How do transfer policies affect support for the Government?

Responsible researcher: Adriano Valladão Pires Ribeiro

Article title: GOVERNMENT TRANSFERS AND POLITICAL SUPPORT

Article authors: Marco Manacorda, Edward Miguel and Andrea Vigorito

Location of intervention: Uruguay

Sample size: 2232 families

Major theme: Economic Policy and Governance

Type of Intervention: Money transfer

Variable of main interest: Government support

Evaluation method: Discontinuous regression

Policy Problem

Questions about how government support is impacted by implemented public policies are of broad interest and difficult to measure. Given its development, an anti-poverty transfer program in Uruguay allowed progress on the topic. It was possible to estimate the effect of transfers on government support among program beneficiaries when compared to non-beneficiaries.

Assessment Context

Uruguay faced a severe economic crisis between 2001 and 2002, with a drop in per capita income and an increase in poverty and unemployment. Even though it was rehearsing a recovery in 2004, the party that had been in power since 1995 was unable to be re-elected, giving way to the left-wing Frente Amplio to take over in March 2005. In this context of recovery, the new government, in April 2005, implemented the country's largest anti-poverty program to date, the Plan de Atención Nacional a la Emergencia Social (PANES).

Intervention Details

PANES was a temporary aid program that lasted until December 2007 and had two objectives. First, provide assistance to families affected by the 2001-2002 crisis and, second, strengthen the human and social capital of the poorest so that they could eventually escape this condition. The main element of the program consisted of monthly cash transfers that were independent of family size. The transfers were significant and amounted to more than half of the average income reported by program beneficiaries before the aid began. Families with children and pregnant women would also receive a food card with limited amounts depending on the number of children and pregnant women. Around 70% of benefiting families received the card.

The Ministry of Social Development was responsible for collecting information about the families, homes, income, work and education of the almost 190 thousand applicants to the program. More than 102 thousand families became beneficiaries, which corresponded to around 10% of all families and 14% of the population of Uruguay. To determine who would be the beneficiaries of PANES, a score was used considering only the socioeconomic characteristics of the families. In order to avoid any type of manipulation, both data collectors and families did not know that eligibility would come through a score, nor which variables and weights would be used. Families below a certain score (eligibility threshold) would be eligible for the program.

After the initial data collection, two other surveys were carried out. The first between October 2006 and March 2007, in which, in addition to information about the house, family composition, durable goods, work, income, education, medical assistance, knowledge of rights and participation in social groups, information was also collected on economic satisfaction, opinion on the program design and political orientation of the respondent, which included support for the incumbent government, the variable of interest in the study. The second between February and March 2008, after the end of the program in December 2007, was quite similar to the previous survey, but with additional questions about social and political positions.

Methodology

To assess PANES's political support for the party that implemented it, a sample of 2,232 families who signed up for the program and whose scores were close to the eligibility limit was used. The idea is to compare eligible and ineligible families who, because they are close to the limit, would have very similar socioeconomic characteristics and, therefore, the only big difference would be in terms of whether they received the money transfer or not. Therefore, differences in the average questionnaire responses regarding the political position of the groups could be inferred as being caused by government financial assistance.

Some points regarding the quality of the program design to avoid potential manipulations and fraud and, in this way, guarantee the veracity of the research results deserve to be highlighted. First, it was found that the eligibility limit worked, that is, families that were below the limit received the transfer and those above it did not. Second, the rule regarding each family's score was created after data collection, with no possibility of manipulation in the responses to the questionnaire by respondents or applicators. Third, the scoring rule only became public after the program ended. Finally, precautions regarding the political questionnaire were taken so that respondents did not act strategically in their responses for fear of losing government assistance.

Results

The impact of PANES on support for the government was measured by the answers to the following question: “In relation to the previous government, do you believe that the current government is worse (0), the same (1/2) or better (1)?” This question was part of the questionnaire applied both throughout the program and after its end, the average response is restricted to the range between 0 and 1, with values ​​close to 1 representing greater support for the current government. As mentioned previously, the difference in the average responses between groups eligible and ineligible for transfers close to the eligibility limit is what makes it possible to compare the program's impact on government support.

Impact reported during the program: In the survey carried out between the end of 2006 and the beginning of 2007, support for the government from families eligible for PANES was 0.90 and that from ineligible families was 0.77. Therefore, eligibility for the program is associated with an increase of 13 percentage points.

Impact reported after the program: Regarding the research carried out in 2008, after the end of the program, the results are similar, although smaller. The increase in support for the government among PANES beneficiaries is estimated between 8 and 12 percentage points.

There was then a significant increase in support for the government that implemented the transfer program, even after the program was completed.

Politics Lessons

We can learn from the results and the program design. First, the results of this study indicate that government transfer policies can have large and persistent effects on beneficiaries' political views. Second, there are several potential problems in this type of measurement, in particular the possibility of confusing the causality of the facts (in this case, the beneficiaries of the program would be families that already supported the government) and manipulation in the responses to the questionnaires. A good design of the program and its implementation, however, shows that not only can such problems be avoided, but the results generated are reliable.

Reference

Manacorda, Marco; Miguel, Edward; Vigorito, Andrea. "Government Transfers and Political Support." American Economic Journal: Applied Economics, 3(3): 1-28. 2011.