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The Welfare Cost of Means-Testing: pensioner participation in income support

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Author Info
Pudney S () (Institute for Social and Economic Research)
Hernandez M (Health Economics and Decision Science, University of Sheffield)
Hancock R (School of Medicine, Health Policy and Practice, University of East Anglia)

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Abstract

We estimate parametric and semi-parametric binary choice models of benefit take-up by British pensioners and use a revealed preference argument to infer the cash-equivalent value of disutility arising from stigma or complexity of the claims process. These implicit costs turn out to be relatively small, averaging about £ 3-4 per week across Income Support recipients. Using the Foster-Greer-Thorbecke measure of poverty among pensioners, we find that allowing for implicit claim costs incurred by benefit recipients raises the measured degree of poverty by not more than 13%.

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Paper provided by Institute for Social and Economic Research in its series ISER working papers with number 2006-12.

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Length: 28
Date of creation: 24 Apr 2006
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Publication status: published
Handle: RePEc:ese:iserwp:2006-12

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Postal: Publications Office, Institute for Social and Economic Research, University of Essex, Wivenhoe Park, Colchester, Essex CO4 3SQ UK
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  1. Keane, Michael & Moffitt, Robert, 1998. "A Structural Model of Multiple Welfare Program Participation and Labor Supply," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(3), pages 553-89, August.
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  2. Klein, Roger W & Spady, Richard H, 1993. "An Efficient Semiparametric Estimator for Binary Response Models," Econometrica, Econometric Society, vol. 61(2), pages 387-421, March. [Downloadable!] (restricted)
  3. Duclos, Jean-Yves, 1995. "Modelling the take-up of state support," Journal of Public Economics, Elsevier, vol. 58(3), pages 391-415, November. [Downloadable!] (restricted)
  4. Ruth Hancock & Geraldine Barker, 2005. "The quality of social security benefit data in the British Family Resources Survey: implications for investigating income support take-up by pensioners," Journal Of The Royal Statistical Society Series A, Royal Statistical Society, vol. 168(1), pages 63-82. [Downloadable!] (restricted)
  5. Halpern, Janice & Hausman, Jerry A., 1986. "Choice under uncertainty: A model of applications for the social security disability insurance program," Journal of Public Economics, Elsevier, vol. 31(2), pages 131-161, November. [Downloadable!] (restricted)
  6. Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, vol. 73(5), pages 1023-35, December. [Downloadable!] (restricted)
  7. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Olivier Bargain & Herwig Immervoll & Heikki Viitamäki, 2007. "How Tight are Safety-Nets in Nordic Countries? Evidence from Finnish Register Data," Working Papers 200712, School Of Economics, University College Dublin. [Downloadable!]
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  2. repec:ese:iserwp: is not listed on IDEAS
  3. Coady, David P. & Parker, Susan W., 2005. "Program participation under means-testing and self-selection targeting methods," FCND discussion papers 191, International Food Policy Research Institute (IFPRI). [Downloadable!]
    Other versions:
  4. David Coady & Susan Parker, 2009. "Targeting Social Transfers to the Poor in Mexico," IMF Working Papers 09/60, International Monetary Fund. [Downloadable!]
  5. David Coady & Cesar Martinelli & Susan Parker, 2008. "Information and participation in a social program," Working Papers 0806, Centro de Investigacion Economica, ITAM. [Downloadable!]
  6. Peter Lynn & Annette Jäckle & Stephen P. Jenkins & Emanuela Sala, 2005. "The Effects of Dependent Interviewing on Responses to Questions on Income Sources," Discussion Papers of DIW Berlin 487, DIW Berlin, German Institute for Economic Research. [Downloadable!]
  7. Sanjit Dhami & Ali al-Nowaihi, 2007. "Optimal income taxation in the presence of tax evasion: Expected utility versus prospect theory," Discussion Papers in Economics 07/10, Department of Economics, University of Leicester. [Downloadable!]
  8. Sanjit Dhami & Ali al-Nowaihi, 2005. "Why Do People Pay Taxes? Prospect Theory Versus Expected Utility Theory," Discussion Papers in Economics 05/23, Department of Economics, University of Leicester, revised Aug 2006. [Downloadable!]
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  9. Ewoudou, Jacques & Tsimpo, Clarence & Wodon, Quentin, 2009. "Stigma and the take-up of social programs," Policy Research Working Paper Series 4962, The World Bank. [Downloadable!]
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