On the compassion of time-limited welfare programs

Hanming Fang, Dan Silverman

Research output: Contribution to journalArticlepeer-review

12 Scopus citations

Abstract

Supporters of recent welfare reforms argue that time limits and other eligibility restrictions serve recipients. We present a simple model of agents with present-biased preferences to investigate the theoretical validity of this claim. We first identify four types of outcome that describe the behavior of a present-biased agent in the absence of time limits. We then show that the behavioral consequences of time limits are contingent on which outcome characterizes the agent's behavior in the absence of time limits. We show that under some conditions the imposition of time limits may improve the well-being of welfare recipients evaluated both in terms of long-run, time-consistent utility and the period-one self's utility. This benefit of time limits may come either from allowing the welfare eligible to start working earlier than they otherwise would or, contrary to the intent of the reforms, from allowing them to postpone working.

Original languageEnglish (US)
Pages (from-to)1445-1470
Number of pages26
JournalJournal of Public Economics
Volume88
Issue number7-8
DOIs
StatePublished - Jul 2004
Externally publishedYes

Keywords

  • Present-biased preferences
  • Time limits
  • Welfare reform

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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