Further to my previous post, here is another quote from Asher’s essay on “Means Tests”.
Take up rates are typically low for means-tested schemes. In the jargon of social science, ‘exclusion rates’ are high. Many actually welcome this, because it saves taxpayer money, and helps to target benefits to the neediest. Anthony Asher disagrees.
[M]eans tests introduce various costs and create a social stigma that [supposedly] helps target pensions at those that need it most. There is some attraction in this type of self-targeting, but it should be noted that the neediest people may be excluded from benefits. It is far from clear that social stigma will select the neediest; it will certainly select the shameless, but the impoverished prim may prefer to starve.
Anthony Asher, “Means Tests: an evaluation of the justice of imposing high rates of claw-back on those of modest means“, presented to the Institute of Actuaries of Australia, Financial Services Forum, May 2006.
Remember, too, that means tests ‘save’ taxpayers money by denying them access to benefits! Means tests are equivalent to taxes, so any savings are illusory.
Tags: targeting
