Social-Benefits Stigma and Subsequent Competitiveness

Abstract

We conduct a laboratory experiment to explore how benefit-eligibility stigma drives subsequent decisions to enter competition. We induce a stigma associated with a low-status benefit and then introduce “plausible deniability” to reduce this stigma by expanding benefit eligibility to a middle-status group. When newly-eligible individuals qualify for the benefit, their rate of entry into a subsequent and unrelated tournament is reduced by 17-20 percentage points compared to the treatment in which they do not qualify. A potential interpretation of our results would suggest expansion of eligibility of certain government assistance programs may produce unintended consequences for the newly eligible.

Keywords: benefit eligibility, plausible deniability, social status, welfare benefits, preference for competitiveness

JEL Classification: C93, I38, D91