Losing benefits hurts more than paying taxes: implications for policy making

In a new piece of research, Silvia Avram argues that people react not just to the financial incentives embedded in taxes and benefits, but also to the way these are presented. She suggests that by changing the way a policy is framed, we may be able to change behaviour.

Dr Avram, Research Fellow at ISER describes her research in this article for the LSE Politics and Policy Blog

“Since the Labour Party introduced the JobSeeker’s Allowance and the New Deal Reforms two decades ago, the question of how to help people transition into paid employment has been at the forefront of the policy agenda. Most politicians and policy analysts argue that the solution is to “make work pay”, i.e. to increase the gap between the income received in and out of work. In practice, the drive to “make work pay” almost invariably translates to welfare cuts. Yet, by framing policy differently, it may be possible to alter the design of welfare benefits so as to encourage people to take up work without necessarily cutting financial support.”

Read the full blog post here and download the ISER working paper here