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Presentation

How much defense spending should we provide, and how should we finance it? How
much political support among citizens for defense spending should we expect? These
are pressing questions to address as defense spending is set to go up substantively in
the coming years with the goal of achieving self-sufficiency and EU sovereignty.

National defense is the textbook example of a pure public good. We review insights
from the theory of pure public goods to identify challenges for an efficient provision
and financing of national defense. Key insights are: (i) The citizens’ willingness
to pay taxes for national defense depends on the design of distributive policies (ii)
Pareto efficiency requires responsiveness to the preferences of citizens who pay for
public goods via the tax system, (iii) An increase of national defense spending may
go hand-in-hand with additional redistribution and (iv) uncertainty about the citizens’
willingness to pay for increased defense spending implies uncertainty about the political
feasibility of reform packages.

Key results

• A long term increase of defense spending requires large support among citizens.
• National defense is a pure public good and we draw insights for a large literature studying
  these goods.
• Political support among citizens of the additional provision of defense spending and the
  financing of it cannot be taken for granted: Conflicts between efficiency and equity are
  inherent to the financing of national defense.
• The availability of information on preferences for defense spending is important for the
  efficient provision and financing of defense spending.
• An increase of national defense spending may go hand-to-hand with with additional redistribution.

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Partners

This note was supported by the Deutsche Forschungsgemeinschaft (DFG) under Germany’s Excellence Strategy – EXC2126/1 – 390838866, Investissements d’Avenir (ANR-11-IDEX-0003/Labex
Ecodec/ANR-11-LABX-0047), ANR-20-CE41-0013-01, and the Interdisciplinary for Defense and
Security (CIEDS) at the Institut Polytechnique de Paris (IP Paris)

 

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