Agency budgets and the use of eligibility rules

Abstract

The practice of limiting program benefits to specific groups in the population through the specification of eligibility and targeting rules is relatively common among government sponsored programs. In some cases, such as Social Security, Supplemental Security Income, and Medicaid, the eligibility criteria are established by Federal and state regulations. The local community and the local administrators of the program can exercise some discretion in the enforcement of these regulations, but they are seldom able to change the specific eligibility rules. This situation contrasts with decentralized programs in which both the specification and enforcement of eligibility and targeting rules are determined at the local level. The result of this decentralization in rule making has been the generally predictable variation in the development and use of eligibility and targeting rules by local organizations. While this observed variation has been both praised and criticized, relatively little research has been done to determine the sources of this observed variation in rule use. Efforts to associate rule use with measures of decentralization are an exception to this generalization. Previous studies of bureaucratic behavior, especially studies which have employed a rational actor approach, have argued that decisions by administrators will depend on their individual preference functions and on various constraints limiting their choices (Tullock, 1965; Niskanen, 1975; Allison, 1971). Although not the central focus of these studies, explanations for the observed variation in rule use by local agencies have been suggested. However, only limited attempts have been made to explore the reasonableness of these suggestions. The objective of this paper is to formalize a rational actor model of bureaucratic behavior designed to explore variations in the use of eligibility rules, and to test this model using data collected on the use of eligibility rules by local organizations. Part 1 presents the theoretical model designed