How large are welfare’s work disincentives?

The conventional economic analysis of welfare programmes is based on the work disincentive issue. This has become a leading justification for recent discussions of welfare reform in the USA that emphasize getting recipients off the rolls and back into productive employment. The presumption is that recipients are rational and selfish agents, and that welfare is sufficiently attractive as to provide substantial work disincentives. Questions that view. This questioning is motivated by the surprisingly high attachment of welfare recipients to the labour force, and is based on the development of a more general framework for viewing the motivations behind economic behaviour. By allowing for diversity of personality types, we are led to a less pessimistic scenario regarding the possibility of designing a system with adequate benefits and without inappropriately high work disincentives.