Household Budget Analogy Revisited: How do Japanese People Respond to State Bankruptcy and Assets?

A 'household budget analogy' is a rhetorical device that equates government budgets with household ones, often to justify fiscal consolidation by emphasizing the risk of state bankruptcy. Expanding on the survey experiment by Barnes and Hicks (2021) in the United Kingdom, we examine the effects of highlighting not only state bankruptcy but also government-owned assets. We hypothesize that the latter makes the public more accepting of government bonds, whereas the former reinforces fiscal concerns. To test this, we conducted an online survey experiment in Japan, a country with high government debt and substantial assets. Our findings do not support these claims: on average, respondents did not adjust their attitudes in response to the treatments. However, those who endorsed the household analogy became more hostile to government bonds under both conditions. Additionally, female respondents were more susceptible to the bankruptcy treatment and became more cautious about government bonds.