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The Welfare Costs of Means Testing: Pensioner Participation in Income

By M. Hernandez, S. Pudney and R. Hancock

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%

Publisher: Department of Economics, University of Sheffield
Year: 2006
OAI identifier: oai:eprints.whiterose.ac.uk:9941

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