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Social Jealousy and Stigma: Negative Externalities of Social Assistance Payments in Germany

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  • Kassenböhmer, Sonja C.
  • Haisken-DeNew, John P.

Abstract

This paper examines the role of social assistance payments (SAP or Sozialhilfe) in determining levels of life satisfaction in Germany using the SOEP 1995-2004. We find strong evidence that individuals in Germany are negatively influenced by increased SAP payments controlling for income, whether or not they actually receive such payments (stigma and social jealousy). While there are obvious benefits to making SAP to those needy, there are substantial negative externalities experienced by those who neither receive SAP nor qualify (counterfactual SAP). Furthermore, these negative effects are even stronger for those who do receive benefits (stigma) suggesting that social jealousy and stigma are a force to be reckoned with when evaluating social policy. We show that the added benefits of increasing SAP are reduced by 50 to 100% because of social jealousy and stigma costs, whereas child benefits (Kindergeld) are seen to enhance life satisfaction over and above a simple income effect. Further, own-earned income, over and above the SAP subsistence level is valued much higher than transfer payments at the SAP subsistence level, suggesting a policy focus on increasing employment integration efforts for SAP recipients as opposed merely to providing SAP transfers.

Suggested Citation

  • Kassenböhmer, Sonja C. & Haisken-DeNew, John P., 2009. "Social Jealousy and Stigma: Negative Externalities of Social Assistance Payments in Germany," Ruhr Economic Papers 117, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:117
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    3. Alpaslan Akay & Olivier Bargain & Mathias Dolls & Dirk Neumann & Andreas Peichl & Sebastian Siegloch, 2012. "Happy Taxpayers? Income Taxation and Well-Being," SOEPpapers on Multidisciplinary Panel Data Research 526, DIW Berlin, The German Socio-Economic Panel (SOEP).
    4. Kunze, Lars & Suppa, Nicolai, 2017. "Bowling alone or bowling at all? The effect of unemployment on social participation," Journal of Economic Behavior & Organization, Elsevier, vol. 133(C), pages 213-235.
    5. Lars Kunze & Nicolai Suppa, 2014. "Bowling Alone or Bowling at All? The Effect of Unemployment on Social Participation," Ruhr Economic Papers 0510, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    6. Franziska Gassmann & Bruno Martorano & Jennifer Waidler, 2022. "How Social Assistance Affects Subjective Wellbeing: Lessons from Kyrgyzstan," Journal of Development Studies, Taylor & Francis Journals, vol. 58(4), pages 827-847, April.

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    More about this item

    Keywords

    Well Being; Life Satisfaction; Social Assistance; Stigma; Social Jealousy;
    All these keywords.

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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