Fuel subsidy reform and the social contract in Nigeria: A micro-economic analysis

Fuel subsidies in Nigeria are enormous – around USD 3.9 billion almost double the health budget. Such come at great cost: opportunity costs of such spending on other development objectives large; distribution resources to state governments is reduced; vast majority subsidy goes better off Nigerians; and cheaper petrol encourages greater pollution, congestion climate change. Despite this, most Nigerians oppose reduction subsidies. We draw a new nationally representative household survey that asked Nigerian men women about their knowledge attitudes towards construct test set hypotheses factors associated with support for reform. find those who pay more or experience less availability fuel tend reform more. On hand, people believe Government corrupt lacks capacity implement compensation programs appear strongly opposed Finally, being religious delivery reasonable national local services also improves acceptance These results idea building social contract key success. • Results from (N = 16,000) reforms. Economic service improve gasoline Beliefs corruption correlated opposition incompetence use savings correlate opposition.