The Yale Law Journal

January 2004

Offering an Invisible Hand: The Rise of the Personal Choice Model for Rationing Public Benefits

David A. Super
113 Yale L.J. 815 (2004)

The 1996 welfare law passed amidst promises to reduce welfare rolls without abandoning needy families. A strong economy, state work support programs, and the efforts of millions of low-income parents brought substantial reductions in the ranks of those eligible for cash assistance, but not enough to meet political demands. Major new restrictions on eligibility, apart from time limits and behavioral sanctions, were politically unacceptable and would not help states qualify for TANF's caseload reduction credit. In response, states have increasingly sought to induce eligible families to choose--or appear to choose--not to receive assistance.

Although claimants' choices have long played a role in the rationing of public benefits, recent efforts are far more sophisticated and pervasive. This marks a transformation of the basic structure of public welfare law as great as that of the legalistic revolution of the 1960s. Informal, choice-based rationing systems differ from their formal predecessors in their relative invisibility, their probabilistic, rather than absolute, restraint on program participation, and the ease with which numerous fairly junior officials may impose them.

Choice-based rationing could allow limited resources to be targeted more closely to need than formal eligibility systems. Unfortunately, many of the informal state rationing systems that have arisen have serious inefficiencies and inequities. Some of the supposed choices on which they rely are inauthentic or inappropriately coerced. Increasing transaction costs to discourage participation may destroy much of the value of the underlying benefit and disproportionately burden some of those most in need. The invisibility of these systems to senior policymakers, journalists, and the general public may prevent informed political debate about the distribution of public benefits. It may also provide the means for individuals to implement nefarious rationing agendas.

With eligibility rules no longer reliable guides to how extensively programs are responding to need, more careful analysis of program data is required. In addition, many of the inequities in choice-based rationing are susceptible to neither the administrative hearing process nor litigation. New advocacy techniques are needed to shape the incentives of the state and local officials who in turn shape the choices of public benefits claimants.