The Political Economy of Targeting

Questions surrounding the allocation and design of social transfers have long intrigued scholars and policymakers in the field of political economy. While transfers targeting those most in need aim to maximize the value of their benefits and improve their livelihood, the political economy of targeting posits that such restrictive eligibility criteria might dampen general social support. This study delves into the social and political sustainability of social protection systems and explores whether and to what extent a broadening of social protection programs impacts society’s redistributive and tax preferences. Using longitudinal individual-level data from Poland’s Panel Survey, we examine the effects of the 2016 transition from income-tested to quasi-universal child benefits on redistributive, tax, and political preferences. Contrary to expectations from political economy models, the findings reveal nuanced responses among beneficiaries and non-beneficiaries. Beneficiaries do not become more supportive of redistribution, and their political and tax preferences remain similar to those of overall non-beneficiaries. A specific group of non-beneficiaries, the ones with children but excluded due to income requirements, react to the policy change by retaliating against the incumbent party and preferring a tax schedule that shifts the burden to other income groups. Overall, the study advances our understanding of the political economy of targeting social transfers and provides insights for policymakers navigating the trade-offs between targeting efficiency and societal endorsement in welfare policy design.