Welfare Stigma Re‐Examined

• Published date: 01 December 2015
• Author: TOMER BLUMKIN,YORAM MARGALIOTH,EFRAIM SADKA
• Date: 01 December 2015
• DOI: http://doi.org/10.1111/jpet.12109

WELFARE STIGMA RE-EXAMINED

TOMER BLUMKIN

Ben-Gurion University

YORAM MARGALIOTH

Tel-Aviv University

EFRAIM SADKA

Tel-Aviv University

Abstract

We dissect welfare stigma into two types: traditional and

statistical, and show that the latter can be employed as a

desirable form of a welfare ordeal, as its costs are positively

correlated with ability.

1. Introduction

In a second best setting, an egalitarian government seeking to target benefits

to the least well-off members of society is faced with a fundamental screen-

ing problem of identifying the deserving individuals. The government uses

various devices to overcome this problem. Direct devices include means test-

ing by reviewing documentation, conducting interviews, and testing by spe-

cialists.1Indirect screening includes targeting groups (tagging, according to

Akerlof 1978): basing welfare eligibility on observable characteristics such as

old age, level of education, or observable disability, correlated with ability;2

1See Besley and Coate (1995) for a general characterization of means-tested income main-

tenance programs.

2For a more recent treatment of the role of tagging in enhancing target efficiency, see

Boadway and Pestieau (2006) and Cremer, Gahvari, and Lozachmeur (2010).

Tomer Blumkin, Department of Economics, Ben-Gurion University, Beer-Sheba 84105,

Israel; CesIfo; and IZA (tomerblu@bgu.ac.il). Yoram Margalioth, The Buchmann Faculty

of Law, Tel-Aviv University, Tel-Aviv, Israel (margalio@post.tau.ac.il). Efraim Sadka, The

Eitan Berglas School of Economics, Tel-Aviv University, Tel-Aviv 69978, Israel; CesIfo; and

IZA(sadka@post.tau.ac.il).

The authors thank an associate editor and three anonymous referees for their com-

ments and constructive suggestions. The usual disclaimer applies.

Received August 13, 2013; Accepted August 15, 2013.

C2014 Wiley Periodicals, Inc.

Journal of Public Economic Theory, 17 (6), 2015, pp. 874–886.

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