Means Testing and Behavior Testing

When it comes to giving taxpayer aid to poor households, I think that people favor a combination of means testing and behavior testing. [UPDATE: between the time I wrote this and the time I posted it, Bryan Caplan expressed similar ideas.]

Means testing follows the principle that the more you can earn on your own, the less aid you get. Contrary to appearances, a basic income grant works that way, assuming that there is an income tax operating in parallel. See my explanation of the equivalence of a basic income grant with a negative income tax.

Behavior testing follows the principle that the more that your poverty is your fault, the less aid you get. Somebody who is mentally and/or physically handicapped deserves more aid than someone who is able-bodied and able-minded.

My view is that the Federal government has a comparative advantage at handing out means-tested aid, while local governments and charities have a comparative advantage at handing out behavior-tested aid. So I would like to see the Federal government provide a small basic income grant and have local governments and charities supply behavior-tested aid.

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3 Responses to Means Testing and Behavior Testing

  1. Lord says:

    The Feds have a massive advantage in raising the funds to do so though.

  2. Tom G says:

    Universal Basic Job — the gov’t can offer a voluntary National Service job to everybody, and try to learn what work they can do, as they accept such a job.

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