DOI 10.1007/s11135-004-5006-x Quality & Quantity (2005) 39: 317–339 © Springer 2005 The Diversity and Causality of Welfare State Reforms Explored with Fuzzy-Sets PAUL PENNINGS Vrije Universiteit Amsterdam, Department of Political Science, De Boelelaan 1081, 1081 HV, Amsterdam, The Netherlands. Tel; +31-20-4446852; Fax; +31-20-4446820; E-mail: pjm.pennings@fsw.vu.nl Abstract. The introduction of fuzzy-sets into social science has potentially improved our ability to study diversity by means of the so-called partial memberships. As a consequence, social phenomena can be studied empirically as a matter of degree and not longer as fixed types. A fuzzy-set is a set with elements whose membership grades can have any real value between 0 and 1. In order to illustrate the capacities of the fuzzy set logic and also to make the discussion less abstract, it will be applied to the study of welfare state reforms. The ‘grad- ing capacity’ of fuzzy-sets makes it possible to study welfare states as partial members of different welfare state regimes at the same time. This approach reveals the diversity of wel- fare reforms better than traditional ways which are often inclined to picture a case as repre- sentative of one particular type which is a too crude classification. Fuzzy-sets are designed to capture the diversity in a way that leaves more room to map individual cases without falling into the trap of idiosyncrasy. An equally important ability of fuzzy-sets is to analyse causal relationships in a small-n design. The fuzzy-set logic can be used to determine nec- essary and sufficient conditions for an outcome. This takes the form of expressions which reveal multiple-conjunctural causation patterns. In this paper the conditions for welfare cut- backs and the effects on socio-economic performance will be examined. Key words: comparative methodology, fuzzy-sets, welfare state reforms, social expenditures, socio-economic performance 1. Introduction The goal of this article is to demonstrate how welfare states can be stud- ied empirically as a matter of degree and not as fixed types. This is done with the help of so-called fuzzy-sets which have been re-introduced into the social sciences by Charles Ragin (2000). A fuzzy-set is a set with elements whose membership grades can have any real value between 0 and 1. This ‘grading capacity’ of fuzzy-sets is a major advancement compared with its predecessor Boolean analysis (also denoted as ‘crisp sets’) (see for a com- parison between fuzzy-sets and crisp sets: Pennings, 2003). In order to illustrate the capacities of fuzzy set logic it will be applied to the study of welfare state reforms. It will be argued that binary scores