Understanding Participation in Social Programs: Why Don't Households Pick up the Lifeline?

In this study, we draw upon data from the low-income Lifeline Assistance Program (Lifeline) for telephone service to examine the participation of eligible households in social programs designed to alleviate financial hardship. Utilizing panel data on participation levels in 1997 and 2003 and the associated variation in state-level policies, we are able to identify program characteristics that significantly affect participation rates. In particular, we find that participation rates are significantly negatively influenced by limitations that some states place on the ability of Lifeline subscribers to utilize optional calling features such as three-way calling or call forwarding. We also find that program participation is positively influenced by the longevity of the individual state's Lifeline program. While no direct test of state-level advertising is feasible, this result is suggestive of an inter-temporal pattern of information dissemination that grows with program longevity. Because eligibility for the Lifeline service is conditional upon participation in other low-income public programs, we also find that: (1) the larger the number of "portals" (i.e., low income public programs that states identify as creating Lifeline eligibility), the higher is participation; and (2) higher financial benefits of these portal programs attract greater participation in Lifeline programs. These results suggest important linkages that may be exploited through coordination of low-income assistance programs. Finally, we test for, and find that variations in Lifeline benefits significantly influence participation rates.