Reducing Compliance Demands in Government Benefit Programs Improves the Psychological Well-Being of Target Group Members

State actions impact the lives of citizens in general and government benefit recipients in particular. However, little is known about whether experiences of psychological costs among benefit recipients can be relieved by reducing compliance demands in interactions with the state. Across three studies, we provide evidence that reducing demands causes relief. In a survey experiment, we show that psychological costs experienced by Danish unemployment insurance recipients change in response to information about actual reduced compliance demands. In two field studies, we exploit survey data collected around a sudden, exogenous shock (the COVID-19 lockdown of the Danish society in March 2020), which led to immediate reductions in compliance demands in Denmark's active labor market policies. We test whether two groups of benefit recipients experienced reduced psychological costs in response to these sudden reductions in compliance demands imposed by the state. Across all studies, we find that the reduction of compliance demands is associated with an increased sense of autonomy, and in two of the three studies, it is associated with reduced stress. Overall, our findings suggest that psychological costs experienced by benefit recipients are indeed affected by state actions in the form of compliance demands.