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

  • Tim Beatty

    (Institute for Fiscal Studies)

  • Laura Blow

    ()

    (Institute for Fiscal Studies)

  • Thomas Crossley

    ()

    (Institute for Fiscal Studies and Institute for Fiscal Studies, University of Essex)

  • Cormac O'Dea

    ()

    (Institute for Fiscal Studies and Institute for Fiscal Studies)

Standard economic theory implies that the labelling of cash transfers or cash-equivalents (e.g. child benefits, food stamps) should have no effect on spending patterns. The empirical literature to date does not contradict this proposition. We study the UK Winter Fuel Payment (WFP), a cash transfer to older households. Exploiting sharp eligibility criteria in a regression discontinuity design, we find robust evidence of a behavioural effect of the labelling. On average households spend 41% of the WFP on fuel. If the payment was treated as cash, we would expect households to spend approximately 3% of the payment on fuel.

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Paper provided by Institute for Fiscal Studies in its series IFS Working Papers with number W11/10.

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Date of creation: Jun 2011
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Handle: RePEc:ifs:ifsewp:11/10
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