Quote Originally Posted by Poopadoop View Post
Do economists model the fact if their money was cut off some proportion of those on benefits would become homeless people, and another proportion would become criminals? Or do they just assume they'd all become wage earners?
Yeah those are in the models, at least in ways. The main ones I've seen are showing effects on utility and labor/leisure trade-off depending on wages and subsidies. If somebody gets more utility from 24 hours of leisure and an income of 0 than he does of his next best option (which would be something like washing dishes part time for a low wage), then he'll take the 24 hours of leisure/0 income option. Most people, however, won't get more utility from the 0 income choice. And the guy who does get more utility from it, gets even more utility from 24 hours of leisure and a welfare check, which is why he takes the welfare check. For these guys, it is very likely that if they did not get that welfare check, they would get more utility by exchanging some of their 24 hour leisure for labor.

Those who legitimately get more utility from 24 hours of leisure and 0 income than if they decreased leisure and increased income are people with disabilities, like a quadriplegic or alzheimer's patient. Or they could be children or retirees. If you're able-bodied and able-minded, it would be VERY atypical to get more utility out of 24 hours of leisure and 0 income than <24 hours of leisure and >0 income.