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

By: Dorsett, Richard (National Institute of Economic and Social Research (NIESR))
Oswald, Andrew J. (University of Warwick)
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: I31 D03 D60 H11 J38

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