Political Trust, Risk Preferences, and Land-Taking Compensation: Evidence from Survey Experiments in China
Meina Cai, Pengfei Liu, Hui Wang
Land acquisition becomes a touchstone for protests and conflict during China’s urbanization, driving local governments to diversify land-taking compensation from solely one-time cash payments to multiple payments, notably, in the form of pension insurance and yearly dividends. Which form of compensation do farmers prefer and why? This study establishes the importance of political trust and risk preferences on individual compensation decision-making. Political distrust induces farmers to choose traditional one-time cash payments over multiple cash payments. Both risk-averse and risk-seeking individuals prefer one-time cash payments to yearly dividends. The findings are developed using two choice experiments: We elicit individual compensation decision-making by asking farmers to state their preferences over hypothetical alternative compensation instruments; We elicit risk preferences using a lottery-choice experiment with varying probability of winning real monetary rewards. The findings are important to understand to what extent the government efforts in innovative compensation designs are effective at quelling rural anger.
Event: Land Governance in an Interconnected World_Annual World Bank Conference on Land and Poverty_2018
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