Abstract

Is it more effective to reduce poverty among the elderly by increasing the benefits paid by the Supplemental Security Income (SSI) program or by increasing eligibility for the program? This paper answers that question from a policymaker's perspective. At given program cost levels, we compare the potential reduction in poverty from increasing benefit levels to the potential reduction associated with a variety of policy proposals that would increase eligibility for the program. This paper employs a microsimulation model containing an eligibility and benefits calculator, a participation model, and an optimization algorithm. The data are from the Survey of Income and Program Participation supplemented by the administrative records of the SSI program.

The results show that increasing eligibility by relaxing the restrictions of the means tests can be more effective in reducing poverty than raising benefit levels.