Labeling Effects of Child Benefits on Family Savings

Arbeitspapier

Contrary to standard microeconomic principles, it is by now well understood that income is not fungible. For example, the label of a government transfer can induce individuals to make expenditure decisions that are skewed towards the label. In this paper, we show that child benefits are disproportionately used for savings assignable to children. We exploit a policy reform in a difference-in-differences approach to estimatethe effect of child benefits on savings while holding total household income constant.Our results suggest a significant positive labeling effect on long-term savings, but noeffect on assignable consumption. We conclude that labeling effects should be consideredcarefully by policy makers, if not for nudging individuals, then to avoidaffecting decisions unintentionally.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ifo Working Paper ; No. 163

Classification and Topics

• Classification: Wirtschaft ; Microeconomic Behavior: Underlying Principles ; Consumer Economics: Empirical Analysis ; Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs
• Subject: Fungibility ; labeling effects ; child benefits ; savings

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hener, Timo
• Event: Veröffentlichung
• (who): ifo Institute - Leibniz Institute for Economic Research at the University of Munich
• (where): Munich
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/73696
• Last update: 10.03.2025, 11:45 AM CET