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

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  • Beatty, Timothy K.M.
  • Blow, Laura
  • Crossley, Thomas F.
  • O'Dea, Cormac

Abstract

Government transfers to individuals are often given labels indicating that they are designed to support the consumption of particular goods. Standard economic theory implies that the labeling of cash transfers or cash-equivalents should have no effect on spending patterns. We study the UK Winter Fuel Payment, a cash transfer to older households. Our empirical strategy nests a regression discontinuity design within an Engel curve framework. We find robust evidence of a behavioral effect of labeling. On average households spend 47% of the WFP on fuel. If the payment were treated as cash, we would expect households to spend 3% of the payment on fuel.

Suggested Citation

  • Beatty, Timothy K.M. & Blow, Laura & Crossley, Thomas F. & O'Dea, Cormac, 2014. "Cash by any other name? Evidence on labeling from the UK Winter Fuel Payment," Journal of Public Economics, Elsevier, vol. 118(C), pages 86-96.
  • Handle: RePEc:eee:pubeco:v:118:y:2014:i:c:p:86-96
    DOI: 10.1016/j.jpubeco.2014.06.007
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    More about this item

    Keywords

    Labeling; Benefits; Expenditure; Regression discontinuity;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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