Consumer behaviour

This presentation was delivered as an 'IFS Public Economics Lecture', December 2010.

These slides were delivered at the ELSA Wave 4 launch, The Royal Society, London.

In recent months, there has been much speculation that the Winter Fuel Payment (WFP) will be abolished or restricted as part of the forthcoming programme of spending cuts. In this observation we contribute to this debate by summarising what the WFP does, and does not, achieve.

The September 2010 inflation numbers, used for the annual inflation adjustments to many taxes, benefits and tax credits, were published today by the ONS. In June, the Chancellor announced that benefits would be uprated with the Consumer Prices Index (CPI) rather than the Retail Prices Index (RPI) or Rossi Index from April 2011, claiming that the CPI provided a better measure of benefit recipients'

The Spending Review, to be finalised later this month, will provide detail regarding the large reductions in spending on public services that will be implemented over the next four years. The estimation of the distributional impacts of cuts in spending on public services is substantially more challenging than the estimation of the distributional impact of changes to taxation and the payment of cash benefits. For many reasons analyses of the former should be interpreted very cautiously.

Presented at a seminar in the Department of Economics at Royal Holloway University of London on 29 September.