Labeling and spending
Can labels lead to efficient spending?
Labeling money transfers for a specific purpose can influence how the recipient uses the money- a prime example being the “winter fuel payment” to seniors in the UK. Survey data on household fuel consumption has shown that individuals who received the payment spent between 10% and 57% more on fuel than those just below the age threshold. By labeling the payment as fuel money, spending is more likely to be directed towards the labeled purpose.