Welfare, Perceived Social Class, and Subjective Well-Being: Evidence from China

Purpose: Does welfare participation help boost the morale of low-income people, or is it so stigmatizing that recipients become less happy and less satisfied with their lives? Welfare can directly lifts the income of poor families and in turn improves their economic and possibly also subjective well-being. However, welfare participation could also have a negative influence on the attitudes and life satisfaction of poor people because of the demeaning means-testing process that welfare recipients have to go through. .Unfortunately, little empirical work has been devoted to this important topic. This study examined the effects of welfare participation on poor people’s subjective well-being and the possible mediating role of perceived social class.

 Method: This study used the 2010 baseline survey data from the China Family Panel Studies (CFPS). CFPS is a national longitudinal annual survey conducted by the Institute of Social Science Survey of Peking University. The CFPS sample has good national representativeness and covers both urban and rural China. Among our analytical sample of 12,415 respondents, 11% of the rural sample (n=6,386) and 7% of the urban sample (n=6,029) were participants of China’s primary welfare program, Dibao. Subjective well-being was measured by two variables: self-reported happiness and life satisfaction. We used propensity score matching to reduce the selection bias. Multinomial logistic regressions among the matched sample were conducted to examine the possible effect of welfare participation on subjective well-being. We further tested whether perceived social class—measured by self-reported relative income level and social status in the local context—played a mediating role in this relationship.

 Results: In both rural and urban China, welfare recipients had significantly lower levels of happiness and life satisfaction (by 20-26%, p<.01) compared to the non-recipients. Perceived relative income level was a significant mediator in both rural and urban areas, accounting for 28-45% (p<.01 for Sobel test) of the overall effect. However, perceived social status was only a significant mediator in rural China (mediated effects=20% on happiness and 54% on life satisfaction, p<.01) but not in urban areas, indicating that social status might be more important in influencing people’s subjective well-being in the more close-knit rural communities. These result patterns held when we used propensity score weighting as a sensitivity test.

Conclusions and Implications: This study found that welfare participation tended to be associated with lower subjective well-being, and this association could be partially accounted for by people’s perceived social class. These findings are from recent data in China but have implications for welfare programs around the world, especially in developing and transitioning economies. It is important for policy makers, practitioners, and service providers to understand dynamics of how welfare participation may be a liability or deterrent for poor people, even though they are receiving additional income through such programs. How to minimize stigma and improve morale of the welfare recipients need to be addressed so that these welfare programs can reach their full potentials in helping boost not only the economic but subjective well-being of the participants.