Policy Gains or Household Need? The Allocation Logic of China's Dibao Program

Haojie Liu, Jiyuan Ling and Zihan Lin

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Abstract: When social assistance is scarce, should it prioritize households in greatest need or those expected to benefit most? Using panel data from the China Household Finance Survey, we distinguish allocation principles by combining predicted policy gains with entry into China's Minimum Living Standard Guarantee (Dibao). We estimate heterogeneous predicted gains in consumption and education and then recover the conditional priorities revealed by recipient selection. Predicted gains explain little of allocation: a Shapley decomposition attributes 96.9\% of the improvement in allocation fit to household priorities and 3.1\% to predicted gains. Lower income, lower education of the household head, and elderly presence consistently predict higher priority across supported outcome-value specifications. Holding local program capacity fixed and removing household-priority differences while retaining the full model's estimated outcome values, the resulting ranking overlaps with recipients by only 10.9\%, implying 89.1\% recipient churn. These findings show that Dibao allocation is more closely aligned with household circumstances associated with poverty and vulnerability than with policy gains predictable from the outcomes and information observed in our data, underscoring the distinction between distributional and impact targeting in social assistance.

Date: 2026-09
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