Affiliation:
1. Department of Economics, London School of Economics and Political Science (LSE), Houghton Street, London WC2A 2AE, United Kingdom, and CEPR.
2. Department of Economics, Columbia University, 420 W118th Street, New York, NY 10027, United States, NBER and CEPR.
Abstract
We model complexity in social programs as a by-product of the screening process. While a more rigorous screening process may improve targeting efficiency, the associated complexity is costly to applicants and induces incomplete take-up. We integrate the study of take-up with the study of rejection (Type I) and award (Type II) errors, and characterize optimal programs when policy makers choose screening intensity (and complexity), an eligibility rule, and a benefit level. Consistent with many real-world programs, optimal programs feature high complexity, incomplete take-up, classification errors of both Type I and II and, in some cases, “excessive” benefits. (JEL D04, D82, H23, I18, I38)
Publisher
American Economic Association
Subject
General Economics, Econometrics and Finance
Cited by
88 articles.
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