Heat or eat? Cold weather income support programmes

This research aimed to examine: 

  • the effects of cold weather and high energy prices on the well-being of vulnerable households, specifically the elderly and low-income households; and
  • the efficacy of income transfer programs (the Winter Fuel Payment and the Cold Weather Payment) aimed at protecting the most vulnerable members of society against cold weather related shocks.

Older lady with thermostat

 

Researchers found that the name of the Winter Fuel Payment influenced how it was spent.

Researchers used household level expenditure survey data combined with price and atmospheric temperature data to identify household responses to unexpected temperature or fuel cost changes by comparing behaviour in such periods to behaviour in “normal” circumstances. 

Findings

  • Households receiving the winter fuel payment are almost 14 times as likely to spend the money on fuel than would have been the case had their incomes been increased in other ways;
  • But in very cold weather it remains the case that the poorest pensioners cut back on spending on food to finance the additional cost of heating their homes.

Contrary to the predictions of standard economic theory this suggests the name of a benefit has a significant influence how it is spent.

It also shows suggests that the poorest 25% of older households are cutting back on food spending to finance the additional cost of keeping warm during cold shocks.