Microeconomics 14th Edition by James Gwartney ,Richard Stroup,Russell Sobel ,David Macpherson

Exercise 7

"Means-tested transfer payments reduce the current poverty rate. However, they also create an incentive structure that discourages self-sufficiency and self-improvement. Thus, they tend to increase the future poverty rate. Welfare programs essentially purchase a lower poverty rate today in exchange for a higher poverty rate in the future." Evaluate this statement.