Briefing Paper No. 27 June 12, 1996

Briefing Paper

The Value Of Welfare Cato vs CBPP

by Michael Tanner and Naomi Lopez

Executive Summary

In 1995 the Cato Institute released a study comparing the benefits available from entitlement programs with income available from work. In May 1996 the Center on Budget and Policy Priorities issued a critique of that study. A review of the original study published by Cato and the criticisms in the CBPP study shows that the Cato study remains an accurate appraisal of the level of welfare benefits. The CBPP study fails to account for the value of non-cash welfare benefits such as Medicaid. In addition, the Cato study's inclusion of housing benefits more accurately reflects the work vs. welfare tradeoff for long-term welfare recipients. With the exception of a small error in the calculation of the value of food stamps in five states, the criticisms of the Cato study are unfounded. Since the federal welfare benefits a typical welfare family would be eligible to receive exceed the wages for the type of entry-level job that most welfare recipients could expect, welfare remains a rational choice for many people.

Full Text of Briefing Paper No. 27 (HTML)

1996 The Cato Institute
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