Public Support for Universal vs. Targeted Transfers: The Role of Pocketbook and Distributional Concerns

Author – Liam F. Beiser-McGrath

Abstract:

In response to adverse economic shocks governments can choose to implement transfer programs. Two distinct approaches to providing these benefits are to either provide universal transfers, which are easier to implement yet less economically efficient, or targeted transfers, which while more cost-effective often face administrative hurdles. While a large body of literature documents the differences between these schemes in terms of economic impacts, less is known about their subsequent political acceptance. In this paper I examine how public support for universal vs. targeted transfers depends upon individuals’ pocketbook effects and distributional concerns. I conduct an original survey experiment in the UK (August 2023, n = 2080), to identify the effect of information about individuals’ personal benefit and/or distribution of benefits by income from different transfer scheme designs upon subsequent policy support. Using the case of the UK’s Energy Price Guarantee (EPG) in response to the 2022 energy crisis, I examine how the move from an initial universal program to a more targeted transfer scheme affects policy acceptance across the income distribution. The results find that initial support for the universal transfer scheme receives support across the income distribution. However, information that the EPG will become more targeted leads to a bifurcation in support by income. Richer individuals, upon learning the personal monetary consequences of targeting transfers, become significantly opposed to this policy design, while poorer individuals have significantly higher levels of support. Information about the distributional consequences of targeting, i.e., its benefits for poorer individuals, weakens the level of opposition amongst richer individuals but neither eliminates opposition nor does it flatten the income gradient in support. These results highlight how the distributional consequences of policy responses shape public acceptance in a manner that reflects existing inequalities within society, generating implications for the political feasibility of policy efforts to address unequal vulnerability to economic shocks.