Should social welfare provision be universal or means-tested?

 In Pension Systems, Welfare & Labour

Should social welfare provision be universal or means-tested? For many people, this question may seem easy to answer and the reason clear for all to see. To many, welfare should be means-tested because benefits should not be given to people who do not need them, that is, the rich and the well-off. According to this view, welfare should only be given to people who need them most, that is, the poor and the needy. Means-testing costs less public resources and wastes less. For a given budget, universalism means less for the poor while means-testing entails more for the poor. It appears that the case for means-testing is simple and cogent.


If the matter is really simple and clear-cut, then it is puzzling for the United Nations Research Institute for Social Development to advocate universalism for combating poverty and inequality in its 2010 report. What has been mistaken then?


The matter, as Nobel Laureate Amartya Sen points out, would be as simple as many assume if welfare beneficiaries are “unreacting”, “passive” and “languid” recipients waiting for their handouts, and if poverty is just a matter of income deprivation.


The matter would also be as simple if public policies are merely instrumental acts – neutral acts carrying no particular meanings except for bringing about desired social outcomes.


However, these three conceptions – on welfare beneficiaries, poverty and public policies respectively – are all mistaken.


On welfare beneficiaries, Sen reminds us that they are not “passive” recipients. They are instead active agents who “think, choose, act, and respond”. In particular, welfare recipients “act and react and fret and run in response to” policies combating poverty.


On poverty, since human beings are active agents, Sen emphasizes that poverty is not merely about income deprivation but about capability deprivation. Poverty should be understood as the lack of a minimum level of capabilities to lead a satisfactory life. Such capabilities range from being able to have adequate food, clothing and shelter to being able to take part in the life of the community and being able to appear in public without shame and so on. The important point is that not all the capabilities necessary for leading a life are readily convertible from incomes.


As regards public policies, there is an abundance of political science literature which points out that public policies are not only instrumental acts but also expressive acts – acts conveying powerful messages about how the state views people and how people view themselves as well as each other


That public policies convey powerful messages, welfare beneficiaries act in response to these messages and that poverty alleviation is about capability building rather than merely providing incomes are essential facts that render means-testing a wrong approach to combating poverty. It is a wrong approach not only because it is ineffective but it is self-defeating. It does more harm than good to the needy.


Means-testing conveys a couple of discrediting messages about welfare claimants. Firstly, means-testing requires potential welfare claimants to identify themselves as poor and to be seen as poor. This requirement is discrediting for a number of reasons.


In market-oriented societies, self-sufficiency and self-responsibility are highly valued. Notwithstanding the fact that the causes of poverty are actually diverse and multiple, involving such factors as socio-economic change, social and political injustice, lack of opportunities and hard luck and cannot be reducible to individual efforts, being in poverty is usually seen as the result of laziness, lack of thrift, not being able to cope in a competitive market or to stand on one’s own feet.


Within such a social context, being in poverty is widely viewed with suspicion, disapproval and hostility.


Secondly, to differentiate legitimate from fraudulent welfare claims, means-testing necessitates procedures of investigating and policing welfare claimants’ personal circumstances. Such investigation and policing can be very demeaning as all welfare claimants are seen as potentially fraudulent. This in itself is discrediting.


The two features above are inherent to any means-testing welfare programs. Consequently, to claim welfare from a means-testing welfare program amounts to a self-declaration of personal fault (for lack of thrift) or personal failure (not able to cope in the market), to admitting that one has to depend on society, and to exposing oneself to be seen as a potential criminal and to social contempt. All these are humiliating and demeaning.


It should also be noted that the discretionary power of welfare administrators to grant or refuse welfare claims amounts to the power to judge the deservingness of welfare claimants. This confers upon administrators a certain degree of moral authority over the claimants, which in turn is very likely to further invoke in claimants the feeling of inferiority and shame.


The damage inflicted by means-testing welfare programs on claimants’ self-respect is incalculable and must not be underestimated. It should be remembered that poverty is not merely about income deprivation but about capability deprivation – a lack of capabilities to lead a satisfactory life. Means-testing welfare programs, while empowering the needy in some aspects, disempower them in others. Such programs deprive the needy of their self-respect and dignity and hence their capability to appear in public without shame. They also relegate the needy to an inferior social status and hence their capability to take part in the life of the community.


In face of tight budgets, it is very tempting for policy makers to subscribe to the “full belly thesis” – that people do not eat self-respect in the context of extreme poverty – in order to dismiss the worth of self-respect and to justify the adoption of the means-testing approach.


To this defense of means-testing, we resort to the thesis of John Rawls, the great contemporary political philosopher, that self-respect is “perhaps the most important primary good”. For Rawls, self-respect is no less important than income or wealth.


The worth of self-respect also finds support in the research on welfare non-take-up – the phenomenon whereby eligible people do not claim their welfare entitlements. Means-testing programs have always been characterized by low take-up rates, and very low rates in some cases. In the UK, for example, some figures showed that means-testing program take-up rates rarely reached over 50%. Regarding the causes of non-take-up, studies found that “procedures for handling claims and claimants are humiliating or degrading”, “a fear of stigmatization” and “a feeling of degradation” were some of the important factors deterring eligible people from claiming their welfare entitlements. This indicates that not a few people do highly value self-respect and dignity.


That means-testing is a wrong approach to poverty removal nonetheless does not make a case for universalism. Additional arguments are needed. In this connection, it is useful to quote Richard Titmuss who founded the academic discipline of social policy. In his defense of universalism embodied in the post-WWII British welfare state, Titmuss explained the reason for adopting the principle:


“One fundamental historical reason for the adoption of this principle was the aim of making services available and accessible to the whole population in such ways as would not involve users in any humiliating loss of status, dignity or self-respect. There should be no sense of inferiority, pauperism, shame or stigma in the use of a publicly provided service; no attribution that one was being or becoming a ‘public burden.’”


Until a non-humiliating means-testing method is found, universalism remains a more positive and respecting approach for combating poverty.



George Cautherley (高德禮)

Hong Kong Democratic Foundation (香港民主促進會)

16 April 2016



A slightly different version of this article entitled “Should social welfare be universal or means-tested?” was published on “EJ Insight” <>, the English service of Hong Kong Economic Journal, on 18 April 2016: <>

A Chinese version of this article entitled “扶貧須經審查  必屬錯誤方案” was published in Hong Kong Economic Journal on 21 April 2016.





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