The hidden quality of social welfare benefits in the tax code means that many people are largely unaware of them, and have no idea of their overall impact. How could these policies of the submerged state be revealed, and what difference would it make? Matt Guardino and I created a web-based experiment to test the impact of providing people with small amounts of basic information about such policies. We found that it had two basic effects: (1) people who expressed no opinion on such policies in the absence of information became significantly more likely to do so after receiving information; (2) after the provision of information, people adopted views that made sense given their political values and their interests, as defined by income. Overall, opposition grew to the policies that aid predominantly high income people, while support grew for policies that aid low income people.
One part of the study, for example, first asked people whether they support or oppose the Home Mortgage Income Deduction. Then subjects were distracted by being asked some questions about sports and entertainment. Next, they received an information treatment consisting of the following statement and graph:
Now here is some information about the federal Home Mortgage Interest Deduction. This policy is a tax benefit for homeowners. It allows them to reduce the amount they pay in income taxes based on the amount they pay in interest on their home mortgages.
Most people think of social welfare policies as ones that aim to help people with low or moderate incomes, but the largest entitlements in what I call the Submerged State conglomeration of policies channeled through the tax code and subsidies to private organizations—benefit especially high income households. The three submerged policies that are most costly to the United States are the tax subsidies for employer-provided health and retirement benefits and the home mortgage interest deduction. Each of these three policies favors more affluent Americans, as seen in the figure below.