Government transfers to individuals are often given labels indicating that they are designed to support the consumption of particular goods. Standard economic theory implies that the labeling of cash transfers or cash-equivalents should have no effect on spending patterns. We study the UK Winter Fuel Payment, a cash transfer to older households. Our empirical strategy nests a regression discontinuity design within an Engel curve framework. We find robust evidence of a behavioral effect of labeling. On average households spend 47% of the WFP on fuel. If the payment were treated as cash, we would expect households to spend 3% of the payment on fuel.
The paper received the Atkinson Award for the best article published in the Journal of Public Economics during the period 2014-16.
Laura Blow and Cormac O'Dea receive their awards from the journal's editors, Erzo F. P. Luttmer and Wojciech Kopczuk
Authors
Laura Blow
Research Fellow University of Michigan
Tom is a Research Fellow at IFS, a Research Professor for the Institute for Social Research at the University of Michigan.
Research Associate Yale University
Cormac is a Research Associate of the IFS, an Assistant Professor of Economics at the Yale University and Research Fellow at the NBER.
Research Associate University of Minnesota
Journal article details
- DOI
- 10.1016/j.jpubeco.2014.06.007
- Publisher
- Elsevier
- JEL
- D12; H24
- Issue
- August 2014
Suggested citation
Beatty, T et al. (2014). 'Cash by any other name? Evidence on labeling from the UK Winter Fuel Payment' (2014)
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