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

Author

Listed:
  • Tim Beatty

    (Institute for Fiscal Studies and University of Minnesota)

  • Laura Blow

    (Institute for Fiscal Studies and University of Surrey)

  • Thomas Crossley

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

  • Cormac O'Dea

    (Institute for Fiscal Studies and Yale University)

Abstract

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.

Suggested Citation

  • Tim Beatty & Laura Blow & Thomas Crossley & Cormac O'Dea, 2011. "Cash by any other name? Evidence on labelling from the UK Winter Fuel Payment," IFS Working Papers W11/10, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:11/10
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    References listed on IDEAS

    as
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    More about this item

    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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