Perceptions of Program Abuse and Support for Social Insurance

• In Event: Political Economy of Policy Making in the United States

Abstract

Do perceptions of abuse in public social insurance programs undercut program support?
Answering this causal question is difficult because perceptions of program abuse
can arise from multiple potential causes including prior opposition to the program.
Examining the case of disability insurance, we circumvent these challenges using multiple
laboratory experiments involving a novel simulated political economy to study
the interplay between labor market shocks, program abuse, perceptions of abuse, and
preferences for benefit levels. We find that negative labor market shocks that preclude
injured workers from returning to work at their pre-injury wage upon recovery increases
the probability of staying on disability instead of working at a lower-wage job despite
being healthy. Further, when benefits are costly, learning about program abuse causes
workers unaffected by labor market shocks to prefer lower benefit levels. Our results
demonstrate an important channel by which shocks to market employment diminish
support for government social insurance.

Authors

• Scott Bokemper, Yale University

• Albert Fang, Yale University

• Gregory Huber, Yale University