Melchior Vella - **Mind v. Matter: Determinants of Take-up Rates of Social Benefits

in the UK**

  • Presenting author: Melchior Vella (Institute for Social and Economic Research, University of Essex)

  • Authors: Melchior Vella

  • Session: B03A - Behavior [1] - Tuesday 14:00-15:30 - Ceremonial Hall

  • Slides: PDF

One of the overlooked issues of delivering social benefits to their target population is imperfect take-up. The literature, while limited, shows that a proportion of individuals or households eligible for social benefits do not claim them. This phenomenon is not limited to the UK, but is widespread across countries. This target inefficiency distorts the intended impact of social benefits and increases the degree of uncertainty surrounding estimates of budgetary implications and attainment of social policy objectives. The data used in this study are drawn from the first nine waves (i.e., 2010-2019) of the UK Household Longitudinal Study (UKHLS) and eligibility simulations based on the UKMOD tax-benefit calculator (UKHLS-UKMOD). The results show the presence of significant dynamics of genuine state dependence once the initial condition and the contribution of unobserved heterogeneity have been accounted for. Unobserved heterogeneity plays an important role for take-up behaviour for certain social benefits: partly explained by personality traits and cognitive skills.