Determinants and effects of benefit take-up: Insights from panel data and microsimulation modelling
Lead Research Organisation:
University of Essex
Department Name: Inst for Social and Economic Research
Abstract
One of the overlooked issues of delivering social benefits to their target population is imperfect take-up. The literature, while limited, shows that a significant 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. There are various reasons why take-up of social benefits, especially means-tested benefits, is far from perfect. Such factors include high claiming costs, administrative errors, lack of information about entitlements, and fear of stigma. 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. Despite its relevance, the topic is however still poorly understood. How have the take-up rates changed over the years? Have they increased or decreased, especially after the rolling out of Universal Credit? Why do eligible individuals choose not to claim benefits? Is non-claiming temporary or permanent? Are there groups in society that are more inclined not to claim social benefits? Answering these questions will help to move away from the assumption - common in the policy debate - of full compliance to benefit rules, provide new insights to improve policy design, and fill research gaps in the literature.
The primary objectives of this project are:
1) to estimate take-up rates for social benefits in the UK and how they have changed over time, particularly for Legacy Benefits and Universal Credit;
2) to study the factors affecting take-up rates, focussing on the role of observed and unobserved characteristics of the eligible population, and how these interact with the characteristics of social benefits;
3) to analyse the impact of imperfect take-up on a variety of social indicators such as cross-sectional and persistent poverty risks, inequality, social mobility;
4) to explore the influence of counterfactual policy designs on take-up and associated social indicators.
This study will exploit a unique combination of UK longitudinal data (UKHLS) and simulations of eligibility conditions based on the UKMOD tax-benefit calculator. In simple terms, UKMOD identifies whether an individual is entitled to a specific benefit, while UKHLS allows us to identify whether he or she receives the benefit. Estimates of take-up rates are obtained by dividing the number of actual recipients by the number of eligible individuals.
We will then exploit the longitudinal dimension of UKHLS, where the same individuals are followed over many years, to provide insights into key factors that drive take-up behaviour over time, including whether (non-)take-up of social benefits is temporary or persistent and whether there are time-invariant characteristics of the individuals that explain this suboptimal behaviour.
The outcomes of this study will be valuable for policymakers and administrators through helping them to better understand how to improve the target effectiveness of policy programmes. By investigating the causes of non-take-up behaviour, we will point to an alternative to directly intervening with traditional fiscal policy tools (e.g. modifying eligibility conditions or benefit amount) in addressing inequality and poverty. Additionally, the research will be useful to scholars from various disciplines looking to understand the effect of benefit (non)-take-up on social outcomes (e.g., inequality) and individual outcomes (e.g., economic security, cross-sectional and persistent poverty, deprivation, social mobility, health and well-being). Insights gained in the study will be applicable to other advanced countries, thus further increasing its relevance.
The primary objectives of this project are:
1) to estimate take-up rates for social benefits in the UK and how they have changed over time, particularly for Legacy Benefits and Universal Credit;
2) to study the factors affecting take-up rates, focussing on the role of observed and unobserved characteristics of the eligible population, and how these interact with the characteristics of social benefits;
3) to analyse the impact of imperfect take-up on a variety of social indicators such as cross-sectional and persistent poverty risks, inequality, social mobility;
4) to explore the influence of counterfactual policy designs on take-up and associated social indicators.
This study will exploit a unique combination of UK longitudinal data (UKHLS) and simulations of eligibility conditions based on the UKMOD tax-benefit calculator. In simple terms, UKMOD identifies whether an individual is entitled to a specific benefit, while UKHLS allows us to identify whether he or she receives the benefit. Estimates of take-up rates are obtained by dividing the number of actual recipients by the number of eligible individuals.
We will then exploit the longitudinal dimension of UKHLS, where the same individuals are followed over many years, to provide insights into key factors that drive take-up behaviour over time, including whether (non-)take-up of social benefits is temporary or persistent and whether there are time-invariant characteristics of the individuals that explain this suboptimal behaviour.
The outcomes of this study will be valuable for policymakers and administrators through helping them to better understand how to improve the target effectiveness of policy programmes. By investigating the causes of non-take-up behaviour, we will point to an alternative to directly intervening with traditional fiscal policy tools (e.g. modifying eligibility conditions or benefit amount) in addressing inequality and poverty. Additionally, the research will be useful to scholars from various disciplines looking to understand the effect of benefit (non)-take-up on social outcomes (e.g., inequality) and individual outcomes (e.g., economic security, cross-sectional and persistent poverty, deprivation, social mobility, health and well-being). Insights gained in the study will be applicable to other advanced countries, thus further increasing its relevance.
