How relative poverty influences responses to social protection programmes: Evidence from Pakistan

Abstract

Since the COVID-19 pandemic global income inequality has again started to rise—a trend exacerbated by the food and fertiliser crisis caused by Russia’s ongoing war in Ukraine (The Economist 2022). Increasingly common disasters (many climate-related) across the globe – such as Pakistan’s devastating 2022 floods (UNICEF 2023), ongoing severe drought in the Horn of Africa (UN News 2022), and the recent earthquake in Syria and Turkey (Francis et al. 2023) – also disproportionately affect already vulnerable groups (UNDRR 2023). Such events tend to further exacerbate the gulf between the rich and the poor. This trend toward greater income inequality is notable, given a growing body of research has demonstrated that citizens’ support for and trust in government is heavily influenced by real as well as perceived income inequality (Gimpelson and Treisman 2018, Healy et al. 2017).

Trust in government is essential for a functioning democracy. It is also critical for the economy - for example, Fukuyama (1996) highlights how social trust plays a role equal to that of physical capital in determining economic prosperity. Governments often address poverty and inequality through redistributive social protection programmes, including cash transfer programmes. Can such programmes foster trust in government amid increasing inequality? Evans et al. (2019) show that they can increase trust in leaders and perceptions of leaders’ responsiveness and honesty among recipients. But the empirical evidence is mixed, and other studies show that this does not occur consistently (Freeland 2007, Ellis and Faricy 2011, Zucco 2013).

Understanding of how economic welfare affects political attitudes and behaviour continues to evolve. Classical economic voting theory focuses on absolute welfare, holding that citizens reward the government for good economic outcomes and punish it for bad ones. However, an emerging literature in political science suggests that perceived relative wellbeing – how people see themselves compared with others – is also important in shaping citizens’ assessments of their political leaders and institutions.

In Kosec and Mo (2023), we studied how Pakistan’s national unconditional cash transfer programme, the Benazir Income Support Programme (BISP), affected political attitudes. Specifically, we considered that cash from the government might have different effects on its recipients according to how economically well off they felt relative to others (and thus presumably how in need and deserving of a cash transfer they felt).