How much and in which direction have the welfare states among the Western democracies changed over the past decades? Moreover, under what conditions have governments enacted these changes? Based on insights from prospect theory, Barbara Vis demonstrates how socioeconomic or political setbacks affect a government’s view of risk—and thereby the degree and type of reform they pursue. This study’s new theoretical stance and innovative methodological approach make it a must read for those policymakers, scholars, and students interested in the politics of welfare state reform.