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Rational Poverty or Poor Rationality? The Take‐up of Social Assistance Benefits

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  • Regina T. Riphahn

Abstract

In several countries social assistance dependence has been increasing since the 1980s. After surveying the theoretical and empirical take‐up literature, this study presents estimates of recent rates of non take‐up of social assistance benefits. Once methodological shortcomings of prior estimations are corrected, the results show that take‐up has fallen recently and thus cannot explain the rising welfare receipt. Following theoretical predictions, the probability that a rational individual takes up social assistance increases with the expected benefit amount and duration, and falls with application cost and stigma. More than half of all households eligible for transfers under the German social assistance program did not claim their benefits.

Suggested Citation

  • Regina T. Riphahn, 2001. "Rational Poverty or Poor Rationality? The Take‐up of Social Assistance Benefits," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(3), pages 379-398, September.
    • Handle: RePEc:bla:revinw:v:47:y:2001:i:3:p:379-398
    DOI: 10.1111/1475-4991.00023
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    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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