The Labeling Effect of a Child Benefit System

Kooreman, Peter

doi:10.1257/aer.90.3.571

Cited by 226 publications

(155 citation statements)

References 8 publications

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“…More direct evidence on fungibility comes from labeled cash grants like child benefits. Kooreman (2000) finds that the marginal propensity to consume child clothing out of child benefits is higher than out of other income, violating fungibility. But even for this kind of benefit it is debated how other factors such as intra-household bargaining or the characteristics of the benefit payment (e.g., periodicity) influence results (see Blow et al 2007, Edmonds 2002.…”

Section: Introductionmentioning

confidence: 99%

Fungibility, Labels, and Consumption

Abeler¹,

Marklein²

2016

Journal of the European Economic Association

102

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The focus for the Centre is research into individual and strategic decision-making using a combination of theoretical and experimental methods. On the theory side, members of the Centre investigate individual choice under uncertainty, cooperative and non-cooperative game theory, as well as theories of psychology, bounded rationality and evolutionary game theory. Members of the Centre have applied experimental methods in the fields of public economics, individual choice under risk and uncertainty, strategic interaction, and the performance of auctions, markets and other economic institutions. Much of the Centre's research involves collaborative projects with researchers from other departments in the UK and overseas. Fungibility of money is a central assumption in the theory of consumer choice: any unit of money is substitutable for another. This implies that the composition of income or wealth is irrelevant for consumption. We find in a field experiment that even in a simple, incentivized setup many subjects do not treat money as fungible.When a label is attached to a part of their budget, subjects change consumption according to the label. A controlled laboratory experiment confirms this result and further shows that subjects with lower cognitive abilities are more likely to violate fungibility. The findings lend support to behavioral models of narrow bracketing and mental accounting. One implication of our results is that in-kind benefits distort consumption more strongly than usually assumed.JEL classification: C91, C93, D01, H31, I38.

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Section: Introductionmentioning

confidence: 99%

Fungibility, Labels, and Consumption

Abeler¹,

Marklein²

2016

Journal of the European Economic Association

102

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“…The amount of a transfer that is spent on human capital investments can also be enhanced by what is variously termed labeling (Kooreman, 2000) or social marketing. For example, Schady and Rosero (2008) found that household assigned randomly to an UCT, termed a social program, spent more on food than indicated in the expenditure patterns of similar households.…”

Section: Safety Nets and Household Investmentsmentioning

confidence: 99%

How Can Safety Nets Contribute to Economic Growth?

Alderman¹,

Yemtsov²

2013

The World Bank Economic Review

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“…Researchers have hypothesized the following mechanisms through which CS may have beneficial effects on children over and above income from other sources (Knox (1996), Aizer and McLanahan (2006)): 1) Kooreman (2000) presents empirical evidence that the marginal propensity to consume child clothing out of exogenous child benefits is much larger than that out of other income sources for households with one child in the Netherlands. He interprets this finding as evidence of the labelling effect of a child benefit system.…”

Section: Introductionmentioning

confidence: 99%

Child Support and Educational Outcomes: Evidence from the British Household Panel Survey

Walker

Zhu

2009

SSRN Journal

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There is some evidence to support the view that Child Support (CS), despite low compliance rates and a strong interaction with the welfare system, has played a positive role in reducing child poverty among non-intact families. However, relatively little research has addressed the role of CS on outcomes for the children concerned.There are good reasons for thinking that CS could leverage better outcomes than other forms of income support and, using a sample of dependent children in non-intact families from the British Household Panel Survey (BHPS), we find that CS received has an effect which is at least 10 times as large as that associated with variations in other sources of total household net income for two key educational outcomes: namely school leaving at the age of 16, and attaining 5 or more good GCSEs. We show that this remarkable and strong result is robust and, in particular, can be given a causal interpretation.JEL Code: D13, D31, J12, J13, J22

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The Labeling Effect of a Child Benefit System

Cited by 226 publications

References 8 publications

Fungibility, Labels, and Consumption

Fungibility, Labels, and Consumption

How Can Safety Nets Contribute to Economic Growth?

Child Support and Educational Outcomes: Evidence from the British Household Panel Survey

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