Welfare effects of deterrence-motivated activation policy: the case of distinct activation-disutility

We investigate conditions for activation policy to be part of an optimal policy, when the motivation for activation is to deter people from collecting benefits. A benevolent government chooses a pure benefit programme and an activation programme and individuals self-select into programmes or work. We consider a distinct disutility for participating in activation programmes. One motivation for this approach is that the choice of concrete activation programmes may affect how people are exposed to activation-disutility. We describe a principle for the choice of optimal activation programmes, but find it hard to give real-world examples that meet the principle.