Political trust, risk preferences, and policy support: A study of land-dispossessed villagers in China. (January 2020)

• Record Type: Journal Article
• Authors: Cai, Meina; Liu, Pengfei; Wang, Hui
• Is Part Of: World development. Volume 125(2020)
• Publication Date: 2020-01
• Subjects: Political trust -- Risk preferences -- Land acquisition -- Decentralization -- Choice experiment -- China; Economic history -- 1990- -- Periodicals; Economic assistance -- Developing countries -- Periodicals; 330.9
• DOI: 10.1016/j.worlddev.2019.104687
• Languages: English
• ISSNs: 0305-750X

Abstract

Highlights: Political trust across local government levels impacts individual support to land-taking compensation policies in China. Political trust in the county-level government positively correlates with individual support to pension policy. Political distrust in the village collective induces villagers to prefer the one-time payment over yearly dividends. The central government lends credibility to county-level governments by softening their budget constraints. Both risk-averse and risk-seeking individuals prefer the one-time cash payment to yearly dividends. Abstract: This paper examines how political trust across local government levels and risk preferences impact individual support to land-taking compensation policies in China. Land expropriation becomes a touchstone for protests and conflict during China's urbanization, driving local governments to diversify land-taking compensation from the traditional one-time lump-sum cash payment to multiple payments, notably, in the form of monthly pension payments and yearly dividends. We found that political trust in the county-level government positively correlates with individual support to pension payments; political distrust in the village collective induces villagers to favor the one-time payment to yearly dividends. Both risk-averse and risk-seeking individuals prefer the one-time cash payment to yearly dividends. The findings are developed using two choice experiments embedded in an original survey: we elicit individual policy support by asking villagers to state their preferences over hypothetical alternative compensation policies; we elicit risk preferences using a lottery-choice experiment with varying probability of winning real monetary rewards. The findings highlight the multi-level local government structure under decentralization and offer insight into to what extent the government efforts in innovative compensation policies are effective at quelling rural anger.