Governments and unpopular social policy reform: Biting the bullet or steering clear?

Under which conditions and to what extent do governments pursue unpopular social policy reforms for which they might be punished in the next election? This article shows that there exists substantial cross-cabinet variation in the degree to which govern- ments take unpopular measures and argues that current studies cannot adequately explain this variation. Using insights from prospect theory, a psychological theory of choice under risk, this study hypothesises that governments only engage in unpopular reform if they face a deteriorating socio-economic situation, a falling political position, or both. If not, they shy away from the risk of reform. A fuzzy-set Qualitative Comparative Analysis (fs/QCA) of the social policy reform activities pursued by German, Dutch, Danish and British cabinets between 1979 and 2005 identifies a deteriorating socio-economic situation as necessary for unpopular reform.It is only sufficient for triggering reform,however,if the political position is also deteriorating and/or the cabinet is of rightist composition.This study's findings further the scholarly debate on the politics of welfare state reform by offering a micro-foundation that helps one to understand what induces political actors aspiring to be re-elected to engage in electorally risky unpopular reform.