extent benefits maintain their real value over time, affect the policy levers available to fight inflation, and shape discretionary budget priorities. Most of the attention in the literature has focused on understanding the economic pros and cons of indexing and the politics and political use of indexation in the context of welfare state reform and retrenchment. Less attention has been paid to what indexation means for democratic accountability. This paper seeks to rectify this by investigating the democratic stakes of indexing government benefits. It argues that there are, other things being equal, strong democratic reasons to index government benefits in a way (or according to metric) that preserves their publicly articulated purpose. However, concerns about lack of discretion and ownership suggest indexation rules should be designed to provide governments with some discretionary power over the size and perhaps timing of automatic adjustments-though accompanied by requirements that the exercise of this discretionary power be justified publicly.

Place, publisher, year, edition, pages
Palgrave Macmillan, 2025.
Keywords [en]
Indexation, Democratic accountability, Money illusion, Welfare state retrenchment
National Category
Political Science
Identifiers
URN: urn:nbn:se:oru:diva-120673DOI: 10.1057/s41304-025-00522-yISI: 001464406900001Scopus ID: 2-s2.0-105002304945OAI: oai:DiVA.org:oru-120673DiVA, id: diva2:1953481
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Örebro UniversityAvailable from: 2025-04-22 Created: 2025-04-22 Last updated: 2025-04-22Bibliographically approved

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Drugge, Daniel

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