ITALY - Public acceptance of unpopular pension reform depends on better information, according to an Italian research study.

The study, based on a poll of a representative sample of Italian citizens, found that information increased political support for pension reform.

The co-authors of the study, Professor Tito Boeri and Guido Tabellini of Bocconi University’s Innocenzo Gasparini Institute for Economic Research, said: “People who are better informed about the costs and functioning of the Italian pension system are more willing to accept reforms that would lengthen retirement age or cut pension benefits.”

However, they found that newspaper and television coverage of pension issues does not contribute to better public awareness of pension reform issues.

“We do not find that exposure to media coverage of pension issues significantly improves information, possibly because individuals read newspaper articles or watch TV programs on these issues just to confirm their existing opinions,” they said.

Boeri and Tabellini said that the usual explanation for public opposition to pensions reform was that “a majority of elderly European voters wants to gain at the expense of younger or future generations”.

“This is not fully convincing, as it presupposes that voters are egoistic and do not care about their offspring,” they said. “We would suggest that opposition to pension reform stems from lack of information about the true costs of the pension system, and lack of understanding of the consequences of pay as you go public pensions.”

They found that information had a causal effect on willingness to reform. “The effect is not negligible. Our lower estimates indicate that, for a middle-aged woman located at the middle of the political spectrum, the probability of supporting reforms increases by 8% percent when she is informed that the pension system is in deficit.“ For others, the effect is much greater, they added.

Boeri and Tabellini said the finding had important policy implications. “To increase public support for pension reforms, governments in countries with large and unsustainable public pension systems ought to devote more effort and resources to inform citizens about the basic functioning of pay-as-you-go pensions, about its actual costs, and the net position of individual contributors.”

Media coverage, by itself, may not be sufficient to inform citizens, they added. “We find that individuals who have read newspaper articles or watched TV debates on pension reform are not better informed than the other citizens.

“Governments who seriously want to improve citizens’ knowledge about the consequences of public pensions ought to find other ways to convey information to voters.”