Who Does the U.S. Benefit System Benefit the Most?
The system reduces poverty the most for the disabled and the elderly and least for several groups among the nonelderly and non-disabled. Over time, we find that expenditures have shifted toward the disabled and the elderly, and away from those with the lowest incomes and toward those with higher incomes, with the consequence that post-transfer rates of deep poverty for some groups have increased. We conclude that the U.S. benefit system is paternalistic and tilted toward the support of the employed and toward groups with special needs and perceived deservingness.
This paper by researchers from the University of Wisconsin, Madison, and Johns Hopkins University is worth looking at—especially during an election year when there’s a question about how effective President Obama has been on reducing poverty. I’ve only skimmed the study so far, but one interesting thing the paper discusses is behavioral responses to benefit programs, for example, the idea that people “reduce their work effort to increase their benefit levels, since most programs pay higher benefits to those with lower income.” That may be true in some cases, but I think we can all agree that nobody wants to be poor.