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Transfer Program Complexity and the Take-Up of Social Benefits

Transfer Program Complexity and the Take-Up of Social Benefits 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. (JEL D04 , D82 , H23 , I18 , I38 ) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Economic Policy American Economic Association

Transfer Program Complexity and the Take-Up of Social Benefits

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Publisher
American Economic Association
Copyright
Copyright © 2011 by the American Economic Association
Subject
Articles
ISSN
1945-7731
eISSN
1945-774x
DOI
10.1257/pol.3.1.54
Publisher site
See Article on Publisher Site

Abstract

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. (JEL D04 , D82 , H23 , I18 , I38 )

Journal

American Economic Journal: Economic PolicyAmerican Economic Association

Published: Feb 1, 2011

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