To address the potential problem of endogeneity between take-up rate and the proportion of recipients in each local area district, we recalibrate the ratio by excluding the eligibility unit from the count of eligible units of the benefit and those claiming the benefit if the unit is already claiming the benefit. [...] The amount of the tax is 1% of the benefit for every £100 of income additional to £50,000, effectively resulting in a taper rate that brings the benefit to 0 if the income of one of the two partners surpasses £60,000. [...] 19 The sign of the estimated parameters indicates the direction of the effect of the associated variables on the probability of taking up the benefit. [...] However, due to the non-linearity of the model, determining the magnitude of the effects directly from the parameters is not straightforward. [...] The increasing implicit cost suggests that the decline in take-up rates is not solely due to the decrease in the real value of the benefits.
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Table of Contents
- CeMPA WP 624 1
- Melchior Vella 1
- Matteo Richiardi 1
- September 2024 1
- ------------------------------------------------------------------------------------- 1
- MIND VS MATTER ECONOMIC AND PSYCHOLOGIC DETERMINANTS OF TAKE- UP RATES OF SOCIAL BENEFITS IN THE UK 2
- Abstract 2
- 1. INTRODUCTION 2
- 2. BRIEF LITERATURE REVIEW 4
- 2.1 Factors affecting take-up behaviour 4
- 2.2 Personality information costs and stigmatisation 7
- 2.3 The role of policy and institutions 8
- 3. ANALYTICAL STRATEGY 9
- 3.1 Measuring take-up 9
- Table 1. Measurement errors 11
- Observed recipiency 11
- True recipiency 11
- Simulated eligibility 11
- True eligibility 11
- 3.2 Microsimulation and data 12
- 3.3 Measuring personality traits and cognitive skills 13
- 4. DESCRIPTIVE STATISTICS 14
- Figure 1. Take-up rates 95 CI 16
- Figure 2. Take-up rates by gross income quartile 17
- Figure 3. Index of benefit rates 2010 1.00 18
- Table 2. Take-up transition matrix 18
- 5. MODEL SPECIFICATION 19
- 𝐳 𝛼 𝐱 𝛽 𝛾𝑦 𝑢 𝜀 19
- 𝑖 1 2 𝑁 𝑡 2 𝑇 𝑇 19
- 𝐱 𝑢 𝜀 𝑁0 𝜎 19
- 𝑦 1 if 𝑦 19
- 0 if 𝑦 19
- 𝑢 𝐱 19
- 𝑢 𝜇 𝐱 𝜹 𝜂 19
- 𝜂 𝐱 𝑁0 𝜎 19
- 𝐱 𝜀 𝜂 19
- 𝜇 𝐳 𝛼 𝐱 𝛽 𝛾𝑦 𝐱 𝜹 𝜂 𝜀 19
- 𝑦 𝜂 𝑦 𝑦 𝑢 𝑦 𝑦 𝑢 𝑦 𝐱 . 𝑢 20
- 𝑢 𝜇 𝐱 𝜹 𝛾 𝑦 𝜂 20
- 𝜂 𝐱 𝑦 𝑁0 𝜎 20
- 𝜇 𝐳 𝛼 𝐱 𝛽 𝛾𝑦 𝐱 𝜹 𝛾 𝑦 𝜂 𝜀 20
- 6. ESTIMATION RESULTS 21
- 6.1 Take-up decisions 21
- Table 4. Marginal effects on the probability of taking-up benefits 22
- 6.2 State Dependency in Benefit Recipiency 26
- Table 5. Asymptotic inflows and outflows into benefit recipiency 26
- Figure 5. Entry probability by eligibility amount and original income 26
- 6.3 Robustness Check for Measurement Error 27
- 6.4 The break-even point of claiming benefit 27
- Figure 6. Predicted probabilities of take-up 28
- 7. DISCUSSION AND CONCLUSION 29
- References 31
- APPENDIX A 40
- Measures of Personality Traits 40
- Table A.1 BFI-S Items pre-selected set of items 40
- Table A.2 The factor loadings for Openness to Experience 40
- Table A.3 The factor loadings for Conscientiousness 41
- Table A.4 The factor loadings for Extraversion 41
- Table A.5 The factor loadings for Agreeableness 41
- Table A.6 The factor loadings for Neuroticism 41
- Table A.7 The factor loadings for Cognitive Ability 42
- APPENDIX B 43
- Association with individual characteristics 43
- Table B.1. Estimates from a probit model of take-up all years 43
- Dynamic Model Results 46
- Table B2. Probability of Claiming CB and LBUC dynamic random-effects probit model 46
- Table B3. Probability of Claiming CB dynamic probit model 48
- Table B4. Probability of Claiming LBUC dynamic probit model 51
- Table B5. Probability of Claiming CB alternative take-up measure dynamic probit model 55
- Table B6. Probability of Claiming LBUC alternative take-up measure dynamic probit model 57
