Design, more than cost drives public support for economic reforms

Governments often assume people reject energy price reforms mainly because the reforms strain their wallets. But new cross-country evidence suggests this is not always the case and that people’s attitudes respond strongly to how reforms are structured and communicated.

Our recent study, draws on randomized survey experiments with 10,000 respondents across Egypt, Indonesia, Mongolia, Nigeria, and Uzbekistan. The findings reveal a clear pattern: how energy price reforms are designed and communicated matters more for public acceptability than the size of the price increase itself.
 

When design changes, support changes

Across countries, most people strongly oppose an immediate 100 percent increase in gasoline or electricity prices. But that resistance almost halves when reforms were redesigned:

• Phasing: Gradual increases over three years reduced strong opposition by about 23 percentage points.
• Targeting: Applying higher prices to high-energy consumers reduced strong opposition by about 26 points.
• Compensation: Providing support to the most affected households reduced strong opposition by about 27 points.

Figure 1 illustrates how each of these design features dramatically reduced strong opposition relative to an immediate price increase. The size of the effect was significantly greater than lowering the energy price increase from 100 percent to 10 percent. Put simply, the design of reforms has a stronger impact on shaping public opinion than the magnitude of the price change itself. This means governments could reduce opposition and improve their fiscal position if they design energy price reforms more in line with people’s preferences.

Figure 1: Attitudes toward energy price increases by design feature

Information matters too

Providing simple, factual information about why reform is needed also had strong positive effects on attitudes. When respondents learned, for example, that wealthier households disproportionally benefit from existing energy subsidies or that subsidies limit investment spending on public services, strong opposition fell by an amount equivalent to halving the size of the price increase. This suggests that clear, effective communication campaigns about fairness and trade-offs can be a powerful tool especially when fiscal pressures are acute.
 

Why does design and communication matter more than cost?

The patterns observed across countries are consistent with well-established behavioral patterns. Present bias leads many people to prefer gradual reforms even when the eventual adjustment is large. Loss aversion makes compensation especially meaningful because it softens the perceived impact of price increases. Fairness heuristics also play a major role: reforms that focus on high-consumption households align with people’s preferences for equity. These behavioral aspects help to understand why careful sequencing, targeting and support mechanisms increase public acceptance.

Experts systematically misjudge public preferences

Policy experts do not always anticipate these reactions correctly. We surveyed 66 policy experts and researchers – primarily economists in academia and international organizations – to gather their predictions of the public’s preferences. Their expectations frequently overestimated the role of costs and underestimated the impact of design features.

Figure 2 shows that experts expected people to prefer universal cash transfers as compensation; in reality, far more respondents preferred better public services and infrastructure. Similarly, experts misunderstood people’s coping strategies, underestimating how much they expect to seek additional income sources.

Figure 2: Coping Strategies and Compensation Preferences (Public vs Experts)

^{Note: 95% confidence intervals shown as spikes.}

This misalignment between experts' predictions and the public’s preferences can easily lead to inaccurate policy advice for governments. For example, governments may default to compensation strategies that are technically sound but not aligned with what people actually prefer.
 

Implications for policymakers

The findings suggest several practical lessons for governments when designing energy price reforms:

• Sequence, target, and compensate: Phasing, targeting high users, and compensating the most affected reduce strong opposition by 23–27 points, even when fiscal impacts are held constant.
• Communicate fairness and trade-offs: Brief, credible messages about who benefits from subsidies and what they substitute for are powerful and cost-effective.
• Base advice on preferences and coping plans: Policy advice improves when it starts from how citizens assess fairness, process information, and manage short-term shocks like price increases.
   

A broader lesson for economic reforms

While this study focuses on energy subsidies, the broader message extends across policymaking: public acceptance depends as much on reform design and communication as on cost. From tax reform to subsidy restructuring, policies are more likely to succeed when they acknowledge how citizens process information, assess fairness, and manage short-term shocks. Well-designed reforms can improve public buy-in and increase the likelihood that reforms are implemented, sustained, and ultimately improve fiscal outcomes.