Subsidies and Behavior

There have been a lot of arguments about government subsidies to individuals (food stamps, TANF, fuel assistance) lately and their impact on behavior. The general assumption is that giving people cash means they won’t work. The reality is much more complicated than this and it turns out that most people do not make significant changes to their behavior based on these subsidies. Yes, someone who gets food stamps may choose to work slightly less overtime, but we don’t see the wholesale destruction of work ethic that many fear. This op-ed in the New York Times takes that traditional argument in a new direction by applying it to the habits and the government subsidies that go to the rich.

One thought on “Subsidies and Behavior

  1. Wow, this article in the New York Times was fascinating. I was appalled by the fact that the interest rates that were lowered for middle class home owners were extended to provide subsidies for beach homes and yachts.
    I was delightfully entertained by Mr Kristof’s comment about perhaps housing the homeless in these publicly supported yachts.

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