Abstract
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.
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