IDEAS home Printed from https://ideas.repec.org/a/bla/kyklos/v60y2007i4p485-507.html
   My bibliography  Save this article

Behavioral Economics and Perverse Effects of the Welfare State

Author

Listed:
  • Scott Beaulier
  • Bryan Caplan

Abstract

Critics often argue that government poverty programs perversely make the poor worse off by encouraging unemployment, out-of-wedlock births, and other 'social pathologies.' However, basic microeconomic theory tells us that you cannot make an agent worse off by expanding his choice set. The current paper argues that familiar findings in behavioral economics can be used to resolve this paradox. Insofar as the standard rational actor model is wrong, additional choices can make agents worse off. More importantly, existing empirical evidence suggests that the poor deviate from the rational actor model to an unusually large degree. The paper then considers the policy implications of our alternative perspective. Copyright 2007 Blackwell Publishing Ltd..

Suggested Citation

  • Scott Beaulier & Bryan Caplan, 2007. "Behavioral Economics and Perverse Effects of the Welfare State," Kyklos, Wiley Blackwell, vol. 60(4), pages 485-507, November.
  • Handle: RePEc:bla:kyklos:v:60:y:2007:i:4:p:485-507
    as

    Download full text from publisher

    File URL: http://www.blackwell-synergy.com/links/doi/10.1111/j.1467-6435.2007.00382.x
    File Function: link to full text
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Berg, Nathan & Kim, Jeong-Yoo, 2010. "Demand for Self Control: A model of Consumer Response to Programs and Products that Moderate Consumption," MPRA Paper 26593, University Library of Munich, Germany.
    2. Schubert, Christian, 2015. "Opportunity And Preference Learning," Economics and Philosophy, Cambridge University Press, vol. 31(02), pages 275-295, July.
    3. Pelikan, Pavel, 2008. "The government economic agenda in a society of unequally rational individuals," MPRA Paper 19127, University Library of Munich, Germany, revised 06 Dec 2009.
    4. Tschoegl Adrian E, 2007. "McDonald's -- Much Maligned, But an Engine of Economic Development," Global Economy Journal, De Gruyter, vol. 7(4), pages 1-18, December.
    5. Christian Schubert, 2012. "Is novelty always a good thing? Towards an evolutionary welfare economics," Journal of Evolutionary Economics, Springer, vol. 22(3), pages 585-619, July.
    6. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, Oxford University Press, vol. 112(2), pages 443-478.
    7. Martin Halla & Mario Lackner & Friedrich G. Schneider, 2010. "An Empirical Analysis of the Dynamics of the Welfare State: The Case of Benefit Morale -super-," Kyklos, Wiley Blackwell, vol. 63(1), pages 55-74, February.
    8. Bruno S. Frey & Reiner Eichenberger & René L. Frey, 2009. "Editorial Ruminations: Publishing Kyklos," Kyklos, Wiley Blackwell, vol. 62(2), pages 151-160, April.
    9. Funk, Matt, 2008. "On the Problem of Vague Terms: A Glossary of Clearly Stated Assumptions & Careful, Patient, Descriptions," MPRA Paper 14505, University Library of Munich, Germany.
    10. Funk, Matt, 2007. "On the Problem of Dependent People: hyperbolic discounting in Atlantic Canadian island jurisdictions," MPRA Paper 14522, University Library of Munich, Germany.
    11. Funk, Matt, 2008. "On the Problem of Sustainable Economic Development: A Theoretical Solution to this Prisoner's Dilemma," MPRA Paper 19025, University Library of Munich, Germany, revised 08 Jun 2008.
    12. Funk, Matt, 2008. "On the Problem of the Island of Earth: Introducing a Universal Theory of Value in an Open Letter to The President of the United States," MPRA Paper 14489, University Library of Munich, Germany.
    13. Pavel Pelikán, 2010. "The Government Economic Agenda in a Society of Unequally Rational Individuals," Kyklos, Wiley Blackwell, vol. 63(2), pages 231-255, May.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:kyklos:v:60:y:2007:i:4:p:485-507. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0023-5962 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.