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The Welfare Cost of Means-Testing: Pensioner Participation in Income Support

Author

Listed:
  • Stephen Pudney
  • Monica Hernandez
  • Ruth Hancock

Abstract

We estimate parametric and semi-parametric binary choice models of benefit take-up by British pensioners and develop methods, based on the compensating variation, of inferring the cash-equivalent value of disutility arising from stigma or complexity of the claims process, taking account of the self-selection induced by take-up. We extend this to incorporate the claim costs borne by welfare-recipients into the measurement of pensioner poverty. We find that allowing for implicit claim costs in this way has a non-negligible impact on poverty measurement.

Suggested Citation

  • Stephen Pudney & Monica Hernandez & Ruth Hancock, 2002. "The Welfare Cost of Means-Testing: Pensioner Participation in Income Support," Discussion Papers in Economics 03/2, Division of Economics, School of Business, University of Leicester.
    • Handle: RePEc:lec:leecon:03/2
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    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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