Tuesday, July 10, 2012

Means Tested Benefits

In principle, all benefits should be means-tested. After all, the government raises a limited amount of money via taxation, and it's better that that goes to those who really need it. In particular, if a person over the age of 60 has not yet retired, they can probably buy their own bus pass.

In practice, if it costs more to perform the means-testing than is saved by performing that check, then it's better to just pay the money out. Call it an efficiency saving.

(It's also worth noting that if you means-test for a benefit, a lot of people will therefore refuse to apply at all, as a point of pride. They don't want to be thought of as a burden on society. However, I'm disinclined to give that argument much weight, especially given the "it costs more than it saves" argument. That said, I'm also inclined to think that people generally shouldn't have to apply for benefits - in general, they should just be sent out as soon as they're eligible. Again, as a matter of principle, although I daresay the practicalities of this make it impossible.)

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