KOF-NZZ survey: where do Swiss economists stand on key economic policy issues?

The view that wage controls and/or price controls should (preferably) not be used as a means of combatting inflation is very widely held among the survey respondents, with 83 per cent agreeing with this opinion (93 per cent of right-wing respondents, 81 per cent of left-wing respondents and 86 per cent of those in the centre).

By contrast, the responses to the question of whether a binding minimum wage increases unemployment among young people and unskilled workers are less clear-cut: overall, 44 per cent (tend to) agree with this statement while 38 per cent (tend to) disagree. A high proportion (18 per cent) neither agree nor disagree with the statement. The political affiliations are divided in their assessment of this question. While the majority of (more) right-wing respondents (72 per cent) agree with the statement that unemployment will (tend to) increase, the corresponding figure is 50 per cent for respondents from the centre. In contrast, the majority of (more) left-wing respondents (tend to) reject this statement (60 per cent).

Regulation of large Swiss banks: too-big-to-fail amendment controversial

Since Credit Suisse was acquired by UBS, the regulation of big banks has once again become the focus of public debate. Economists do not agree on whether it would be possible in principle to amend too-big-to-fail regulation, so that a major Swiss bank could be wound up without any risk to taxpayers in the event of a crisis. 47 per cent (tend to) agree with this statement, 14 per cent neither agree nor disagree, and 39 per cent (tend to) disagree. The influence of political affiliation on response behaviour is not very pronounced here.

Public debt: considered too high in many advanced economies

The COVID-19 pandemic has led to a sharp increase in government debt in many countries. This has triggered a broad debate about the extent to which public debt is too high in several countries. Overall, around two-thirds of survey respondents (tend to) consider it to be too high in many advanced economies. The majority of economists who define themselves as politically (more) to the right or in the centre agree with this statement (86 per cent and 75 per cent respectively). The situation is different in the case of respondents who define themselves politically as (more) to the left: 44 per cent of them agree with this statement, 30 per cent neither agree nor disagree, and 26 per cent disagree.

In Switzerland, the government spending ratio – i.e. public spending as a share of gross domestic product – is not considered to be too high. More than two-thirds of survey respondents reject the statement that the government spending ratio is too high. This view is fairly widespread across the political spectrum, although not equally pronounced in all cases. 48 per cent of respondents who define themselves as (more) right-wing reject this statement, 11 per cent are undecided and 41 per cent agree. The majority of other political affiliations reject this statement (59 per cent of respondents who define themselves as centrists and 90 per cent of those on the left).

The economists agree less about Switzerland’s debt brake. Overall, 37 per cent agree with the statement that the debt brake should be relaxed, 17 per cent are undecided and 46 per cent disagree. Of the (more) right-wing economists, 71 per cent disagree with the statement. Of those respondents who define themselves politically as centrists, 45 per cent disagree and 33 per cent agree. And, of the economists who see themselves as (more) left-wing, 47 per cent agree and 34 per cent disagree.

Inequality: wealth distribution too unequal according to around half of respondents

The economists were also asked about their views on inequality in Switzerland. A distinction was made here between disposable income and wealth. 41 per cent of respondents stated that disposable incomes should (probably) be distributed more equally. On the other hand, 36 per cent (tend to) reject this statement. However, the answers differed considerably depending on the respondents’ political preferences. 71 per cent of those with (more) left-wing leanings agree with the statement that incomes should be distributed more equally, while the same proportion of those with (more) right-wing leanings reject this statement. There is a mixed picture among economists who see themselves politically as centrists, with 30 per cent agreeing and 41 per cent disagreeing with the statement.

56 per cent consider the distribution of wealth to be (probably) too unequal. 29 per cent (tend to) reject this statement. This means that wealth inequality in Switzerland is viewed more critically than income inequality. However, the influence of political affiliation can be felt here in a similar way to the issue of income inequality. 75 per cent of right-wing respondents disagree with the statement that wealth should be distributed more equally, whereas 88 per cent of left-wing respondents agree with it. 53 per cent of those in the centre agree with the statement.

Causes of inflation: monetary explanation widespread

As far as the causes of inflation are concerned, a distinction can be made between monetarist and non-monetarist (e.g. Keynesian, supply-side or structural) explanations. Monetarists believe that inflation is a monetary phenomenon. This means that inflation – particularly beyond the short term – is a consequence of an expansion of the money supply that is greater than the increase in the real production of goods and services. Keynesian inflation theory, on the other hand, focuses on the Phillips curve, which shows that unemployment and the inflation rate are negatively correlated in the short term.

Both theories tend to meet with approval in the survey. However, approval of the monetarist approach is slightly higher: 58 per cent agree with the statement that inflation is (more likely to be) a monetary phenomenon. In contrast, just under half of respondents (51 per cent) are convinced that unemployment can be reduced in the short term by a higher inflation rate. Views on monetarism differ according to the respondents’ political affiliations: 76 per cent of the (more) right-wing respondents (tend to) agree with monetarism theory, while 68 per cent of economists in the centre of the political spectrum (tend to) agree. Of those respondents on the (more) left wing of the spectrum, 34 per cent (tend to) agree and 47 per cent (tend to) disagree. In contrast, the approval rates for the short-term Phillips curve do not differ greatly across the political spectrum (left: 50 per cent, centre: 61 per cent, right: 45 per cent).

Environmental policy: disagreement over industrial subsidies

The economists surveyed also commented on key environmental policy issues. There is disagreement on the question of whether the transition to green technologies in Switzerland should be subsidised by industry. While a total of 45 per cent of the economists surveyed were (mainly) in favour of this, 41 per cent were (mainly) against this approach. A further 14 per cent were undecided. The respondents’ political affiliations play a significant role in this question.

Industrial subsidies are rejected by 71 per cent of respondents who define themselves as (more) politically right-wing, as do 46 per cent of those in the political centre. In contrast, 65 per cent of respondents on the (more) left wing of the spectrum are in favour of such subsidies.

On the other hand, the general attitude towards combatting pollution through emissions taxes rather than through the statutory imposition of limits is clearer. A clear majority of 78 per cent overall (tend to) prefer the introduction of emissions taxes over the imposition of limits. This preference applies across the political spectrum.

There is also a consensus when it comes to assessing the potential of new technologies. A total of 72 per cent of respondents (tend to) believe that carbon-neutral economic growth will be possible as a result of technological innovation. Only 12 per cent are (mainly) sceptical, while 16 per cent are undecided.

The role of central banks in climate policy is another topic that is repeatedly the subject of intense debate. In April 2024, for example, the National Council discussed climate rules for the Swiss National Bank (SNB). 62 per cent of the economists responding to the KOF-NZZ survey generally (tend to) reject the inclusion of climate targets in central banks’ mandates. By contrast, 28 per cent would (tend to) be in favour of such an extension of these mandates. However, the responses given differ significantly depending on political affiliation. 86 per cent of (more) right-wing respondents and 70 per cent of those located in the political centre (tend to) reject the inclusion of climate targets by central banks. Respondents on the (more) left wing of the spectrum are less clear in their preferences: a narrow majority of 53 per cent are in favour, 15 per cent are neither in favour nor against, and 32 per cent are opposed. It is also clear that female economists are more in favour of including climate targets than male economists.

Political views most influential in assessing distribution issues

The respondents’ political views play a role in their responses to the majority of questions. This influence is particularly strong in the case of questions on the distribution of both wealth and income. However, the responses to some of the questions on climate policy also differ according to political affiliation – for example, the role of central banks in climate policy or the use of industrial subsidies. The respondents’ political affiliations are also of great importance when assessing the impact of minimum wages and the public spending ratio in Switzerland.

On the other hand, views across the political spectrum are similar when it comes to the potential of new technologies for carbon-neutral growth, assessing the introduction of emissions taxes, capital rules for banks, and too-big-to-fail regulation. Assessments of the Phillips curve also hardly differ across the political spectrum.