A Six-Figure Welfare Fraud Horror Story
March 31, 2017
Certain redistribution programs are called “entitlements” because anybody who meets various criteria is “entitled” to automatically get money or other benefits.
Economists worry that such programs (particularly the “means-tested” entitlements) create perverse incentives since some people will choose to work less and earn less in order to maximize the amount of handouts they receive. Such behavior is immoral, but understandable. People learn that if they make sacrifices and work more, the reward is taxation, whereas if they work less (or not at all), the reward is freebies from the government.
And the problem presumably is worse in places where there is a greater amount of redistribution (if you’re curious, here’s the data on which states and countries have the most profligate package of benefits).
But the problem goes beyond simply luring people into idleness with bad incentives. When politicians create programs that give away money, they also create…
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