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Cash by any other name? Evidence on labelling from the UK Winter Fuel Payment

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  • Timothy K.M. Beatty
  • Laura Blow

    ()
    (Institute for Fiscal Studies)

  • Thomas Crossley

    ()
    (Institute for Fiscal Studies and University of Cambridge)

  • Cormac O'Dea

    ()
    (Institute for Fiscal Studies)

Abstract

Standard economic theory implies that the labelling of cash transfers or cash-equivalents (e.g. child benefits, food stamps) should have no effect on spending patterns. The empirical literature to date does not contradict this proposition. We study the UK Winter Fuel Payment (WFP), a cash transfer to older households. Exploiting sharp eligibility criteria in a regression discontinuity design, we find robust evidence of a behavioural effect of the labelling. On average households spend 41% of the WFP on fuel. If the payment was treated as cash, we would expect households to spend approximately 3% of the payment on fuel.

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Paper provided by Institute for Fiscal Studies in its series IFS Working Papers with number W11/10.

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Date of creation: Jun 2011
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Handle: RePEc:ifs:ifsewp:11/10

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  1. Diane Whitmore, 2002. "What Are Food Stamps Worth?," Working Papers 847, Princeton University, Department of Economics, Industrial Relations Section..
  2. David Card & Carlos Dobkin & Nicole Maestas, 2008. "The Impact of Nearly Universal Insurance Coverage on Health Care Utilization: Evidence from Medicare," American Economic Review, American Economic Association, vol. 98(5), pages 2242-58, December.
  3. David S. Lee & Justin McCrary, 2009. "The Deterrence Effect of Prison: Dynamic Theory and Evidence," Working Papers 1168, Princeton University, Department of Economics, Center for Economic Policy Studies..
  4. Lee, David S. & Card, David, 2008. "Regression discontinuity inference with specification error," Journal of Econometrics, Elsevier, vol. 142(2), pages 655-674, February.
  5. Peter Kooreman, 2000. "The Labeling Effect of a Child Benefit System," American Economic Review, American Economic Association, vol. 90(3), pages 571-583, June.
  6. David S. Lee & Justin McCrary, 2009. "The Deterrence Effect of Prison: Dynamic Theory and Evidence," Working Papers 1171, Princeton University, Department of Economics, Industrial Relations Section..
  7. Milligan, Kevin & Lemieux, Thomas, 2006. "Incentive Effects of Social Assistance: A Regression Discontinuity Approach," Analytical Studies Branch Research Paper Series 2006280e, Statistics Canada, Analytical Studies Branch.
  8. repec:ese:iserwp:2008-35 is not listed on IDEAS
  9. Christopher Carpenter & Carlos Dobkin, 2007. "The Effect of Alcohol Consumption on Mortality: Regression Discontinuity Evidence from the Minimum Drinking Age," NBER Working Papers 13374, National Bureau of Economic Research, Inc.
  10. Moffitt, Robert, 1989. "Estimating the Value of an In-Kind Transfer: The Case of Food Stamps," Econometrica, Econometric Society, vol. 57(2), pages 385-409, March.
  11. Edmonds, Eric, 2002. "Reconsidering the labeling effect for child benefits: evidence from a transition economy," Economics Letters, Elsevier, vol. 76(3), pages 303-309, August.
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Cited by:
  1. Beatty, Timothy K.M. & Tuttle, Charlotte, 2012. "Expenditure response to increases in in-kind transfers: Evidence from the Supplemental Nutrition Assistance Program," 2012 AAEA/EAAE Food Environment Symposium, May 30-31, Boston, MA 122873, Agricultural and Applied Economics Association.
  2. Dolan, P. & Hallsworth, M. & Halpern, D. & King, D. & Metcalfe, R. & Vlaev, I., 2012. "Influencing behaviour: The mindspace way," Journal of Economic Psychology, Elsevier, vol. 33(1), pages 264-277.
  3. Kooreman, Peter & Melenberg, Bertrand & Prast, Henriëtte M. & Vellekoop, Nathanaël, 2013. "Framing Effects in an Employee Savings Scheme: A Non-Parametric Analysis," IZA Discussion Papers 7154, Institute for the Study of Labor (IZA).
  4. Felső, Flóra Á & Soetevent, Adriaan R., 2014. "Broad and narrow bracketing in gift certificate spending," European Economic Review, Elsevier, vol. 66(C), pages 284-302.
  5. Capacci, Sara & Mazzocchi, Mario & Shankar, Bhavani, 2012. "Evaluation With Inadequate Data: The Impact Of The French Vending Machine Ban," 2012 AAEA/EAAE Food Environment Symposium, May 30-31, Boston, MA 123198, Agricultural and Applied Economics Association.

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