Microeconomics 13th Edition by Russell Sobel, David Macpherson, Richard Stroup, James Gwartney

Exercise 12

"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.