How labeling cash transfers increased the likelihood of spending it on intended goods by 38%

Intervention · Consumer Protection


In order for unconditional money transfers to be effective, governments have to ensure these benefits are used for their allocated purpose. In this study, researchers investigated whether labeling the Winter Fuel Payment increased the likelihood that recipients would spend it on household fuel compared to a neutral label. Data from The Living Costs and Food Survey from years before and after implementation of the Winter Fuel Payment was used to test the labeling effect. They found that labeling the cash transfer as “Winter Fuel” increased the likelihood it was spent on household fuel by 38%. 


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Rating = 5/5 (good ecological validity; thorough statistical analysis; careful selection of participants; controlled confounding effects)

Behavioral effects of labeling the UK Winter Fuel Payment
Received an unlabeled cash transfer Approximately 3% of the transfer was spent on household fuel
Received a labeled cash transfer Approximately 41% of the transfer was spent on household fuel

Key Concepts

Framing effects: the idea that our decisions are shaped by how options are presented to us. 

Mental Accounting: attributing value to money (or other goods) differently based on the mental category we assign it to. 

Labeling effect: when a person’s spending decisions are influenced by the label attached to money received. 

Winter Fuel Payment (WFP): an unconditional state pensioner benefit paid annually to cover additional winter heating costs to people over the age of 60 in the UK.

The Problem

Asking pensioners to return unnecessary benefits 

Government benefits play a significant role in inclusive growth and sustainable development of a country. The WFP is a social benefit that has been criticized for its unconditional nature - meaning it’s sent to all residents over 60.1,2 It's estimated that 80% of pensioners don’t need the benefit, yet £2.1bn was spent on the WFP in 2014/2015. To resolve this issue, pensioners who don’t need the allowance are encouraged to return it. However, only 400 out of 12 million recipients did so in 2015.3 One reason for why the money isn’t returned may be because it's spent on other goods. 

Ensuring benefits are spent on intended goods

As the COVID-19 pandemic continues to adversely impact economies, it has become even more important for governments to ensure funds are used efficiently. As unconditional cash transfers give the recipients autonomy on how to spend the money, legal means can not be used to control their spending decisions. This makes it more challenging to ensure that government benefits through unconditional cash transfers are used for their intended purpose. 


Acquiring fuel expenditure data

To get a comprehensive measure of household expenditure in the UK, the study used The Living Costs and Food Survey data from 1988-1996, and from 2000-2008. The survey consists of an expenditure diary in which every purchase is recorded over a two week period, and a questionnaire that records infrequently bought items. Information on fuel expenditure was derived from both the questionnaire and diary. The sample of households included was carefully selected to control for any confounding factors. 

Finding the labeling effect

It’s possible that an increase in fuel spending is observed due to an increase in income after receiving the WFP, and not a labeling effect. To test for the labeling effect, the researchers looked at the proportion of income that was spent on fuel. Generally, as our income increases we spend a smaller proportion of our total income on necessary goods (eg. food and utilities).The researchers also controlled for several other factors such as location, household size, education, and year.

The EAST framework

This study utilized the EAST framework, which outlines four ideals for policy makers to use when applying behavioral science. The framework suggests that a policy should be Easy, Attractive, Social, and Timely (EAST). Labeling is an easy change for the policy makers to implement and it makes the spending decision easier for the receiver. Adding a label to the transfer makes the purpose of the transfer more salient, which makes it more attractive for the receiver to spend money on its intended purpose. The label also brings in a social aspect to the transfer as it now gives a suggestion for the spending norm. If a money transfer is framed as “winter fuel”, the receiver is nudged into thinking this is what other receivers are probably spending the money on. Finally, the policy is timely since the payment is transferred during the winter months.

Results and Application

Labeling the WFP ensures that it’s spent on household fuel costs

After adding a label to the WFP, there was a significant increase in the proportion of money spent on household fuel, and an insignificant increase in spending on other goods.This indicates that the WFP was indeed spent on fuel instead of other necessary goods. More specifically, they found that the likelihood of a household spending the WFP on household fuel when the transfer was labeled was 41%, and with a neutral label it was 3%. This increase in the likelihood of spending the WFP on household fuel is attributed to the labeling effect.

Labels make unconditional money transfers more effective

The results of this research suggest that a simple label on unconditional cash transfers can influence how the money is spent. Labels can be used to incentivise spending on certain goods and services, while intentionally not having a label might be better suited for cash transfers intended to redistribute resources. 

Financial Services After being cooped up at home one lockdown after another, people are eager to spend. This is reflected in the recent increases in credit card debt.⁴ To encourage the repayment of credit card balances, debt can be labeled in a way that increases repayments on credit cards.⁵
Development & Social Protection Meeting savings goals can be especially challenging for low-income individuals and communities, as is reflected in the relatively lower savings rates in developing countries. Labeling savings can help direct people towards specific goals and increase savings.⁶ 
Education With rising college tuition fees more students are needing to take out loans to pursue higher education. However, there is concern that many students are loan averse and unwilling to finance college through borrowing. Not labeling financial options as loans can help reduce the fear some students have about borrowing.⁷


  • The results of this study provide useful information for the effective implementation of government benefits which can in turn benefit society as a whole.
  • The study uses results from surveys that are sent across the UK. As such, the participants are anonymous and inclusive. 
  • The researchers conducted a very thorough statistical analysis to ensure the validity of their findings. 

Does the intervention demonstrably improve the lives of those affected by it?
Room for Improvement
The intervention does not demonstrate how it could improve the lives of those involved.
Does the intervention respect the privacy (including the privacy of identity) of those it affects?
Survey respondents were not identified.
Does the intervention have a plan to monitor the safety, effectiveness, and validity of the intervention?
Room for Improvement
A plan for monitoring the safety, effectiveness or validity of the intervention is not mentioned.

Does the intervention abide by a reasonable degree of consent?
Survey responders are aware that the data can be accessed through the Office of National Statistics.
Does the intervention respect the ability of those it affects to make their own decisions?
Insufficient Information/Not Applicable
The intervention uses survey data.
Does the intervention increase the number of choices available to those it affects?
Insufficient Information/Not Applicable
The number of choices available do not increase as a result of this study.

Does the intervention acknowledge the perspectives, interests, and preferences of everyone it affects, including traditionally marginalized groups?
Room for Improvement
There is no mention of others' preferences.
Are the participants diverse?
Room for Improvement
The Living Costs and Food Survey is sent throughout the year to people across the UK. 
Does the intervention help ensure a just, equitable distribution of welfare?
The results can help governments implement more effective benefits packages.

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  1. Thurley, D., McInnes, R., & Kennedy, S. (2019). Winter Fuel Payments update (CBP-6019). House of Commons Library.
  2. Burstow, P. (2017, December 1). Let's end this old age care lottery. the Guardian.
  3. Rosenbaum, M. (2015, March 26). Winter fuel payment rejected by about 400 pensioners. BBC News.
  4. Konish, L. (2021, September 27). 42% of Americans have racked up more credit card debt since COVID-19 began. These tips can help get that under control. CNBC.
  5. Trudel, R., Blanchard, S. J., & Kettle, K. L. (2019). Labeling Debt as Ordinary versus Exceptional to Motivate Consumers to Increase Credit Card Repayments.
  6. Udry, C., Karlan, D., Kutsoati, E., McMillan, M., & McConnell, M. (n.d.). Savings account labeling and financial literacy training for Susu customers. The Abdul Latif Jameel Poverty Action Lab (J-PAL).
  7. Evans, B., Boatman, A., & Soliz, A. (2018). Framing and Labeling Effects in Preferences for Borrowing for College: An Experimental Analysis. Research in Higher Education, 60, 438-557.
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