Beatty TKM, Blow LE, Crossley TF, O'Dea C (2014) Cash by any other name? Evidence on labeling from the UK Winter Fuel Payment, Journal of Public Economics 118 pp. 86-96 Elsevier B.V.
Government transfers to individuals are often given labels indicating that they are designed to support the consumption of particular goods. Standard economic theory implies that the labeling of cash transfers or cash-equivalents should have no effect on spending patterns. We study the UK Winter Fuel Payment, a cash transfer to older households. Our empirical strategy nests a regression discontinuity design within an Engel curve framework. We find robust evidence of a behavioral effect of labeling. On average households spend 47% of the WFP on fuel. If the payment were treated as cash, we would expect households to spend 3% of the payment on fuel.
Beatty TKM, Blow LE, Crossley TF (2014) Is there a ?heat-or-eat? trade-off in the UK?, Journal of the Royal Statistical Society: Series A (Statistics in Society) 177 (1) pp. 281-294 Wiley
Do households cut back on food spending to finance the additional cost of keeping warm during spells of unseasonably cold weather? For households which cannot smooth consumption over time, we describe how cold weather shocks are equivalent to income shocks. We merge detailed household level expenditure data from older households with historical regional weather information. We find evidence that the poorest of older households cannot smooth fuel spending over the worst temperature shocks. Statistically significant reductions in food spending occur in response to winter temperatures 2 or more standard deviations colder than expected, which occur about 1 winter month in 40; reductions in food expenditure are considerably larger in poorer households.