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Thursday, March 24, 2011

Poll Results on Pensions and Budgets: Let's Be Cautious in Interpreting the Results

The Public Policy Institute of California (PPIC) takes a respected monthly poll on public attitudes in the state on political and policy issues. The March release is just out.

Taken at face value, the public is very concerned about the state budget situation (Figure 2 - scroll down below), there is slippage in support for a special election advocated by Gov. Brown on tax extensions (although a bare majority still support the plan – Figure 3), cutting public pensions is seen as a good way to balance the budget (Figure 4), and the way to reform public pensions is to move to a defined-contribution/401k approach (Figure 5).

You will note that I started with Figure 2 in the paragraph above. So let’s take a deep breath before over-interpreting Figures 2 through 5 and start by looking at Figure 1.

Figure 1:
What we learn from Figure 1 is that most folks, even the politically sensitive “likely voters” crowd, are not spending sleepless nights worry about the state budget. For real people, “it’s the economy, stupid,” not the state budget. Of course, if they are asked about the budget, they will agree that it is a big problem – because that is what the news media are talking about. If they are asked if public pensions are a big problem, they will also agree – and for the same reason.

But note the question about fixing public pensions to deal with the budget (about which they are not losing sleep). It refers to the budget “this year.” Even interpreting “this year” to mean next fiscal year, none of the reform proposals, even the most drastic, have a material impact on the budget next fiscal year. All pension proposals are intended to address the unfunded liability of the various plans which is a longer-term issue.

What about the switch from defined-benefit plans to defined contribution? The pollster apparently did not define those terms other than a reference to 401k plans. So we don’t know whether the respondents know the difference between the two types. Indeed, we don’t know how many know what a 401k plan is. All I can tell you is that when I have taught grad students, they look blankly at you when you first throw out those terms. I suspect that many persons who work at employers that offer 401k plans know there is a saving plan of some type available, but may not know exactly what section of the Internal Revenue Code apply to that plan. (Text continues below Figure 5.)

Figure 2:Figure 3:Figure 4:Figure 5:

As I noted in a prior post on a recent Field Poll, when a public pension question was asked, 48% of voters thought that public pensions were about right or not generous enough. Yet when remedies for public pensions were suggested, these were also supported. What these results really tell you is that the general public, even those more politically attuned than average, are not deeply involved with state and local issues but draw impressions from the news media. Responses to questions are sensitive to framing and suggestion. What voters might do in an actual election would depend critically on how the campaigns, pro and con, market their viewpoints through TV ads and other methods of outreach.

The full PPIC poll is at http://www.ppic.org/content/pubs/survey/S_311MBS.pdf

A more complete analysis of the pension element in the PPIC and the Field polls can be found at the url below. Click on the pdf:

http://www.employmentpolicy.org/topic/blog/mitchell%E2%80%99s-musings-32811-pensions-suitable-framing

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