COVID-19 Direct Relief Payments and Political and Economic Attitudes among Tertiary Students: A Quasi-Experimental Study

Abstract

During the COVID-19 pandemic, ad hoc direct relief payments were used extensively as a means of economic stimulation and individual compensation. Current studies are focusing on the economic impact of these policies, but they seldom consider how these payments affect individual beliefs and attitudes. This study used a survey with quasi-experimental elements to examine how these payments affected tertiary students in Hong Kong by focusing primarily on a cohort including both eligible and noneligible students. Whereas satisfaction with the economy and government and support for democracy were not affected, nonrecipients assigned greater importance to meritocratic factors in improving life outcomes. The findings of this study shed light on how governments inadvertently may be affecting the outlook of young adults with transfers during the COVID-19 pandemic.

Restrictions on mobility and lockdown measures during the COVID-19 pandemic led to a global economic downturn, with extensive business closures and surges in unemployment around the world. In response, many developed economies provided one-off payments to residents as a relief measure and an attempt to stimulate economic recovery. Hong Kong is a good example (figure 1 is a timeline of related events): COVID-19 first hit Hong Kong in January 2020, when the city was experiencing the aftermath of the social movement in the previous year. In response, the Hong Kong government rolled out the Cash Payout Scheme (i.e., $10,000 cash payment; ~US$1,274) and the Consumption Voucher Scheme (i.e., $5,000 in e-vouchers; ~US$637) in 2020 and 2021, respectively. ¹ Although an emerging body of literature focuses on the wider economic and political impacts of these measures, their effects on individual values and attitudes have received relatively less attention. This study examines whether such payments affect individuals’ satisfaction toward the government and the economy, their support for democracy, and a belief in meritocracy.

Figure 1 Timeline of Major COVID-19 Events (Top) and Current Research (Bottom)

This study used a survey design with quasi-experimental elements with data collected from students in tertiary institutions in Hong Kong. We leveraged the eligibility requirements of the two types of benefits discussed previously. Because only permanent residents older than 18 before a certain arbitrary date were eligible, students from the same class (i.e., those who were born in 2003) could be divided into three groups: those who received both the cash benefit and the consumption vouchers, those who received only the vouchers, and those who received neither. ² If we assume that these three groups are largely similar except for the birthday (not birth year)—an assumption examined herein—the differences identified can be plausibly attributable to the transfers received.

This study contributes to the literature in two ways. First, direct relief payments were popular among governments facing the imminent global economic crisis caused by COVID-19 to stimulate the economy (table 1). As opposed to regular welfare payments, they might carry distinctive effects due to their ad hoc and one-off nature, but they also are less studied for the same reason. This study investigates how such payments affected individuals in addition to their macroeconomic outcomes. Second, the impact of welfare on individuals is difficult to identify given the complex (and potentially endogenous) nature of the relationship. To establish a causal relationship, studies must rely on an exogenous change (e.g., a policy change); however, this rarely can be done in practice, much less with individual views (see Deshpande 2016 for a study of the effect of welfare on earnings). Our study focuses on whether one-off payments affected the economic and political views of young adults.

Table 1 Examples of COVID-19 Direct Relief Payment Schemes

Note: Refer to the online appendix for sources.

WELFARE BENEFITS: IMPACT ON INDIVIDUAL VIEWS

An emerging body of literature recognizes the positive impact of direct relief payments on economic recovery (Asebedo et al. 2020; Bui et al. 2022; Yuktadatta et al. 2022). The general consensus is that relief payments are an immediate way to stimulate consumption demand and improve the standard of living. However, to our knowledge, relatively few studies explore the effects of such payments on individuals, especially changes to their subjective views.

The general consensus is that relief payments are an immediate way to stimulate consumption demand and improve the standard of living. However, to our knowledge, relatively few studies explore the effects of such payments on individuals, especially changes to their subjective views.

This study examines the impact of relief payments from two theoretical angles: the effects of receiving welfare payments and their relationship with meritocracy. Although welfare programs are important lifelines for people in need, they sometimes are criticized for creating perverse incentives and fostering dependence on them. Pierson (1996) identified a “feedback” effect whereby welfare policies create a group of beneficiaries who are highly supportive of them (and who would oppose a retrenchment). It also has been suggested that negative stereotypes of welfare recipients lead to decreased public support for welfare (Gilens 1999; Mullen and Skitka 2009). Clearly, transfers would be welcomed by the beneficiaries, whereas other people might be less enthusiastic. Therefore, we hypothesized that transfer payments have different effects on recipients and nonrecipients, all else being equal.

The first type of difference concerns political and economic satisfaction. It is well established that a main goal of welfare provision is for governments—both democratic and authoritarian—to increase regime support and legitimacy (Han 2020; Knutsen and Rasmussen 2018). This is especially true for governments facing the COVID-19 pandemic as people sought economic recovery and relief. Indeed, Bui et al. (2022) found that COVID-19 financial support was linked to a more optimistic economic outlook, greater trust in government, and better personal well-being. In a nondemocratic system, the provision of welfare further legitimizes a government with no electoral mandate, which potentially could weaken support for democracy (Knutsen and Rasmussen 2018). From an ideological perspective, because democracy often is viewed as a way of redistribution, citizens receiving welfare also might support democracy less strongly (Wong 2022). We therefore propose the following hypotheses:

H1: Recipients of relief payments have a higher level of economic satisfaction.

H2: Recipients of relief payments have a higher level of government satisfaction.

H3: Recipients of relief payments have a lower level of support for democracy.

Second, receiving transfer payments also may affect a person’s view of meritocracy, which is defined as the principle that individuals should be allocated social positions and goods in proportion to their abilities and efforts, including their education and skills (Bell 1972; McNamee and Miller 2004). In modern societies, meritocracy often is used to justify inequality (Mijs 2021). Two groups of factors are commonly used to explain meritocracy. The personal-attributes thesis links success to personal hard work and educational background, whereas the societal-success thesis attributes success to non-meritocratic factors such as family resources and social networks (Busemeyer, Goerres, and Weschle 2009; Mijs 2021). To explain the relative importance of these factors, the “belief in a just world” perspective describes the tendency to believe that inequalities are meritocratic and therefore do not need to be addressed (Benabou and Tirole 2006; Jost, Banaji, and Nosek 2004). In addition, powerful groups seek to maintain their advantages through “self-justification” (Mijs 2016, 2021). In line with self-interest and rational theories, individuals with higher education and income levels often have strong meritocratic beliefs because they stand to gain from this norm (i.e., they are successful because they are capable and work hard) (Duru-Bellat and Tenret 2012; Kunovich and Slomczynski 2007).

Although the receipt of an ad hoc welfare transfer arguably is not as important a socioeconomic factor as salary or occupation, it might affect views of meritocracy and create a gap between recipients and nonrecipients. The difference is that, in this case, whether a transfer is received is a matter of luck. ³ Therefore, recipients are more likely to attribute the payment to non-meritocratic factors because they did nothing to receive it. Conversely, those who miss out on the transfer because they were born later might develop a stronger belief in meritocracy because they were forced to realize that they can rely only on hard work in life. We therefore propose the following hypotheses:

H4a: Recipients of relief payments will develop a non-meritocratic view of success.

H4b: Nonrecipients will develop a meritocratic view of success.

…in this case, whether a transfer is received is a matter of luck. Therefore, recipients are more likely to attribute the payment to non-meritocratic factors because they did nothing to receive it.

To our knowledge, few studies have examined the impact of transfers and redistribution on meritocracy, and much less in a controlled setting. As pointed out by Duru-Bellat and Tenret (2012), causality from an individual’s background to meritocratic beliefs is in question because it is equally plausible that those in a dominant position believe that their achievement is a result of their merit (reversing the causality). It has been long established that information and beliefs about responsibility significantly affect redistributive preferences. For example, if people are informed that income differences are self-determined (as opposed to luck), inequality becomes more tolerable and redistribution less fair (Alesina, Stantcheva, and Teso 2018; Cappelen et al. 2013). Our study examined how a transfer for which eligibility is based partly on luck (at least for those who were born close to the cutoff date) may affect views of meritocracy.

RESEARCH DESIGN

The data in this study were collected from online surveys administered in November and December 2021 targeting tertiary students (primarily those born in 2003) in Hong Kong (Wong and Kwong 2023). Payments of benefits could alter meritocratic views, especially for young adults in their formative years without any extensive real-world exposure (Wong and Chui 2017), and when the distinction between receiving and not receiving such benefits is arbitrary.

Invitations were sent via the electronic platforms (e.g., message boards and forums) of several tertiary institutions. Although the message specified that freshmen (i.e., first-year students, the cohort born in 2003) were invited, we did not limit the participation of other students. ⁴ A small incentive (i.e., vouchers worth HK$50/US$6.40) was provided after completion of the survey. In total, 647 responses were received; however, only 412 responses were used in the analysis after excluding respondents who were not permanent residents (and therefore did not qualify for the benefits) as well as those for whom there was missing data.

The date of birth of the respondents was crucial in determining which government benefits they received. To increase the likelihood of obtaining a truthful answer and to minimize the likelihood that the respondents would be aware of the purpose of this question, they first were asked to select their year of birth and then the period that included their birthday: (1) January 1 to February 16; (2) February 17 to March 31; (3) April 1 to May 10; (4) May 11 to June 18; (5) June 19 to July 31; or (6) August 1 to December 31. As shown in table 2, this method allowed us to unambiguously classify respondents according to which benefits they were qualified to receive. At the time of the survey, the disbursement of these payments had been completed. ⁵

Table 2 Summary of Group Background

Notes: **p<0.05. Income: Household income on a scale of 1 (lowest) to 10 (highest). Class: Subjective assessment of class background: 1: lower class, 2: lower-middle class, 3: middle class, 4: upper-middle class, 5: upper class.

The classification of the respondents is shown in table 2. A simple means comparison of their household income level and subjective socioeconomic class demonstrates that the three groups were largely equal (i.e., the differences did not reach conventional levels of significance). The exception was female respondents in Group B (with a small N), which was significantly different from the other two groups. Ideally, we wanted to conduct a pairwise comparison of the three groups and determine the effect of the two financial incentives. Unfortunately, only a relatively small group of respondents (N=30) was categorized in Group B (who received only the consumption voucher), which may have precluded a reliable analysis. Therefore, two types of comparison were conducted to examine (1) the effect of any government benefits, Group A+B versus Group C; and (2) the effect of cash payments and vouchers, Group A versus Group C. Two-tailed t-tests were used because the effects could be positive or negative depending on the item in question. ⁶

Dependent Variables

This section describes the measures that were used in the survey.

Economic and Political Satisfaction

To determine whether government benefits can improve satisfaction with the economy, we used standard economic-evaluation questions from projects including the Global Barometer Surveys. Using a scale of 1 (very dissatisfied) to 10 (very satisfied), respondents were asked to evaluate the current economic condition of Hong Kong and their family’s economic situation today and in the near future. They also were asked about their satisfaction with the quality of Hong Kong’s governance.

Democratic Support

The survey also probed respondents’ support for democracy by asking them to assess whether it is good to have a democratic system of governance. This is a standard question in comparative projects such as the World Values Survey. A higher figure represented stronger democratic support (i.e., 1=very bad; 4=very good). ⁷

Relative Importance of Meritocratic Factors in Life Outcomes

The 2009 Social Inequality Survey under the International Social Survey Programme includes a set of questions that ask respondents to evaluate the importance of a range of factors in determining life outcomes (see, e.g., Mijs 2021). Survey participants were asked to rate how important (from 1=“not important at all” to 5=“indispensable”) they believed each factor was for succeeding in life: (1) hard work, (2) having ambition, (3) having a good education, (4) coming from a wealthy family, (5) knowing the right people, (6) a person’s race, (7) a person’s religion, and (8) being born a man or a woman. We categorized hard work and education as meritocratic factors and family background and network as non-meritocratic factors. Because an individual could regard all of the factors as equally important or unimportant (e.g., assigning the same score to all items), we also created a composite index of the relative importance of meritocracy by subtracting non-meritocratic from meritocratic factors (rescaled to range from 1 to 10).

RESULTS

The results are summarized in table 3. As discussed previously, two pairs of comparisons were conducted to ensure the robustness of the findings. Overall, the inclusion of Group B made little difference, with minor exceptions. For the first set of variables—perhaps surprisingly—the direction of the hypothesized effect was not uniform. Although it was expected that the receipt of benefits would improve satisfaction with the economy and the government, the pattern was mixed. However, the difference was not statistically significant for any of the four satisfaction outcomes. This also was the case for democratic support: those who did not receive anything demonstrated a stronger support for democracy as a system of government, but the difference is not statistically significant. Thus, H1 to H3 are not supported.

Table 3 Effects of Relief Measures on Individual Views

Notes: ***p<0.01; **p<0.05; *p<0.1.

Regarding the second set of variables on the perceived importance of different factors on life outcomes, the differences between meritocratic and non-meritocratic factors were more clear-cut. The group receiving nothing (Group C) consistently attributed greater importance to meritocratic factors (i.e., hard work and education) and lower importance to non-meritocratic factors (i.e., family and network) than the other groups. More important, the differences were significant for hard work (p<0.05), family (p<0.01), and network (p<0.05 for comparison [ii] only). The composite index also was significant at p<0.01, with nonrecipients placing a stronger emphasis on meritocratic factors. This also was the case for the remaining factors when we regarded ambition as meritocratic and ethnicity, religion, and gender as non-meritocratic (although only ethnicity was significant). Thus, overall, H4a and H4b were supported.

DISCUSSION AND CONCLUSION

This study examines the impact of COVID-19 relief measures on tertiary students. Instead of identifying a general effect, we leveraged the eligibility requirement of two transfer programs and compared those who were born before and after the cutoff dates. Because we focused only on students of similar ages and backgrounds, it can be argued that the differences identified were attributed to the effect of the transfer payments. We find that those who did not qualify for the benefits assigned greater importance to meritocratic factors in improving life outcomes than recipients and vice versa for non-meritocratic factors. However, there was no significant difference for political and economic satisfaction or support for democracy. We do not argue that the results are generalizable (i.e., specific to Hong Kong and/or the period under investigation); however, the findings are theoretically grounded and call for greater attention to the unintended side effects of welfare on shaping people’s views.

…the findings…call for greater attention to the unintended side effects of welfare on shaping people’s views.

Our findings about the belief in meritocracy support the argument from the personal-attributes thesis that nonrecipients identify individual talent and personal skills as key drivers of upward mobility (Atria et al. 2020). In particular, nonrecipients of benefits place greater importance on hard work as a factor for success, whereas recipients prioritize non-meritocratic factors such as family and networks. The experience of qualifying for benefits (i.e., by being born slightly earlier than the cutoff) calls attention to non-meritocratic factors; non-recipients who miss out by luck are forced to recognize that only hard work can bring them success. Recipients of benefits, in contrast, become more aware of the importance of factors outside of their control, such as family and networks. For example, they might associate being born into a rich family with the experience of receiving free payments. This also explains why the difference was not significant for educational background—although it was significant as part of the composite index. Nonrecipients did consider it important, but failure to qualify for benefits had little to do with the difference.

The fact that welfare payments affect the view of meritocracy has strong implications for both individuals and governments. For individuals, their attitude toward merit and success should be considered an important attribute by itself. However, it is further argued that meritocracy is a crucial factor of subjective well-being directly or as a mediator, especially among disadvantaged groups (e.g., if the minority group believes in meritocracy and attributes their disadvantage to their lack of merit) (Foster and Tsarfati 2005; Klein 2013). Whereas governments often adopt a short-term view of improving legitimacy in the distribution of ad hoc benefits, the unintended change to individual outlook may have further consequences. A population with a strong (or weak) belief in meritocracy may have a higher (or lower) acceptance of inequality and therefore less (or more) demand for redistribution. According to our findings, the distribution of benefits would make the population more reliant on further redistribution due to a weakened belief in meritocracy. This argument aligns with the literature on the difficulty of welfare retrenchment due to the constituencies created (Pierson 1996). Our study might have provided a potential micro-foundation for this phenomenon.

In addition, as with most welfare programs, only permanent residents of Hong Kong were eligible for these payments. This distinction may explain the result in perceived importance of ethnicity with a different type of self-justification taking place. Instead of attributing their advantageous position to meritocracy (as in the original self-justification thesis), the recipients clearly understood that the benefits were not related to their personal characteristics (except perhaps their birth date). They made sense of this by placing greater importance on non-meritocratic factors in their perception of success.

We did not find any impact on individual satisfaction with the economy and government, which is somewhat inconsistent with the literature (Asebedo et al. 2020; Bui et al. 2022). There are several potential explanations. First, recipients may have vastly different levels of satisfaction with the same COVID-19 benefit policy depending on their personal background and views (Yuktadatta et al. 2022). This study targeted young adults, who in general were active in past protests in Hong Kong—their demands remain largely unmet—and one-off relief measures would be far from sufficient to change their views on the government. In other words, the payments may be effective in causing a positive improvement in satisfaction toward the government among other age groups.

Second, Hong Kong’s notoriously high levels of income inequality and housing prices have long been a major grievance among young people (Wu and Chou 2017). Therefore, it is not surprising that a modest payment did not significantly alter their economic—and, by extension, political—satisfaction. Similarly, the lack of an effect on democratic support can be attributed to the strong support for democracy developed by students in recent social movements, which should not be easily affected by payments. A third reason for the insignificant effect is the sample size.

The study concludes with two limitations of this research. First, its relatively small sample size forced us to either omit or merge the middle group (i.e., those who received only the consumption voucher) with the other groups in the previous analysis. In addition, the lack of a significant difference in some variables may be due to the small sample size rather than the lack of a real effect. However, this strengthens confidence in our statistically significant results.

Second, political attitudes are products of long-term socialization and often are considered as rather stable over time (Prior 2019). However, it is not uncommon for researchers to identify a change in meritocratic views based on framing or additional information in some experimental studies as our study does (Alesina, Stantcheva, and Teso 2018; Cappelen et al. 2013; Trump 2018). Studies also seldom examine the duration or persistence of the effects. Due to the limits of our research design, we had no way of knowing whether the changes caused by the receipt of payments were long-lasting or temporary and that might dissipate over time.