Social image concerns and welfare take-up

Using a laboratory experiment, we present first evidence that social image concerns causally reduce the take -up of an individual ly beneficial transfer. Our design manipulates the informativeness of the take- up decision by varying whether transfer eligibility is based on ability or luck, and how the transfer is financed. We find that subjects avoid the inference both of being low-skilled (ability stigma) and of being willing to live o f others (free- rider stigma). Using a placebo treatment, we exclude other explanations for the ob- served stigma effects. Although stigma reduces take-up, elicitation of political preferences reveals that only a minority of "taxpayers" vote for the public transfer.