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Transfer program complexity and the take-up of social benefits

Kleven, Henrik Jacobsen and Kopczuk, Wojciech (2011) Transfer program complexity and the take-up of social benefits. American Economic Journal: Economic Policy, 3 (1). pp. 54-90. ISSN 1945-7731

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Abstract

We model complexity in social programs as a by-product of the screening process. While a more rigorous screening process may improve targeting efficiency, the associated complexity is costly to applicants and induces incomplete take-up. We integrate the study of take-up with the study of rejection (Type I) and award (Type II) errors, and characterize optimal programs when policy makers choose screening intensity (and complexity), an eligibility rule, and a benefit level. Consistent with many real-world programs, optimal programs feature high complexity, incomplete take-up, classification errors of both Type I and II and, in some cases, "excessive" benefits.

Item Type: Article
Official URL: http://www.aeaweb.org/aej-policy/index.php
Additional Information: © 2011 American Economic Association
Library of Congress subject classification: H Social Sciences > HB Economic Theory
H Social Sciences > HV Social pathology. Social and public welfare. Criminology
Sets: Departments > Economics
Collections > Economists Online
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 05 Apr 2011 12:44
URL: http://eprints.lse.ac.uk/33767/

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