To Claim or Not to Claim: Investigating Non-Take-Up of Welfare Schemes Targeting Hong Kong Older Adults and the Stigma Attached to Them

Abstract

This article investigates the unique contribution of specific programme characteristics together with personal stigma, stigmatisation by the public, and claims stigma, to the non-take-up of targeted income support among Hong Kong older adults. Drawing on data from a sample of 3,299 Hong Kong older adults aged 65 or above, we find that between 11-14 per cent of eligible participants did not receive cash transfers from Normal and Higher Old Age Living Allowance (OALA) and old-age Comprehensive Social Security Assistance (old-age CSSA). By combining mainstream economic analysis with attempts to quantify welfare stigma (Baumberg, 2016) we find that transaction costs were most consistently and strongly related to non-take-up of targeted income support; non-take-up of old-age CSSA and Higher OALA but not Normal OALA varied with welfare stigma after controlling for personal and household characteristics of study participants. This article further adds to the literature by examining the effect of recent reforms to asset- and means-tested benefits for the same target population of older adults on take-up in the East Asian context. The article suggests that automatic switching of beneficiaries from Normal OALA to Higher OALA effectively facilitated higher take-up of the latter. The policy implications of these various findings are discussed.

Introduction

Internationally, there has been a long debate regarding the non-take-up rate of targeted income support, commonly understood as a situation in which eligible individuals do not apply for benefits and, therefore, end up not successfully claiming them (Goedemé and Janssens, 2020). High non-take-up implies that targeted income support programmes risk not serving their primary purpose (namely, alleviating poverty), and contribute to exclusion errors and unjustified disparities among eligible social groups (Hernanz et al., 2004; Dubois and Ludwinek, 2014). Non-take-up of welfare schemes by older adults, specifically, may increase public expenditure in the long run as it goes hand in hand with poor health, which increases the future costs of healthcare and long-term care (Dubois and Ludwinek, 2014). The stigma attached to welfare receipt has been identified as one of the causes of non-take-up alongside other programme, personal, and household characteristics (Stuber and Kronebusch, 2004; Baumberg, 2016). The literature on targeted income support has been extended to include low- and middle-income countries (Roelen, 2020) and cautioned against universalistic broad-brush discussions of welfare stigma across “time, place, culture, and stage of economic development” (Yang and Walker, 2020:564).

In 2019, 32% of Hong Kong older adults aged 65 years or above lived in poverty using the official poverty line adopted by the Hong Kong Government – namely, half of the median household income adjusted by household size (Hong Kong SAR Government, 2020). Without a social insurance programme in place, the Hong Kong government has relied on zero pillar retirement pensions which provide either means-tested or universal, regularly tax-funded, government-provided, non-contributory cash transfers (Kühner and Chou, 2019). Historically, non-take-up in Hong Kong has been high, which led the Hong Kong government to introduce several measures to relax the eligibility criteria for the oldest targeted income support scheme for Hong Kong older adults, the Comprehensive Social Security Assistance (CSSA), and a new scheme, the Old Age Living Allowance (OALA), which was subsequently adjusted to contain a higher and lower tier – namely, Higher OALA and Normal OALA.

No study to date has systematically examined the impact of these policy changes on the take-up rate or the welfare stigma attached to these schemes in the local Hong Kong context. To fill this research gap, we analyse the take-up rates of Normal OALA, Higher OALA, and old-age CSSA among Hong Kong older adults defined as aged 65 and above. Subsequently, we assess which programme characteristics and welfare stigma factors contribute to the non-take-up of these targeted income support schemes after controlling for personal and household characteristics. Theoretically, most previous studies on take-up of welfare schemes focused on a limited number of factors and failed to cover the stigma attached to different benefits for the same target population alongside more mainstream economic explanations. Indeed, to our knowledge, few studies have examined programme characteristics, welfare stigma and their impact on non-take-up of means-tested schemes targeting the same population within the East Asian context (but see Li and Walker, 2018 for an ethnographic comparison of two social assistance schemes in rural South-Central China). In doing so, we identify several policy implications to improve take-up by reducing welfare stigma and additional barriers identified in the specific programme structures of Normal OALA, Higher OALA, and old-age CSSA, but also for targeted income support for older adults more generally.

Targeted Income Support for Hong Kong older adults

The cash welfare schemes for older adults in Hong Kong are aimed at reducing poverty in old age and address the coverage gap due to an immature contributory scheme – namely, the Mandatory Provident Fund (MPF) scheme, which was first implemented in the year 2000. The MPF, an employment-based and privately managed plan, involves compulsory savings through individual accounts, requiring employees to contribute 5% of their monthly salary, which their employers match. One major shortcoming of the MPF is that it needs 30 to 40 years to mature, so its capacity for reducing elderly poverty is still minimal for those who retired in the last 20 years and for those who will be retiring in the coming 10-20 years. Moreover, due to its low contributory rate, the accumulated MPF savings are insufficient for retirement security among low-income workers, and the MPF does not cover homemakers.

In 2013, the Hong Kong Government addressed the persistent economic hardship of a large share of its older adults by introducing the Old Age Living Allowance (OALA), a tax-funded, means-tested social pension programme for those aged 65 and older. Next to the universal Old Age Allowance (OAA), which is a universal scheme for those aged 70 and above, OALA became the second targeted income support scheme alongside old-age Comprehensive Social Security Assistance (CSSA) which since its introduction in 1971 served as the primary social safety-net for Hong Kong older adults (Commission on Poverty, 2017). In the financial year 2017–18, these three schemes covered approximately 70.7% of the aged population in Hong Kong – 11.4% by the CSSA, 39.3% by the OALA, and 20.1% by the OAA – and the recurrent expenditure on the three programmes for older people was HKD 31.7 billion (approximately USD 4.09 billion), representing about 8.5% of total recurrent government expenditure (Commission on Poverty, 2017).

In December 2015, Hong Kong entered a hot debate on pension reform due to a six-month public engagement exercise proposed by the Government. The main controversy was polarised between two potential paths for future development of retirement pensions: a universal or a means-tested one (Commission on Poverty, 2015). After the consultation, the Government decided not to introduce a new universal pension but instead to strengthen the existing pillars in the retirement income protection system. In her 2017 Policy Address, the Hong Kong Chief Executive announced three measures to maintain OALA and old-age CSSA. In February 2017, the Hong Kong government abolished the arrangement whereby family members had to declare that they provide no financial support to the elderly applicant for the old-age CSSA (the so-called “bad son statement”). In May 2017, the Hong Kong government raised the asset limit for OALA. Finally, in April 2018, a higher tier of assistance under OALA was introduced (the so-called ‘Higher OALA’), with a higher monthly allowance but with stricter asset limits (SWD, 2018).

As part of the first phase of the application process for the newly introduced income support, the Social Welfare Department (SWD) issued a notification letter (“green”) to Normal OALA recipients who, according to the SWD’s records, met the monthly income and asset limits of the Higher OALA. Individuals receiving this notification letter were automatically switched to the Higher OALA and received the higher benefit levels without having to make a new application. If notified individuals opted not to switch to the Higher OALA because their income or assets exceeded the stipulated limits, they had to complete a reply slip and send it back to the SWD. Furthermore, in the second phase, SWD issued a second notification letter (“yellow”) to Normal OALA recipients who were not eligible for the Higher OALA according to the SWD’s records but were invited to apply for the Higher OALA once they met the asset- and income-limits by completing an attached application form. In a subsequent third phase, Hong Kong older adults who were not receiving Normal OALA could make an application for the Higher OALA by completing the form themselves and sending it to the SWD.

To summarise, cash welfare programmes for Hong Kong older adults are conceptualised as the zero pillar according to the World Bank’s framework of pension systems (World Bank, 2005) and place OAA and old-age CSSA on opposite ends of the universalism-targeting spectrum with Normal OALA and Higher OALA in-between (see Table 1). Among three targeted welfare schemes, Normal OALA features the least stringent eligibility criteria, followed by Higher OALA and old-age CSSA; the old-age CSSA benefit level depends on health and other needs of the individual claimant, but are generally more generous than those for Higher OALA and Normal OALA. Despite abolishing the “bad son statement”, asset and income limits of old-age CSSA continue to be assessed based on the information provided for the individual claimant and all members of the household they live in. In 2010, old-age CSSA take-up was found to be 57.1% in a survey of 541 eligible Hong Kong older adults (Oxfam and Policy 21, 2010), placing historical take-up rates among Hong Kong older adults towards the lower end of international comparisons of targeted welfare programmes estimated to range from 40-90% in the United States (Plueger, 2009) and 40-80% in Europe (Hernanz et al., 2004).

Table 1. Social security for older Hong Kong adults ¹

Note.

¹ All rates as of 1/2/2022

² Various additional supplements (long-term, community living, transport, residential care, etc.) and special grants exist.

Theoretical Framework of Welfare Take-up

According to the model of economic rationality, the choice of participating in a targeted income support scheme largely depends on the needs of potential recipients and the extent to which these needs are met by the benefits offered (Ratcliffe et al., 2008). Besides, information costs include the time and effort required to gather information on existing schemes, determine complex eligibility rules, understand the application procedure, and ascertain enrolment and payment sites (Bhargava and Manoli, 2015). Studies using a randomised-controlled experimental design have demonstrated that take-up can be increased by reducing information costs (Bettinger et al., 2009). Besides, transaction costs relate to the time and effort spent in the claiming process, such as filling in forms, preparing documentation, and understanding reporting rules. Alongside the length of recertification (Burstein et al., 2009), transaction costs have been shown to contribute to the non-take-up of benefits (Brodkin and Majmundar, 2010), while the frequency of outreach to potential beneficiaries by case workers positively impacts take-up rates – in particular, if designed as language-specific or multi-mode programmes (Kincheloe et al., 2007; Ratcliffe et al., 2008).

Consequently, our first hypothesis (Hypothesis 1) leads us to expect that the above programme factors – namely, lower perceived sufficiency of benefit amounts, more significant perceived difficulties in the application procedure, information costs and transaction costs – are positively associated with the non-take-up of targeted income support schemes among eligible Hong Kong older adults – namely, Normal OALA, Higher OALA, and old-age CSSA, respectively.

In his classic work, Moffitt (1983) argued that welfare benefit take-up is not exclusively dependent on financial cost-benefit analyses but is also linked to the stigma attached to welfare benefit receipt. Several studies have since documented the relationship between welfare stigma and non-take-up of targeted income support (Kayser and Frick, 2001; Aizer and Currie, 2004; Nicoll, 2015). The stigma associated with participation in welfare programmes might be considered an outward sign of personal failure or laziness as a consequence of public discourse about poverty and welfare programmes (Somers and Block, 2005). However, stigma covers a range of feelings such as shame to be associated with welfare recipients, fear of losing others’ respect, resistance to providing personal information on subjects like assets and income as well as fear of humiliating treatment in the process of claiming benefits (Van Oorschot, 1994).

Empirical studies have measured welfare stigma in different ways: for instance, by using proxy measures of labour force participation or the number of relatives or friends who receive welfare benefits; by survey questions measuring attitudes to welfare and welfare recipients (Stuber and Kronebusch, 2004); or comments regarding “pride,” “charity,” or an unwillingness to visit the “welfare office” (Burstein et al., 2009). Inconsistent definitions and measurements of stigma have been identified as one of the major reasons why it has remained difficult to draw firm conclusions about how stigma operates in participation decisions (Nicoll, 2015).

In one recent research, welfare stigma was conceptualised in three ways: “personal stigma” was defined as an individual’s feeling that claiming benefits reflects a degraded identity; “stigmatisation by the public” referred to the claimant’s perception that other individuals consider welfare recipients less worthy; and “claims stigma” captured a person’s feeling of shame during the application process (Baumberg, 2016). Personal stigma, also known as “identity stigma,” is associated with concerns of personal humiliation as welfare recipients tag themselves as people who have lost their pride and dignity (Fothergill, 2003). Stigmatisation by the public, also referred to as “social stigma,” is understood as benefit recipients’ fear of being perceived as lazy, dishonest, and morally weak because of the social belief that they are undeserving (Gilens, 1999). Claims stigma, also called “treatment stigma,” captures the extent to which benefit recipients are exposed to a perceived hostile environment when dealing with eligibility caseworkers (Cloward and Piven, 1993).

The degree of stigma attached to welfare benefit receipt has depended on the design of income support policy (Stuber and Kronebusch, 2004). Schemes that are more targeted, less contribution-based, less generous, and more conditional are generally found to be more stigmatised (Larsen, 2006). Our second hypothesis, therefore, is that in Hong Kong, the stigma attached to welfare receipt – namely, personal stigma, stigmatisation by the public, and claims stigma – should be more pronounced for targeted income support schemes with stricter means and asset tests – namely, old-age CSSA, followed by Higher OALA and Normal OALA (Hypothesis 2). Our Hypothesis 3 is that the unique effect of personal stigma, stigmatisation by the public, and claims stigma should also be most pronounced for old-age CSSA, followed by Higher OALA and Normal OALA in Hong Kong. Default enrolment is commonly found to be effective in increasing take-up rates of welfare benefits by reducing information and transaction costs (Currie, 2004). Besides testing these hypotheses, we are therefore particularly interested to explore whether the use of notification letters (“green” and “yellow”) and the automatic switching of eligible individuals from Normal OALA to Higher OALA had any identifiable impact on take-up-rates and the explanatory power of transaction costs, information costs, and welfare stigma in the specific Hong Kong context.

Methods

Sources of data

This study involves a cross-sectional household survey in which 3,299 Hong Kong Chinese older adults aged 65 or above were randomly selected using the sample frame provided by the Hong Kong Census and Statistics Department (CandSD). Although this is the most up-to-date, complete, and authoritative sampling frame available in Hong Kong, the sample is not representative of older Hong Kong adults. A two-stage stratified sample design was adopted, with records in the frame of quarters first stratified by geographical area and type of quarters: for the first stage, a random sampling of quarters was selected; for the second stage, one of the household members aged 65 years or above was invited for an interview, using the last birthday method. During the period between January and September 2020, part-time interviewers conducted face-to-face interviews with all participants in their homes between January and September 2020. Participants were not interviewed within the residential care home sector, which remains underdeveloped in Hong Kong. According to official statistics merely eight percent of Hong Kong adults lived in homes for the aged and hospitals, whereas the vast majority lived with their spouse (54%) or wider family (20%) (Legislative Council Secretariat Research Office, 2021). Ethical approval for the research was obtained from the Human Research Ethics Committee (HREC) of the Education University of Hong Kong (HREC number 2015-2016-0324).

Take-up rates

Eligibility for old-age CSSA, Higher OALA, and Normal OALA was determined based on household income, assets, and household size. Participants were asked to report their exact income in the past month from several sources, including wages, pensions, rents, investments, transfers from family members (especially adult children) or friends, and government assistance (CSSA, OALA, OAA, other). Participants’ assets were further assessed by asking them to report their possessions in several asset categories, including cash and savings; stocks, bonds, and funds; property they did and did not occupy; local and overseas businesses. The acquired information was used to compute whether the participants’ household income was below half of the median by household size, i.e., below the official Hong Kong poverty line, and whether their assets were below the asset limit for old-age CSSA, Higher OALA, and Normal OALA, respectively.

To determine participants’ eligibility for and take-up of welfare schemes is difficult and involves a substantial degree of measurement error (Bruckmeier et al., 2021). It is particularly problematic regarding those who are “near eligible” (Shaefer and Gutierrez, 2013). Therefore, a “near eligible” category was created for those whose asset or income level was less than 105% of the threshold. We also directly asked if participants are eligible for Old-age CSSA, Higher OALA, and Normal OALA. If they did not know the criteria, the interviewer would explain them in detail. In cases where older adults lived with their children and were unaware of their household’s financial situation, interviewers referred to family members who could answer these items.

Independent Variables

Perceived insufficiency of benefit amounts for old-age CSSA, Higher OALA, and Normal OALA was measured by a single-item indicator on a 5-point scale ranging from 1 (fully sufficient) to 5 (fully insufficient). Similarly, perceived difficulty in the application procedures was measured by asking participants whether it would be difficult to apply for each of the targeted income schemes on a 5-point scale ranging from 1 (very easy) to 5 (very difficult). Information costs were measured by eight items on a five-point scale ranging from 1 (little) to 5 (much), capturing: the perceived time and effort invested in searching the benefit amounts; eligibility criteria; details of the application procedure; and the location of office sites. The scores were averaged with higher scores indicating higher perceived information costs. Transaction costs were measured by asking participants’ agreement to eight statements on a 5-point scale ranging from 1 (strongly disagree) to 5 (strongly agree). Examples were “It is not worth the hassle to apply for the CSSA (OALA)”; “The application for the CSSA (OALA) is long and complicated”; “It is hard to get the documents needed to apply for the CSSA (OALA)”; “The opening hours of the CSSA (OALA) office are not convenient”; and “It is difficult to get to the CSSA (OALA) office” (Stuber and Kronebusch, 2004). All scores were averaged, with higher scores indicating higher perceived transaction cost.

Personal stigma was measured by asking participants, “How much do you agree or disagree that people should feel ashamed to claim CSSA (OALA)?” in random order. Participants responded on an 11-point scale ranging from 0 (“strongly disagree”) to 10 (“strongly agree”). Stigmatisation by the public and claim stigma were assessed by asking participants, “How much do you think people in general in Hong Kong would agree or disagree that people should feel ashamed to claim CSSA (OALA)?,” and “People are generally treated with respect when they claim CSSA (OALA)?” using the same response categories as for personal stigma. Besides “ashamed”, we also used alternative terms reflecting weaker stigmatisation (i.e. “embarrassed”, “looked down upon”, and “lack of respect”) and calculated average scores with higher scores indicating higher perceived personal stigma, stigmatisation by the public, and claim stigma, respectively (Baumberg, 2016).

The impact on take-up decisions of the abolishment of the “bad son statement” for old-age CSSA and raising the income and asset limit for Normal OALA were collected for eligible participants, on an 11-point scale ranging from 0 (“no impact at all”) to 10 (“great impact”), respectively. We further asked participants who received the Higher OALA how they applied for it: through “green letter”; “yellow letter”; or completing the application forms independently after June 2018. We tested the impact of default enrolment on receiving the Higher OALA by observing how take-up rates varied among these three groups of potential recipients.

Covariates

To control for personal and household characteristics that were found to be associated with the probability of welfare benefit take-up in the literature (Fuller-Thomson and Redmond, 2008; Burstein et al., 2009; Purtell et al., 2012), demographic and socioeconomic variables including age, gender, marital status, education, and employment status were collected. We also included in our models several measures to control for variation in health needs, such as self-reported health, chronic illness, pain, and activities of daily living (ADL). Finally, besides their household size, participants were asked how much they spent on a list of items in the past month, including rent, utilities, food and transportation, and educational payments for children, to calculate whether their household expenditure was below half of the median by household size (1 = “yes” or 0 = “no”). A full list of operationalisations and descriptive findings of these covariates is available from the authors upon request.

Analysis

First, we used descriptive statistics to present sample characteristics and take-up rates of Normal OALA, Higher OALA, and old-age CSSA by dividing the number of participants who successfully claimed the benefit by the number of those who were eligible. Second, we computed bivariate analysis of three types of welfare stigma (personal stigma, stigmatisation by the public, and claims stigma) across the three targeted income support programmes for Hong Kong older adults to identify which of them are the most stigmatizing. Third, we performed a set of multivariate logistic regression models (one each for Normal OALA, Higher OALA, and old-age CSSA) to examine the unique contribution of programme factors and welfare stigma on the non-take-up rate of eligible participants after controlling for personal and household factors. For the models of old-age CSSA, only participants who were eligible for the CSSA were included (n = 1,094). Similarly, for the model of higher OALA, only those who were eligible for Higher OALA, but not CSSA (n = 1,106), and for the model of Normal OALA, only those who were eligible for Normal OALA, but not Higher OALA (n = 1,099) were included. All variance inflation factor (VIF) values of the independent variables were lower than the standard cut-off threshold of 10.0, suggesting that our models did not suffer from multicollinearity (Hair et al., 1995). We performed all data analysis and management tasks using SPSS Statistics 26 (IBM Corp, 2019).

Results

Sample Characteristics

There were more female than male participants in our study sample; the mean age of participants was just over 70 years; more than 90% of all study participants were not economically active (see Table 2). The percentage of married participants was considerably higher among those eligible for Higher OALA (72%) compared to those eligible for old-age CSSA (28%) and Normal OALA (39%). The educational level was lower among those eligible for old-age CSSA, with only 9% reaching secondary level or above. All the participants who qualified for old-age CSSA (100%) indicated that there were no employed persons in their households. The average household expenditure adjusted by the number of persons in the household was highest among those eligible for Normal OALA (HK$10,267), followed by those eligible for Higher OALA (HK$9,482), and old-age CSSA (HK$4,912).

Table 2. Descriptive characteristics of study participants

Take-up rates

From the 1,094 participants who were eligible for old-age CSSA, 950 received the benefits resulting in a take-up rate of 86.8% (C.I. = 84.8%, 88.8%) (see Table 3). Among the 1,250 participants who were eligible for Higher OALA, but not old-age CSSA, 1,115 participants received the benefit with a take-up rate at 89.2% (C.I. = 87.5%, 90.9%). Among the 1,234 participants eligible for Normal OALA but not Higher OALA, 947 participants received the benefits with a take-up rate of 77.0% (C.I. = 74.7%, 79.4%). The findings show that the take-up rate of Higher OALA was greater than the take-up rate of Normal OALA and old-age CSSA, respectively.

Table 3. Welfare take-up and non-take-up rates of study participants

Bivariate analysis among stigma factors

Of those participants who were eligible for Normal OALA, those who did not receive the benefits perceived significantly greater personal stigma (t (1,097) = 2.06, p = .041) and greater claim stigma (t (1,097)=3.79, p<.001), as compared to those who received the benefits of Normal OALA. However, there was no significant difference in stigmatisation by the general public between those who received and did not receive Normal OALA (see Table 4). Of those participants who were eligible for Higher OALA, those who did not receive the benefits perceived significantly greater personal stigma (t(1,104)=45.58, p<.001), greater stigmatisation by the general public (t (1,104) = 37.27, p < .001), and greater claim stigma (t (1,104) = 23.86, p < .001) as compared to those who received the benefits of Higher OALA. Finally, of those participants who were eligible for old-age CSSA, those who did not take up the benefits reported significantly greater personal stigma (t (1,092) = 20.56, p < .001), greater stigmatisation by general public (t (1,092) = 27.35, p < .001), and less claim stigma (t (1,092)=-6.61, p<.001) compared to those who received the benefits of old-age CSSA. The findings show that the perceived welfare stigma among those who did not take up the benefits was greatest for old-age CSSA, followed by Higher OALA and Normal OALA. Claim stigma was particularly high among participants who received old-age CSSA (mean = 6.53), whereas personal stigma was the lowest among recipients of Higher OALA (mean = 1.63).

Table 4. Bivariate analysis of stigma factors of targeted welfare schemes

Note. Significance levels: * p < 0.05, ** p < 0.01, *** p < 0.001.

Multivariate logistic regression analysis

Starting once more with the least ‘stigmatised’ of the three asset- and means-tested benefits, of those participants who were eligible for Normal OALA, compared with those who received the benefits of Normal OALA, participants who perceived that the application procedure was complex (OR = 2.34, p <.001) and higher transaction costs (OR = 31.48, p <.001) were less likely to take up the benefits. The perceived impact of raising the income and asset limit on take-up decisions was statistically significant (OR = 1.18, p <.01) after controlling for all other variables in the model. However, none of the welfare stigma factors, i.e., personal stigma, stigmatisation by the general public, and claim stigma, were related to higher non-take-up among participants eligible for Normal OALA. The impact of raising the income and asset limit remained statistically significant once all welfare stigma factors were included in the model specification (see Table 5).

Table 5. Logistic regression analysis of non-take-up of targeted welfare schemes

Note. Dependent variable: 0=take-up; 1=non-take-up. Covariates included, but not reported: gender, marital status, education level, employment status, self-rated health, chronic illness, pain, activities of daily living (ADL), household size, household expenditure poverty. Full model and descriptive figures of all controls is available from authors upon request. Significance levels: * p < 0.05, ** p < 0.01, *** p < 0.00.

Of those participants who were eligible for Higher OALA, compared with those who received the benefits of Higher OALA, participants who perceived that the benefits were insufficient (OR = 8.15, p <.001), the application procedure was complex (OR = 2.81, p <.01), higher transaction costs (OR = 10.75, p <.001), personal stigma (OR = 3.81, p <.001), and stigmatisation by the general public (OR = 2.92, p <.01) were less likely to take up the benefits. Participants who perceived greater claim stigma (OR = 0.44, p <.05) were more likely to take up the benefits. Finally, of those participants who were eligible for old-age CSSA, compared with those who received the benefits of old-aged CSSA, participants who perceived that the benefit amount was insufficient (OR = 2.55, p <.01), the application procedure was complex (OR = 4.37, p <.001), required much time and effort in searching information (OR = 2.07, p <.05), higher transaction costs (OR = 95.14, p <.001), personal stigma (OR=2.86, p <.001), stigmatisation by the general public (OR = 3.52, p <.001), and claim stigma (OR = 2.12, p <.001) were less likely to take up the benefits after personal and household characteristics were controlled for. The impact of the “bad-son statement” was not statistically significant once all welfare stigma factors were included in the model specification.

Discussion

After rejecting the idea of introducing a new universal pension, the Hong Kong government decided to reinforce asset- and means-tested welfare schemes for older persons to tackle the high elderly poverty rate. However, the historically low take-up rate reduced the effectiveness and efficacy of the income support schemes, aiming to alleviate old-age poverty. This current study is the first to investigate the take-up rate of Normal OALA, Higher OALA, and old-age CSSA among Hong Kong older adults and analyse impact of programme specific characteristics and the stigma attached to them after controlling for personal and household characteristics of our study participants. This study sheds light on how to improve take-up of welfare benefits, helping policymakers devise and implement measures that can boost it. For instance, barriers identified in programme factors, especially transaction costs, or due to the psychological burdens caused by welfare stigma could be removed or reduced.

Compared with the previous literature on welfare benefit take-up in Hong Kong, our findings suggest that the take-up rate of old-age CSSA has increased from 57.1% to 86.8%. Indeed, this current study found that the take-up rates of Normal OALA, Higher OALA, and old-age CSSA are high in international comparison (> 85%) after the reform process that occurred in Hong Kong during the 2010s. The increase in the take-up rate of old-age CSSA may be partly explained by the abolishment of the “bad son statement”; however, although the perceived impact of this policy measure was more significant for those participants who did not receive old-age CSSA than for those who received it, this impact was not high, about 4 out of a scale from 0-10, and not statistically significant once all welfare stigma factors were included in model specifications. The perceived impact of increasing income and asset limits for Normal OALA were linked to higher non-take-up irrespective of our model specification. This result may suggest that the Hong Kong government’s decision to introduce a higher tier of assistance under OALA (“Higher OALA”) with a higher monthly allowance and stricter asset limits might have resulted in lower take-up. However, our findings suggest that Higher OALA had the highest take-up rate among all targeted income support programmes (89.2%), followed by old-age CSSA (86.8%) and Normal OALA (86.2%).

Nevertheless, our findings suggest a relatively large distance in the perceived welfare stigma attached to Normal OALA compared to Higher OALA and old-age CSSA. This finding is in line with our Hypothesis 2, which stated the stigma attached to welfare receipt should be more pronounced for targeted income support schemes with stricter means and asset tests. The finding that welfare stigma remains comparatively high among those eligible for old-age CSSA, but fail to receive it, is in line with previous studies on the social safety net in Hong Kong (Chung, 2010). For the first time, this current study adds to the literature that Higher OALA is more stigmatising than Normal OALA. These findings suggest that the linkages between targeted income support and welfare stigma in Hong Kong are broadly comparable to those identified in Mainland China after its marketisation turn (Chen et al., 2017; Yang and Walker, 2020). At the same time, they highlight that the particular policy context needs to be considered for more detailed analyses within the East Asian context.

Particularly, we suggest that the discrepancy between the take-up rates and stigma attached to old-age CSSA, Higher OALA, and Normal OALA can be partly explained by the Hong Kong government’s use of default enrolment to Higher OALA via the use of the “green” and “yellow” notification letters. Our analysis revealed that of those who received Higher OALA, 54.0% received the “green letter”, 37.2% received the “yellow letter”, and only the remaining 8.8% applied independently after June 2018. This government action effectively increased take-up rates of Higher OALA while also reducing the personal stigma attached to Higher OALA. More generally, default enrolment draws on existing administrative data to identify individuals who meet the eligibility criteria for a particular welfare scheme and, importantly, shifts the administrative burden of completing applications from eligible older adults to the Government.

More generally, the perceived insufficiency of the cash benefits, difficulties in the application procedure, and transaction costs were significantly associated with the non-take-up of income support among Hong Kong older adults. These findings confirm our Hypothesis 1, albeit with some caveats regarding the expected impact of higher information costs on non-take-up among participants eligible to Higher OALA and Normal OALA, likely due to the specific context of shifting the completion of applications from eligible older adults to the Government via the process of automatic enrolment. Transaction costs were most strongly related to non-take-up across all targeted income support schemes, particularly non-take-up of old-age CSSA. Therefore, to further increase take-up rates of old-age CSSA, policymakers should consider decreasing the complexity of application procedures and transaction costs besides enhancing the perceived sufficiency of the benefits for potential welfare beneficiaries. A large-scale survey should estimate the minimal amount of money needed for Hong Kong older adults using a budget approach.

Given the complexity of the zero pillar retirement pensions as a result of a period of “institutional layering” since the introduction of OALA in 2013, a reduction of transaction cost could be achieved by integrating the different income support schemes into one programme with one set of rules, eliminating the need to apply for multiple programmes. Although the Hong Kong Government did not deliberately intend to make the system more complicated, programme simplification would make the application process more manageable. For instance, individuals could fill out just one form to apply for multiple schemes. Integration of targeted income support would also simplify communication with potential beneficiaries and allow the Hong Kong government to streamline marketing messages such as moving the programme’s framing for the whole population of Hong Kong older adults instead of only for the poor, reducing the psychological costs of participation.

To reduce the difficulties in the application procedure for old-age CSSA and information costs associated with it, one might suggest that online access to programme application materials could make it easier for potential applicants (or their family members) to determine if they are likely to be eligible and what documents they need to provide. Specifically, online access could allow potential applicants to perform a preliminary check of their eligibility after entering some basic information about their household size, income, and assets. Ideally, such an online application system could also be combined with a phone interview with an eligibility worker to complete the application if necessary. An online system could also enable direct upload of verification documents, thus removing the requirement to mail or deliver verification documents to the programme office. Of course, these potential merits of an improved online information and application system would have to be carefully weighed against the real possibility that it could further exclude some older Hong Kong adults with limited digital literacy or lacking access to appropriate IT equipment and internet access. Caution is especially warranted considering the available evidence that suggests personal computer and internet use among older adults in Hong Kong has been significantly lagging behind liberal welfare regime types such as the United States, United Kingdom, and Australia (Kwong, 2015). In other words, the Hong Kong government would be well advised to assert greater efforts to bridge the existing ‘grey digital divide’ first (Morris, 2007), which would also be in line with its more general vision to position Hong Kong as a leading ‘smart city’ in East Asia.

Besides these programme factors, our findings established a link between welfare stigma and non-take-up of old-age CSSA and Higher OALA, but not Normal OALA. In other words, our Hypothesis 3 is only partially confirmed. Particularly striking is the high degree of perceived claim stigma among current recipients of old-age CSSA in Hong Kong. This finding suggests that Social Welfare Department (SWD) staff could be retrained to ensure that older Hong Kong applicants are treated with dignity and respect, thus reducing the perceived claims stigma of old-age CSSA recipients. Our results suggest a relatively strong net effect of perceived stigmatisation by the public on non-take-up of old-age CSSA. In addition, political and media rhetoric could become less stigmatising if mass media and politicians could change how to report and communicate with people receiving those welfare benefits (for similar findings for the UK case, see: Baumberg et al., 2012).

Further measures could be developed and implemented to reduce the stigma associated with old-age CSSA and enhance its accessibility. One possibility to “destigmatise” old-age CSSA might be to delink it from other user groups of CSSA such as, for example, the unemployed, which the Government and the local media have held up as examples of an eroded work ethic and a declining spirit of self-reliance (Chan and Chan, 2013). The requirement that older adults who apply for the old-age CSSA scheme must do so on a household basis could be eliminated to avoid situations where families may reject an elderly individual’s application because they want to avoid the associated personal stigma (Chiu and Ko, 2011).

Our findings also show that perceived insufficiency of the benefits and transaction costs are essential correlates of non-take-up of Higher OALA, and only personal stigma and stigmatisation increase non-take-up of Higher OALA, but not claim stigma. On the other hand, transaction cost was the strongest predictor of non-take-up of normal OALA and followed by difficulties in the application procedure. The perceived insufficiency of the benefit, information costs and stigma-related factors are not significantly associated with non-take-up of Normal OALA. Based on these findings, we recommend that measures similar to old-age CSSA should be devised and implemented to increase the benefit amount for Higher OALA by reducing its transaction costs as well as the stigma associated with it. At the same time, policies must be designed and implemented to decrease the transaction cost of Normal OALA further.

Limitations

This current study used cross-sectional data and was not able to establish causality among welfare stigma and non-take-up. As mentioned previously, our sample is not a representative sample of older adults aged 65 and older in Hong Kong because our target populations were those who are eligible for Normal OALA, Higher OALA, and old-age CSSA, respectively. Lastly, while most of our findings are in line with our theoretical expectations or can be explained by referring to the specific policy context of the Hong Kong case, some unresolved questions remain, which might be addressed in a follow-up study, possibly using a more qualitative research design to gain a deeper understanding of the experiences and decision-making processes of Hong Kong older adults eligible to targeted income support. A more inductive approach to arrive at a conceptualisation of the context-specific linkages between targeted income support, welfare stigma, and Confucian ethics for various groups of beneficiaries promises to be particularly fruitful in Hong Kong, which as a leading global city within contemporary China, uniquely combines Eastern and Western attributes. Also, subsequent quantitative analyses might consider how specific needs, including material deprivation or health status, may moderate or mediate the links between welfare stigma and non-take-up old-age CSSA, Higher OALA, and Normal OALA observed in our analysis. For instance, such investigations would shed light on why the perceived degree of welfare stigma among recipients of Normal OALA and its statistical impact on non-take-up is so different from those eligible for Higher OALA.

Conclusion

Raising the take-up of targeted income support programmes presents an opportunity for policymakers to more efficiently alleviate the economic hardship of older adults while recognising their substantial contribution to economic progress during their working adult lives. For Hong Kong specifically, programme, personal and household factors besides welfare stigma were found to be associated with non-take up of Normal OALA, Higher OALA, and old-age CSSA to varying extent. At the same time, the recent use of processes of auto-enrolment produced encouraging results. In June 2022, the Social Welfare Department (SWD) announced a merger of the Normal OALA and Higher OALA, which will be implemented in September 2022. The merged OALA will adopt the more relaxed asset limits of the Normal OALA and the higher payment rate of the Higher OALA, while the monthly income limits will remain unchanged. Based on the findings presented in this article, this policy change presents a step in the right direction. Suppose the Hong Kong government wants to further maximise take-up rates of targeted income support programmes for Hong Kong older adults; in that case, this article identified additional measures to ‘stigma proof’ targeted income support via diminishing the various administrative and psychological burdens associated with those same programmes.