The Welfare Cost of Means-Testing: pensioner participation in income support

Publication type

Conference Paper

Series

European Meeting of the Econometric Society

Authors

Publication date

August 21, 2003

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%.

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