Public interest or individual benefit: biased perception toward Chinese redistributive policies

Abstract

Purpose

Redistributive policies aim to reduce income disparities and improve social equity. This study investigates whether redistributive effects that successfully diminish objective income inequality also effectively alter people’s perceptions of inequality.

Design/methodology/approach

Utilizing data from the 2018 China Household Income Survey (CHIP), comprising 56,167 individuals, this study applies ordered probability regression (Oprobit) and ordinary least squares (OLS) for analysis. To address potential biases in estimates, we employed the generalized propensity score matching (GPSM) method to estimate the treatment effect of transfer income on perceptions of inequality.

Findings

The results indicate that while China’s redistribution policies effectively reduce income disparities, they do not improve perceptions of inequality. Individuals exhibit biased attitudes toward redistributive policies. Specifically, perceptions of inequality are insensitive to the overall redistributive effect; the relationship is negative among the poor but positive among the rich. This contradictory pattern may be attributed to perceived income losses among the rich and gains among the poor.

Social implications

The findings have important implications for policy development. Redistribution policies should not only aim to mitigate income disparities but also address and improve people’s perceptions of inequality.

Originality/value

Existing literature has largely overlooked the impact of redistribution on perceived income inequality. This study represents an early effort to explore whether redistributive policies that reduce income inequality also influence people’s perceptions of inequality.