Why Do Poor People Not Take Up Benefits? Evidence From Barcelona’s B-MINCOME Experiment

This blog is based on an article in the Journal of Social Policy by Bru Laín and Albert Julià. Click here to access the article.

An increasingly alarming problem

Low coverage rates of conditional and means-tested benefits negatively affect social protection systems. One cause is non-take-up (NTU), i.e. potential claimants not applying for a benefit despite being eligible. Thus merely having policies in place is not enough; they must be thoroughly implemented and reach those most in need.

In OECD countries, NTU rates for social assistance programmes range between 40-80 per cent and stand at 50 per cent for means-tested benefits across all European countries. The magnitude of the problem is alarming. According to the European Commission, “non-take-up is a matter of concern and needs to be carefully monitored”, while the European Economic and Social Committee fears that most “minimum income schemes […] fall short of alleviating poverty” and are “concerned that non-take-up of such schemes tests their effectiveness still further”.

Theoretical framework

The literature identifies and evaluates different factors affecting the likelihood of an individual applying for a benefit. Our paper seeks to understand NTU by means of a theoretical framework by identifying and organizing these factors in two levels of analysis:

i) The potential claimants’ individual characteristics in relation to the information barriers they face.

ii) The administrative logic and functioning regarding the communications strategy used by public institutions.

The data collected from the B-MINCOME pilot scheme —a cash transfer programme implemented in Barcelona between 2017 and 2019— allows us to study and compare the hypotheses associated with these two dimensions of analysis. Which of these two dimensions is more relevant to addressing the issue of NTU? Answering this may be of help for other similar programmes in Barcelona and elsewhere, and is therefore the central research question of our paper.

Main findings

On individual claimants’ factors, application rates are usually explained on the basis of applicants’ sociodemographic variables in combination with their socioeconomic characteristics. The combined effect of both types of variables does alter the private transaction costs and the information barriers incurred by an individual making rational choices between the expected utility of a benefit and the effort required to apply for it. However, as our paper demonstrates, these private transaction costs do not fully account for the low participation rate. Hence, other non-individual factors must exist.

On administrative and institutional factors, a key element to studying how administrative logic and the functioning of institutions affect NTU rates is the type of communications strategy employed when informing people about benefits. As observed in other cases, and given the exhaustive informative tasks performed by the B-MINCOME pilot project, communications strategy is fundamental. This pilot did not only try to reach out to all potential participants by mail and phone, but also by holding 400 face-to-face information sessions in their neighbourhoods where the project was fully described, all doubts answered, and support provided to anyone who needed help to complete the application form.

Data show that 92.3 per cent of those candidates who attended the information sessions went on to apply for the benefit. Thus although claimants’ characteristics may play a significant role in imposing high informative and private costs, the administrative functioning – and particularly the communications strategy – are fundamental in determining NTU rates. 

The ‘circular-cost paradox’: technical and moral concerns

Exhaustive communications are essential to reach all potential claimants. As a result, the cost of a policy will increase due to the tasks and resources necessary to implement a comprehensive communications strategy. This raises the technical question of whether this cost can be assumed for other, larger-scale programmes. Moreover, this cost is expected to increase where the benefit is more focused and conditional, especially when targeting the most vulnerable, hard-to-reach groups. Thus, conditional benefits easily fall into a ‘circular-cost paradox’: the more focused they are, the greater the risk of non-take-up, and hence, the higher the cost of implementation.

Our research revolves around the simple question of whether individual or institutional factors were more relevant in explaining NTU. The answer howeve is more complex than involving some moral concerns. Not claiming a benefit does not solely (nor primarily) respond to individual factors but the administrative functioning of public institutions. Whether or not a person decides to apply for a benefit does not seem an especially controversial question. From a moral standpoint, however, it is very much a matter of concern if the person is not claiming the benefit because they are unaware of its very existence, they have not been properly informed about a too complex application process, or this is only accessible through an online procedure they are not able to navigate. The phenomenon of NTU must therefore be addressed not only by those invested in the adequate technical performance of social protection systems but also by those morally concerned about how contemporary societies treat their most vulnerable members.

About the authors

Bru Laín is a Researcher at the University of Barcelona.

Albert Julià is a Researcher at the University of Barcelona.

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