The effect of benefits level on take-up rates: evidence from a natural experiment

Abstract

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Estimating the Impact of a Policy Reform on Benefit Take‐up: The 2001 extension to the Minimum Income Guarantee for UK Pensioners

“…Most economic analyses of take‐up behaviour have considered claiming as a utility maximizing choice (see Moffitt 1983; Blundell et al . 1988; Duclos 1995; Anderson and Meyer 1997; Dahan and Nisan 2007; Pudney et al .…”

“…Most economic analyses of take-up behaviour have considered claiming as a utility maximizing choice (see Moffitt 1983;Blundell et al 1988;Duclos 1995;Anderson and Meyer 1997;Dahan and Nisan 2007;Pudney et al 2006a;Hernandez et al 2007). The individual compares expected benefits from claiming with the inherent costs of applying, and chooses to claim only if the expected benefit adequately compensates the costs.…”

The Route to Take‐up: Evidence from the UK Pension Credit Reform

“…In other words, a 10% increase in financial entitlement results in an estimated take‐up increase of 6 to 12%. These results are consistent with the well established empirical finding of a positive correlation between entitlement amounts and take‐up behavior, and with the causal role of monetary incentives as take‐up triggers established in a few other studies (Anderson and Meyer, , reporting an entitlement elasticity ranging from 0.33 to 0.6; Zantomio et al ., , whose estimates reflect an entitlement elasticity of about 0.5; Dahan and Nisan, , who however do not report any figure on the estimated entitlement elasticity of take‐up).…”

“…Most have obtained the result exploiting the cross-sectional variation of entitlement levels across the eligible population (Warlick, 1982;Ashenfelter, 1983;Moffitt, 1983;Halpern and Hausman, 1986;McGarry, 1996). A few have gone further towards causality by exploiting exogenous changes in program parameters to identify a positive entitlement elasticity of take-up behavior (Anderson and Meyer, 1997;Dahan and Nisan, 2010;Zantomio, Pudney and Hancock, 2010). On the other hand, very little is known about individuals' responsiveness to policies aimed at reducing claiming barriers.…”

Explaining Non-Take-up of Water Subsidy

“…A standard cost-benefits model suggests that eligible households would apply if the expected benefits are higher than the cost (See [3] and more recently [4]). The straightforward implication is that for a given level of benefits a negative relation exists between the costs and take-up rates of social benefits.…”