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The Welfare Cost of Means Testing: Pensioner Participation in Income

  • Monica Hernandez

    ()

    (Department of Economics, The University of Sheffield)

  • Stephen Pudney
  • Ruth Hancock

We estimate parametric and semi-parametric binary choice models of benefit take-up by British pensioners and use a revealed preference argument to infer the cash-equivalent value of disutility arising from stigma or complexity of the claims process. These implicit costs turn out to be relatively small, averaging about £3-4 per week across Income Support recipients. Using the Foster-Greer-Thorbecke measure of poverty among pensioners, we find that allowing for implicit claim costs incurred by benefit recipients raises the measured degree of poverty by not more than 13%.

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Paper provided by The University of Sheffield, Department of Economics in its series Working Papers with number 2006004.

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Length: 42 pages
Date of creation: Apr 2006
Date of revision: Apr 2006
Handle: RePEc:shf:wpaper:2006004
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