Human Well-Being and In-Work Benefits: A Randomized Controlled Trial

55 Pages Posted: 15 Feb 2014  

Richard Dorsett

National Institute of Economic and Social Research (NIESR)

Andrew J. Oswald

University of Warwick - Department of Economics; IZA Institute of Labor Economics

Abstract

Many politicians believe they can intervene in the economy to improve people's lives. But can they? In a social experiment carried out in the United Kingdom, extensive in-work support was randomly assigned among 16,000 disadvantaged people. We follow a sub-sample of 3,500 single parents for 5 ensuing years. The results reveal a remarkable, and troubling, finding. Long after eligibility had ceased, the treated individuals had substantially lower psychological well-being, worried more about money, and were increasingly prone to debt. Thus helping people apparently hurt them. We discuss a behavioral framework consistent with our findings and reflect on implications for policy.

Keywords: randomized controlled trials, government policy, in-work benefits, wage subsidies, well-being, happiness

JEL Classification: I31, D03, D60, H11, J38

Suggested Citation

Dorsett, Richard and Oswald, Andrew J., Human Well-Being and In-Work Benefits: A Randomized Controlled Trial. IZA Discussion Paper No. 7943. Available at SSRN: https://ssrn.com/abstract=2396438

Richard Dorsett (Contact Author)

National Institute of Economic and Social Research (NIESR) ( email )

2 Dean Trench Street
Smith Square
London, SW1P 3HE
United Kingdom

Andrew J. Oswald

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom
523510 (Phone)

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

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