ISER Working Paper Series 2006-12

The welfare cost of means-testing: pensioner participation in income support

Authors

Publication date

01 Apr 2006

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%.

Subjects

Pensions and Poverty

Notes

working paper

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Related publications

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

   Stephen Pudney, Monica Hernandez, and Ruth Hancock

   Conference Paper, European Meeting of the Econometric Society - 21 Aug 2003

2. The welfare cost of means-testing: pensioner participation in income support

   Monica Hernandez, Stephen Pudney, and Ruth Hancock

   Journal Article, Journal of Applied Econometrics - 2007
   1. Pensions
   2. Poverty

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