The study described below suggests a quick and powerful effect of welfare benefits on behaviour. It is all the more remarkable since the report is connected to the Institute for Fiscal Studies which, in the past, I would have associated with the view that giving money to the poor was an obviously good idea. I would not previously have expected this institute to worry about the perverse incentives this might create. But now this study makes a very dramatic claim: that the effect of benefit changes takes place almost straight away.

Of course I wholly agree that welfare benefits change behaviour. I would argue further than they change people's morality. But I have always taken the cautious view that it takes a long time for benefit changes to do all this. I have found it hard to imagine a woman thinking to herself as she is deciding whether or not to have sex (or whether to have it with contraception) "Yes, I think I will go ahead, unprotected. After all, I calculate that benefits for lone parents have gone up ten per cent."

But who knows? Perhaps I have been overcautious. I hope that I might find the time in the future to read the report in detail.

Here is part of the the Daily Telegraph report:

The study, Does Welfare Reform Affect Fertility?, looks at the impact on the birth rate in the UK caused by reform of child benefits launched by Labour.

It says that the introduction of Working Families Tax Credit and an increase in Income Support between 1999 and 2003 triggered a rise in taxpayer spending on children "unprecedented" in the previous 30 years.

Because the reforms were targeted at the poorest families with children, the value of their state handouts increased by 10 per cent of their total household income.

For couples who both left school at 16, the reforms meant an increase in benefits of 45 per cent, from £39 a week to £56.76. This is a rise almost twice as much as the handouts for which a couple who went on to sixth form college would be eligible, which increased by 25 per cent to £37.27 a week.

The researchers then looked at fertility rates both before the reforms were announced and after, for a sample of 101,330 women aged between 20 and 45.

They found a large increase in the first year after the benefits were made more generous, particularly among women who had left school as soon as possible.

The results show a 15 per cent increase in the probability of having a baby in the "low education group", equivalent to an extra 45,000 births compared with 670,000 across Britain as a whole.

Overall there has been a steady rise in the birth rate since 2001, and although some of this is down to higher fertility among immigrants, even among women born in the UK it has risen from 1.68 births per woman in 2004 to 1.79 last year.

In addition, analysis of household surveys found large numbers of poorly-educated women who said they were not using contraception because they wanted to have children.

The study, led by Sarah Smith of the Centre for Market and Public Organisation at Bristol University, is published in the autumn issue of the journal Research in Public Policy.

Posted by James Bartholomew • Indexed in Parenting • Welfare benefits

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