Determining Participation in Income-Tested Social Programs

Abstract

Estimates of the number of participants to expect in income-tested social programs may be made from data on income distributions alone. These simple estimates will be biased if the social program induces incentive effects or if some eligible participants do not pursue their application for benefits. This article brings these issues together and sets out a statistical framework for testing whether the simple estimates are likely to be adequate in practice. The data used for the empirical work come from the Seattle and Denver Income Maintenance Experiments, the largest of several similar experiments thus far undertaken. The results imply that the simple estimates of program participation may be adequate if a program of the experimental type investigated here is implemented nationally.

Key Words:

• Discrete choice models
• Social experiments
• Probit model