Perception-reality bias: the differences in government trust across income groups

This paper first measures and compares the size of middle-income groups in China based on the subjective income evaluation method and the objective criteria. Second, it empirically investigates the differences in government trust of different income groups defined by the subjective evaluation method and the objective criteria. It is found that there is a significant difference between the results of the subjective evaluation of income and objective criteria. Compared with individuals in the middle-income group, individuals in the low-income group have a significantly worse overall evaluation of local government and a considerably lower trust in local government officials. On the other hand, individuals in the high-income group have a substantially better assessment of local government and a significantly higher trust in local government officials. However, the differences in trust in government across income groups defined by objective criteria are insignificant overall. In terms of policy insights, the effect of targeting low-income groups determined by subjective evaluation may be more effective in improving people’s trust in the government.