The Welfare Cost of Means Testing: Pensioner Participation in Income

Monica Hernandez Alava, Stephen Pudney and Ruth Hancock

No 2006004, Working Papers from The University of Sheffield, Department of Economics

Abstract: 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%.

Keywords: Benefit take-up; Program participation; pensions; welfare; poverty (search for similar items in EconPapers)
JEL-codes: C25 D63 H55 I32 I38 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2006-04, Revised 2006-04
New Economics Papers: this item is included in nep-dcm
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Citations: View citations in EconPapers (10)

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