Understanding welfare stigma: Taxpayer resentment and statistical discrimination

Welfare stigma is widely regarded to be of central importance in understanding the impact of welfare programs in their goal of alleviating poverty. It affects both the decision to take up benefits and the well-being of those who actually do. This paper develops alternative models of the determinants of welfare stigma. We identify two views: a statistical discrimination approach and a taxpayer resentment view. We discuss how each may be formalized and derive their implications. We then examine what they imply about the relationship between stigma and program design.