Public Attitudes towards Income Redistribution: Evidence from Hong Kong

Transcription

1 SOCIAL POLICY &ADMINISTRATION ISSN DOI: /spol VOL., NO., 2015, PP. Public Attitudes towards Income Redistribution: Evidence from Hong Kong Alfred M. Wu and Kee-Lee Chou Department of Asian and Policy Studies, The Hong Kong Institute of Education, Hong Kong Abstract The drivers of public support for redistributive policy have stimulated academic debate around the world. The majority of studies use cross-country surveys conducted in the Organisation for Economic Co-operation and Development countries to contribute to the debate on whether self-interest or social values have more influence on public attitudes towards redistribution. Drawing on a phone survey conducted in 2013, this study advances the discussion by investigating public attitudes towards redistribution and social policy changes against the backdrop of buoyant government revenues in Hong Kong. The Hong Kong welfare model, best seen as a parallel to the liberal welfare state, is selective and residual. Contrary to the usual assumption, the social values hypothesis, viewing poverty as societal problems instead of individual reasons, has been supported in the Hong Kong context. It lends support to greater redistribution in a residual welfare state. The policy implications of the findings are also discussed. Keywords Redistribution; Public attitude; Poverty; Income inequality; Hong Kong Introduction In ageing societies, using public money to effect income redistribution is a core aspect of the political agenda. Widening income inequalities in many societies heightens the need for redistribution. Nevertheless, public support is vital to the formation and implementation of a good redistributive programme. In some countries, such as the UK, public support for some welfare redistribution has declined over time (Dorey 2010). In the meantime, some may support a certain type of redistribution, such as education and health spending, but not others (Humpage 2015; McCall and Kenworthy 2009). Public attitudes complicate any attempt to increase or reduce public expenditure on redistribution. This study aims to investigate public attitudes towards redistribution in Hong Kong, a former British colony with a residual welfare system, which implies a minimal role of the state in providing social welfare and welfare benefits usually are modest. Nevertheless, the fiscal position in Hong Kong, Author s: wumuluan@ied.edu.hk; klchou@ied.edu.hk

2 enjoying phenomenal economic growth in recent years, has been optimistic. In recent years, against a backdrop of many advanced economies grappling with fiscal austerity, Hong Kong has accumulated huge budget surpluses. For example, in the financial year , the general revenue account and funds in the government budget showed a surplus of HK$1.450 billion, which increased further to HK$ billion the following year. Nevertheless, even these amounts were not huge compared with the surpluses of the latest two years, namely HK$ billion and HK$ billion in the financial years and , respectively (see figure 1). As shown in figure 2, based on current projections, Hong Kong s predicted fiscal performance will be extraordinary, with government surplus as a share of gross domestic product (GDP) reaching almost 5 per cent in Therefore, if we regard government surplus as a good indicator of public finance health among developed economies, Hong Kong would be a star performer. Indeed, figure 2 suggests that among six selected developed economies, only Norway performs better, and its surplus is steadily reducing. In stark contrast to the above economic indicators, Hong Kong is also characterized by increasing poverty and a stunning growth of income inequality. The United Nations Development Programme (2010) reports that among 32 very high human development countries, Hong Kong was ranked first in terms of income inequality (see also Saunders et al. 2014). A poll, drawing on a sample of 6,100 Hong Kong residents aged 12 64, suggests that wealth is seriously unequally distributed, with the poorest 20 per cent only accessing 6 per cent of the wealth, and the richest 20 per cent controlling 43 per cent (South China Morning Post, 10 April 2013). With other developed economies demonstrating a similar demographic trend, there has been widespread debate over whether or not more public money should be spent on redistributive programmes such as education, health care, social assistance and pensions. Such controversy arises against a background of welfare state retrenchment and fiscal austerity in many developed economies. However, debates over redistribution in Hong Kong have emerged in the context of a burgeoning budget surplus, meaning that the disagreement is Figure 1 Government revenue, expenditure, surplus, or deficit: general account and funds (HK$ million),

3 Figure 2 Government surplus or deficit as a share of GDP (%), not mainly about whether or not the Hong Kong Special Administrative Region (HKSAR) government can afford to redistribute public money, but about finding a social consensus about how this should be done. This issue, which has so far been given little attention in the academic literature, is more difficult to answer. Drawing on a survey conducted in 2013, we attempt to close this research gap by investigating public attitudes towards redistribution in the Hong Kong context. To what extent do the people of Hong Kong support redistribution and government intervention? What factors have determined public support or opposition? Compared with other research in public attitudes towards redistribution, this work makes several contributions. First, the context is unique and significant, which may contribute to a better understanding of public opinion on the welfare system. Like other advanced economies, Hong Kong is witnessing a rapidly ageing population plus a substantially widening income gap. More importantly, in recent years government coffers have been buoyant and even, to some extent, overflowing. The bulk of the extant research on public attitudes towards redistribution has been carried out in the context of fiscal austerity or even fiscal insolvency in the developed economies. The unique case of Hong Kong, where the government is in far better fiscal health, may shed new light on the existing research. Put simply, it may enable us to form a better understanding of public attitudes towards state intervention during fiscally good years where there remain some difficult demographic and other factors (that is, rapid ageing and enduring poverty). 1 Second, this article scrutinizes the micro-foundation of public preferences on redistribution. Most previous work examines the institutional factors affecting public attitudes. Some of the literature uses Esping-Andersen s (1990) categorization framework to compare welfare preferences across countries (see Busemeyer et al. 2009; Jakobsen 2011). Echoing this approach, we also explore the microfoundation in a single case study, which may reap great benefits. Using 3

4 micro-based survey data can reveal economic, political, societal intricacies underpinning a society that are vital to the formation and implementation of government policy. Third, drawing on a transitional society against a turbulent political and economic environment, the Hong Kong case, in a single context compared with cross-country studies in most of the similar studies, can inspire the research in many different contexts. As a laissez-faire economy and the role of state in the economy being constrained, Hong Kong has worn an institutional straitjacket confining the government s role in redistribution. Intriguingly, the interaction between the government and popular demand has intensified in recent years but not led to a better environment for making social policy conducive to addressing poverty and income inequality. Other societies, especially those encountering similar challenges, may gain some experience from Hong Kong. The remainder of the article is organized as follows. The next section discusses the theoretical debate on public attitudes towards redistribution before the methodology, and the findings of this study are presented. We identify some intriguing findings with regard to public perceptions of redistributive policy, and the section which follows discusses these in detail with regard to the policy implications. The article ends by proposing some policy implications for the HKSAR government and beyond. Theorizing Public Attitudes towards Redistribution Some theoretical arguments are raised in the literature, of which the two main strands are self-interest and social values (Svallfors 2012). The former emphasizes the impact of actual or perceived vulnerability on public support for redistribution (Ainsaar 2012). Citizens positions in society determine their attitudes and motivations towards redistributive programmes. Nevertheless, the other line of thought argues that attitudes towards redistribution are not formed by one s own situation but instead by values or ideologies held about redistribution (Ainsaar 2012). 2 For example, it is assumed that people supporting social equality (left-leaning people) are inclined to accept redistributive programmes (van Oorschot 2010: 21). The policy implications of these two lines of thought are distinct. The self-interest hypothesis The logic underpinning the self-interest argument is straightforward, as the assumption is that individuals are utility-maximizing agents. People who are likely to benefit from redistribution tend to support government intervention and welfare enhancement, while those who should contribute to redistribution or will benefit less from the programme are inclined to oppose it (Linos and West 2003). Both the actual and potential recipients of redistributive programmes should be supportive of redistribution. For example, evidence suggests that unemployed citizens are more likely to have positive attitudes towards redistribution (Gelissen 2000). Although unemployment benefits offered by governments vary across countries, unemployment is widely considered to be associated with the perceived vulnerability of a worsening 4

5 standard of living. In the light of these circumstances, the unemployed would be expected to support redistributive programmes. Likewise, people on low incomes also are inclined to support redistributive programmes. As their incomes are lower than the average, such individuals tend to find that they cannot improve their situation without help from their relatives, friends or the government. Thus, evidence suggests that those on low incomes are strongly supportive of redistribution (see Bean and Papadakis 1998). A related issue is that being of a perceived lower social class will make individuals more supportive of redistribution. Although social class may not be identical to one s actual financial or other situation, the perception in itself suggests a level of perceived vulnerability for individuals or families. People in lower social classes are generally more vulnerable to risks such as unemployment or poor health. In addition, they may have weaker social networks or be isolated socially. The literature has therefore shown that social class is expected to affect public perception of redistribution (Svallfors 2004). A caveat is needed. Both objective self-interest and subjective self-interest play a role in shaping public demand for redistribution. Perceptions of being in a lower social class, not equal to one s actual financial situation, may, to some extent, exert a more explicit impact on public attitudes towards redistribution. More importantly, social values or ideologies may interact with the two different approaches of self-interest in reality. 3 For example, perceiving social development or social injustice as a driver of poverty may coincide with subjective self-interest such as a person s self-evaluation of unemployment risk. Both of them will jointly have an influence on demand for redistribution. Through our study, we find that subjective self-interest and ideologies have a great say in affecting an individual s perception of welfare distribution. In addition to these factors, other demographic or individual factors may affect public attitudes towards redistribution. Age probably matters. Research has focused more on the link between one s own financial situation and popular attitudes towards redistribution. As Busemeyer, Goerres and Weschle (2009: 196) suggest, one s position in the life cycle will also have a bearing on public preferences for redistribution. The rationale behind this is simple. Although not all of the elderly are poor, the majority need more health care and other types of social assistance. Therefore, they have an incentive to support redistributive programmes such as health care provision. Similarly, the number of children in a family may affect perceptions of redistribution as children require substantial spending on education and health care. In general, having more children is expected to increase the financial vulnerability of a family, at least in the short term. Therefore, the number of children in a family may also contribute to a greater support for redistribution. Ainsaar (2012) finds that families with children tend to support child-related public programmes. In addition to age, research also shows that gender has an impact on attitudes, with some arguing that women tend to favour redistribution more than men (Habibov 2013). The social values hypothesis Social values may also have an impact on public attitudes towards redistribution. Svallfors aptly points out that self-interest is in no way close to the full 5

6 story behind the patterning of welfare attitudes (Svallfors 2012: 226). The logic underlying the self-interest argument is that individuals will pursue utility maximization based on their actual or perceived vulnerability. Nevertheless, some argue that even individuals who are financially strong may be sympathetic towards heightened welfare redistribution. In reality, some people, even the rich, may support redistributive programmes. This suggests that more stable factors, such as social values or ideologies, may affect the demand for redistribution. Empirical evidence indicates that social values instead of selfinterest can explain redistributive preferences (Fong 2001). Social values are reflected in concrete attitudes towards income inequality or poverty. A theory on income inequality and support for redistribution has been developed by Meltzer and Richard (1981). As income distribution is skewed to the right in developed economies, the income of the median voter is generally lower than the mean income in society. On the one hand, median voters, having a critical influence on government decisions through elections and other channels, will seek to increase redistribution to improve their own circumstances. On the other hand, higher income inequality in society leads to stronger public support for redistribution as progressive taxes are normally imposed on higher income individuals or families instead of median voters. Nevertheless, modest income inequality will be associated with weak support for redistribution, as median voters may need to pay extra taxes as well (Dallinger 2010; Meltzer and Richard 1981). The empirical findings are mixed, however (Dallinger 2010). Perceived causes of poverty have also been argued to have an impact on public attitudes towards redistribution. When poverty is seen as the result of laziness or character failing, people tend not to support redistributive measures. This is evident in many contexts. For example, in the UK, many people attribute poverty to individual factors such as poor parenting rather than the surrounding environment (Sefton 2009). Unsympathetic attitudes towards poor people complicate government anti-poverty initiatives. Support for a government anti-poverty programme declined substantially from 1994 to 2006 in the UK (Dorey 2010). This situation may be seen in other liberal welfare regimes. In contrast, some take the view that the root cause of poverty is social injustice, meaning that structural barriers rather than personal failings lead to individuals being poor. In this view, poverty is not about poor parenting or financial mismanagement, but a result of social dysfunction, and so the government has a responsibility to tackle it through redistribution. Support for redistribution, Jaeger (2009) notes, tends to be higher in the conservative regime or the social democratic regime. The institutional theories suggest that the structure of the welfare state, institutional arrangements for welfare provision, and existing ideologies will all affect public support for redistribution. For example, in a social democratic welfare regime, which provides generous welfare benefits to the public, demand for redistribution will be higher if income inequality and poverty worsen. In a liberal regime where welfare provision is more targeted and remains minimal, such demand tends to be lower ( Jaeger 2013). In addition to these explanations, the governmental protection hypothesis promulgated in the political sociology literature points out that individuals 6

7 view welfare state provision as a form of social insurance which protects them from economic shocks and other crises. Popular demand for redistribution will therefore increase in bad times, such as recessions. However, individuals will be reluctant to support redistribution in good times when economic indicators are generally good ( Jaeger 2013). The case study in Hong Kong may shed fresh light on the assumption and suggest a different story. In summary, according to the self-interest hypothesis, the actual and potential recipients of redistributive programmes will support such policies. Specifically, those who are unemployed and older, who perceive themselves vulnerable to becoming poor, who are of lower social class, and who have more children are more likely to be supportive of redistributive programmes. Based on the social values hypothesis, the perceived causes of income inequality, magnitude of income inequality, and causes of poverty are all associated with public attitudes to redistribution. In particular, individuals who perceive income inequality as a consequence of providing benefits to the rich, who are living in a less equal society, and who attribute poverty to social injustice, are more inclined to call for redistribution. Methodology Data collection The data used in this study came from a telephone survey conducted in March 2013, the targets of which were adults aged 18 and over who were Hong Kong residents and Cantonese speakers. The sampling procedure consisted of two steps. First, we randomly selected a fixed set of telephone numbers from the latest residential telephone directories and used them as seed numbers. Using those seed numbers, we generated another set of numbers by randomly adding or subtracting 1 or 2 to/from each of the numbers (the plus/minus 1/2 method) so as to obtain new and unlisted numbers. Second, our trained telephone interviewers asked the potential respondent in each household to participate in this study if he or she fulfilled the inclusion criteria. If there was more than one potential respondent in a household, we randomly selected one for interview by using the next birthday rule, in which we selected the person whose next birthday was the soonest. All interviewers were monitored by qualified supervisers and their performance was also evaluated using real-time camera surveillance. All interviews were conducted anonymously. The sample size was 1,032, giving a response rate of 68.0 per cent. Due to missing values in the variables used in this study, the final sample for analysis contained data from 873 respondents. Measures The survey included a question on public support for redistribution, which was the dependent variable in this study, Should the government reduce income difference between the rich and the poor, perhaps by raising the taxes of wealthy families or by giving income assistance to the poor, or should the government not concern itself with reducing differences?. 7

8 Responses were collected using a 7-point Likert-type scale ranging from 1 = the government should not reduce inequality to 7 =thegovernment should concern itself with reducing inequality, with 4 indicating a halfand-half response. This item was adopted from a recent study of public opinion on income inequality and redistribution policy preferences (McCall and Kenworthy 2009). The analysis consisted of producing descriptive statistics, bivariate correlations, and multivariate regression analyses covering the three groups of variables. First, the variables related to the self-interest hypothesis included perceived vulnerability to a worsening financial situation, employment status, being of a lower social class, age, and number of children. Perceptions of vulnerability to a reduction in standard of living were assessed by asking respondents, Do you think that in the next 12 months, you and your family will be better off than today or worse off?, with responses measured using a 3-point scale where better = 0, no difference = 1, and worse = 2. To measure objective financial situation, we used one variable, namely whether or not the respondent was unemployed (and not studying, employed, retired, or a homemaker). Self-rated social class was also included as a subjective indicator of the financial situation of the household. Respondents were asked to indicate which social class their family belonged to, with the options including upper-class, upper-middle-class, middle-class, lower-middle-class, and lower class. One binary variable was recoded as an indicator of lower class compared with all other response categories. Age was coded in 12 groups (18 20 = 1; = 2; = 3; = 4; = 5; = 6; = 7; = 8; = 9; = 10; = 11; 70+ = 12), while number of children was grouped into four categories (0 = 0; 1 = 1; 2 = 2; 3 = 3 or more). Second, the set of variables related to the social values hypothesis included the perceived causes of income inequality, magnitude of income inequality, and causes of poverty. The first was measured using the item, Inequality continues to exist because it benefits the rich and the powerful, and the second using the item, Differences in income in Hong Kong are too large. Respondents rated both items using a 5-point Likert-type scale ranging from 1 = strongly disagree to 5 = strongly agree. Perceptions of the causes of poverty were assessed using one item in which respondents were asked, Why are there poor people in Hong Kong? Here are four possible reasons; bad luck, laziness or lack of willpower, injustice in society, and modern social development. Which reason do you consider to be the most important? And which do you consider to be the second most important?. The order in which the four reasons were presented was randomized for each respondent. In our analyses, we recoded responses to this item into three dummy variables depending on which reason was selected as most important, namely; (1) bad luck; (2) laziness or lack of willpower; and (3) injustice in society. Finally, the last set of variables covered basic demographic characteristics, namely gender (male = 0; female = 1); education level (1 = elementary and below; 2 = junior high; 3 = senior high; 4 = certificate or associate degree; 5 = bachelor degree; 6 = postgraduate degree); and marital status (married = 1; other = 0). 8

9 Results Bivariate analysis The results showed that 57.8 per cent of respondents agreed that the HKSAR government should reduce income differences between the rich and the poor, while only 13.6 per cent opposed this. Approximately 11.0 per cent believed that they and their family would be worse off a year after today. While 29.7 per cent of respondents ranked laziness as the top cause of poverty, 28.5 per cent and 33.6 per cent of respondents rated social injustice in the society and modern social development, respectively, as the most important reason. Table 1 shows the descriptive statistics for the variables used in this study. As can be seen in table 2, significant correlations were found between attitudes to redistribution and perceived vulnerability, attitudes to income inequality, perceived causes of income inequality, perceived injustice as the cause of poverty, unemployment, perceptions of being in a lower class, and being married. Multiple and logistic regression analyses To formulate the simplest model of attitudes to redistribution, the first multiple regression only included variables that were significantly correlated with the dependent variable. Table 3 shows the multiple and logistic regression models with unstandardized coefficients. These show that perceived vulnerability, attitudes to the causes of income inequality, perceptions of injustice as the cause of poverty, and perceived social class were all positively associated with redistribution policy preference. Specifically, individuals who expected their lives to become worse, who believed that income inequality continues to exist because it benefits the rich and the powerful, who ranked social injustice as the most important cause of poverty, and who perceived themselves as being in a lower social class tended to agree that the HKSAR government should reduce the income gap between rich and poor. Because the dependent variable, attitude to redistribution, was so highly skewed, it is questionable whether the assumption of normality in a multiple regression can be supported. Therefore, we dichotomized the variable by contrasting individuals who agreed that the government should reduce income inequality (7) with all other respondents. The result of the logistic regression of this binary variable is shown in table 3. It can be seen that perceived vulnerability, ranking injustice as the most important cause of poverty, and perceiving oneself as being in a lower social class were all significantly associated with support for redistribution. Discussion Our findings support the proposition that both self-interest and social values influence public support for redistribution. Perceived vulnerability and perceived lower social class positively affected attitudes towards redistribution in our survey. When respondents were asked about their projected financial situation over the next 12 months, those who thought things would get worse 9

10 Table 1 Descriptive statistics for the variables used in this study (n = 873) Dependent variables Percentage/mean (SD) Attitudes to redistribution 4.98 (1.62) 1 = Government should not be concerned 4.1% 2 2.9% 3 6.6% 4 = Half-and-half 28.5% % % 7 = Government should reduce inequality 25.5% Independent variables Self-interest variables Perceived vulnerability 0.86 (0.59) Getting better 25.5% Same 63.2% Getting worse 11.2% Unemployed 2.9% Perceptions of being in a lower social class 38.3% Age (12 groups: 1 12) 7.32 (3.27) Number of children 1.31 (1.08) % % % % Social values variables Perceived causes of income inequality 3.69 (1.30) Perceived magnitude of income inequality 4.15 (1.05) Perceived causes of poverty Laziness 29.7% Bad luck 4.7% Injustice 28.5% Social development 33.6% Demographic variables Female 58.4% Education (6 groups: 1 6) 3.18 (1.51) Married 66.8% tended to support redistributive programmes. Also relevant is the fact that respondents who said their family belonged to a lower social class were more inclined to support public programmes aimed at addressing income inequality. This testifies to our assumption that subjective self-interest plays a substantial role in shaping public attitudes towards redistribution. A somewhat more intriguing finding is that when asked about the causes of poverty, individuals who saw social injustice as the most salient factor also tended to support redistribution. The correlation coefficient of this factor with the dependent variable was 0.81 in the multiple regression models. Seeing 10

11 Table 2 Bivariate correlations of agreement with the redistribution policy statement, Should the government reduce income difference between the rich and the poor? Support for redistribution correlation coefficient Self-interest variables Perceived vulnerability 0.12** Unemployed 0.09** Perceptions of being in a lower social class 0.09* Age (12 groups: 1 12) Number of children Social values variables Perceived causes of income inequality 0.14** Perceived magnitude of income inequality 0.14** Perceived causes of poverty Bad luck Injustice 0.25** Social development Demographic variables Female Education (six groups: 1 6) Married -0.08* Notes: *p< **p< poverty as a social phenomenon beyond individual control suggests that people are more sympathetic to the disadvantaged, regardless of their own financial situation. The finding may nonetheless suggest a subtle change occurring in Hong Kong, which was viewed as a welfare regime close to the liberal type. Usually, in the liberal welfare regime, many people attribute poverty to individual causes. However, public attitudes, albeit divided, towards poverty and redistribution in Hong Kong differ substantially from the one in the liberal system. In addition, the literature on welfare legitimacy indicates that the Hong Kong people are exceptionally motivated by sympathy and moral obligation compared with other developed countries (Wong et al. 2006). Unemployment status and number of children in the family had no discernible effect on support for redistribution. As welfare benefits are limited and should be directed to those in greatest need of state intervention, unemployment or the burden of caring for children may not be a reason for seeking redistribution in the Hong Kong context. In addition, the findings of this study do not support the governmental protection hypothesis wherein popular demand for redistribution changes according to economic circumstances. However, a caveat to these findings is also in order. Changing public attitudes towards the welfare state have posed a threat to developing a good redistributive policy in Hong Kong. People are now more divided than ever on social policy and a looming trend is that Hong Kong people demand for 11

12 Table 3 Multiple and logistic models of public attitude to redistribution Dependent variable: Agreement that the government should reduce income differences between rich and poor Multiple regression Unstandardized coefficients Logistic regression Unstandardized coefficients Self-interest variables Perceived vulnerability 0.19* 0.39* Unemployed Perceptions of being in a lower social 0.25* 0.49** class Social values variables Perceived causes of income inequality 0.09* 0.06 Perceived magnitude of income inequality Perceived causes of poverty Bad luck Injustice 0.81** 0.68** Social development Demographic variables Married Adjusted R Notes: *p< 0.05.**p< a greater state intervention when income inequality and poverty have reached unprecedented levels. As noted by Chow (2003), prior to the return of sovereignty in 1997, it appeared that social policy in Hong Kong moved towards universalism. Nevertheless, the runaway economy, rising unemployment, and worsening fiscal position in Hong Kong soon after 1997 made the HKSAR government cautious, even sceptical, about expanding the scope of social policy. The government rejected any possibility of turning Hong Kong into a Western liberal welfare state and promoted a flexible welfare strategy by handing out many one-off benefits to the needy (Chan 2012). It seems that middle-class people and those with high levels of education or high incomes, who may be seen as the most politically important section of the population, dislike the thought of a universal welfare system (Wong et al. 2006). 4 Nevertheless, the situation is more complex than it first appears. Despite a seemingly conservative stance on redistributive policy, increased attention has recently been paid to the structural causes of poverty and inequality in Hong Kong, especially over the past five years. For example, nowadays many people attribute poverty to property hegemony, which has aroused huge debate among Hong Kong people (Tang et al. 2012). It has been argued that property hegemony has some bearing on poverty in Hong Kong, especially for 12

13 those living in poor conditions with low incomes. At first glance, property hegemony is not directly related to poverty. Nevertheless, as Chan et al. (2014) point out, Hong Kong people are concerned about wealth disparities and take the view that property has a decisive effect on an individual s economic future. For example, property developers and landowners can obtain more material resources, while the have-nots tend to be marginalized and impoverished due to skyrocketing house prices. The Hong Kong society is therefore dominated by the view that property hegemony is one of the crucial causes of poverty. 5 Some people believe in this type of structural explanation of poverty rather than attributing it to laziness or lack of willpower. Our findings suggest that those who perceive poverty as resulting from social injustice tend to support redistribution. Therefore, regardless of individuals financial background, more stable and enduring social values or ideologies affect their preferences about government policy in this area. As society moves towards a more general agreement on the structural causes of poverty, the pressure on the government to increase redistribution will build. Hong Kong s redistributive policy-making in recent years has been defined by a set of intertwined demographic, social, economic, and political trends. It is now one of the most rapidly ageing societies in Asia and faces serious problems with regard to elderly poverty. Meanwhile, Hong Kong remains one of the most unequal societies in Asia and, to some extent, among the developed economies worldwide. The HKSAR government remaining a largely authoritarian structure (Lee 2005) runs to its own timetable and seems reluctant to satisfy the demand for greater redistribution. The financial secretary of the HKSAR government has latterly been criticized for the government s reluctance to commit to an expansive and institutionalized welfare state against a huge, accumulated budget surplus. Meanwhile, in order to ease the concerns of lawmakers and the general public alike, the government has also promoted a number of one-off general benefits. A striking case is Scheme $6,000 wherein in 2011, the government gave HK$6,000 to all adult holders of a Hong Kong permanent identity card when contemplating how to spend public money after the coffers of the government were overflowing. Many people, nonetheless, were not satisfied with this, depicting the scheme as an example of the government s inability to redistribute public money wisely and proactively. As well as evaluating public perceptions, existing evidence also points to the pessimistic side of the residual welfare regime in Hong Kong. As pointed out by Wong (2008), the welfare level in Hong Kong, measured by social expenditure as a share of GDP, lags almost 40 years behind the average for the Organisation for Economic Co-operation and Development countries. 6 Certainly, the informed public tends to express widespread disagreement with government policy in this area. This will generate ongoing tension between social demand and the government s response, complicating any efforts to improve redistributive policy in Hong Kong. Conclusions By examining a unique survey data collected in Hong Kong, we may conclude that both self-interest and social values affect public attitudes towards 13

14 redistribution. People who foresee themselves as more economically vulnerable tend to support state intervention and enhanced redistribution. Similarly, perceiving oneself as being of a lower social class can increase one s support for government assistance. More importantly, perhaps, those who consider social injustice to be the most important cause of poverty are more likely to support redistribution. Therefore, the findings of this study indicate that public support for redistribution in Hong Kong may derive from two sources: self-interest associated with individuals own financial or other condition, and social values, which may be more stable and detached from personal circumstances. The theory underpinning public attitudes towards redistribution further suggests that the structure of the welfare state also plays a part in shaping public demand for state intervention. 7 As far as the Hong Kong case is concerned, the picture is intricate. The Hong Kong residual welfare model, and to some extent the liberal welfare framework, seems to be increasingly challenged in modern times. The demand for increased state intervention has grown. In our survey, per cent of respondents agreed that the government should be concerned with mitigating income disparities while only 13.6 per cent disagreed with the principle of state intervention. The traditional liberal welfare model tends to tell a story of self-reliance combined with the modest acceptance of state assistance. Nevertheless, in view of enhanced income inequalities, people are not only becoming more sympathetic towards the financially marginalized but also keener to demand that the government provide support to mitigate the underlying problems. In particular, against the backdrop of economic prosperity and buoyant government revenues, minimal intervention from the HKSAR government has been viewed as a manifestation of its attempts to shirk its responsibilities to its constituents. The case study in Hong Kong may shed light on other economies. As a laissez-faire economy aligned with a residual welfare regime, the HKSAR government has deliberately constrained its role in some social policy areas. In the meantime, Hong Kong people used to tolerate income inequality and viewed it as an acceptable side effect of the Hong Kong spirit that different personal efforts will naturally lead to a widening income gap. However, in our survey, many people view poverty and income inequality as societal problems instead of individual failures. Therefore, property hegemony as a story related to increasing income inequality and worsening poverty has hit local headlines. Our findings suggest a nuanced picture of public perceptions towards social policy and pertinent policy structure changes in a turbulent and fast-changing economy. Although some new findings in a traditional residual welfare state are presented, we also acknowledge the limitation of our study. Given this study is not developed on a longitudinal dataset investigating public attitudes towards redistribution over years in Hong Kong and the sample size of this survey is small, the observation on redistribution attitudes should be treated as tentative. Perhaps more importantly, this survey was conducted in a good economic environment with increased government revenues. Whether or not the findings are still valid remains to be seen if Hong Kong faces an economic downturn. This study testifies to a complex interaction between government policy and popular demand. As noted previously, before 1997, there was a 14

15 consensus pushing the HKSAR government to adopt a more inclusive and universal welfare system. However, after the handover to the People s Republic of China, especially when experiencing several economy downturns, the HKSAR government has reverted to a conservative approach defending a residual welfare state. Nevertheless, over the past decade, the demand for greater redistribution has increased steadily. The gap between government policy and popular demand has been enlarged; therefore social policymaking, especially needed in an ageing society with a substantial income gap, has become a deadlock. All this has profound implications for other economies, particularly developing and transitional economies. Amid changing ideology and social values in the society, the HKSAR government has had to begin addressing the redistribution issue. The government has latterly accorded great attention to poverty and housing issues in Hong Kong. First, it has revived the Commission on Poverty as an inter-departmental organization advising the government on making policies related to poverty. The Commission on Poverty, abolished in the previous administration, has worked on the setting of a poverty line and an in-depth analysis of poverty situation in Hong Kong. Second, the HKSAR government intends to boost housing supply especially public housing provision. As discussed before, the housing issue is intertwined with income inequality and poverty in Hong Kong. Addressing the housing issue requires substantial government intervention and more public money in this area. As social values or ideologies related to income redistribution are evolving, the interplay between government s new efforts and public attitudes remains an open question. When remaining wedded to the model of residual welfare, the HKSAR government should pay attention to perceptions of economic vulnerability among its citizens and direct more resources to those who are being marginalized due to a variety of reasons such as economic globalization and integration with mainland China. However, another caveat is in order here. Allocating more resources to social policy is not enough to tackle the root cause of social ills. The government must have a proactive policy on the one hand, but on the other hand, a more democratic and responsive state must be developed if public demand is to translate into effective government policy. 8 Acknowledgements Support for this research was provided by the Research Grant Council Public Policy Research Fund (HKIEd 7005-PPR-12) and Start-up Research Grant at The Hong Kong Institute of Education RG 86/ R. Correspondence concerning this article should be addressed to Professor Kee-Lee Chou. Notes 1. As noted later, a theory predicts that individuals tend to be less supportive of redistributive programmes in economic good times (Jaeger 2013). 2. Svallfors (2012) aptly refers the self-interest hypothesis to a political economy 15

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