Winter Fuel Payment

In the UK everyone over the age of 60 is given the Winter Fuel Payment each year by the government. ('Winter Fuel' refers to heating and electricity costs.) Over the last 10 years the Winter Fuel Payment has varied between £200 and £250 per person over 60, with the payment for those over 80 varying between £300 and £400. The Winter Fuel Payment is usually paid in one lump sum in November or December. There are no legal requirements or official guidelines over how the Winter Fuel Payment should be spent by the recipients.

On average, what percentage of the Winter Fuel Payment do you think is spent on fuel? 

Imagine the hypothetical scenario where everything stayed the same, but the Winter Fuel Payment was called 'The Annual Payment'. On average, what percentage of the Winter Fuel Payment (now called The Annual Payment) do you think would be spent on fuel?

The answers are 41% and 3%, respectively! (according to Beatty, Blow, Crossley and O'Dea, 2011) The label 'Winter Fuel' alone causes 38% of the Payment to be spent on fuel. This is called the labelling effect and it is another example of non-fungibility.

Does this information change whether you think pensioners should receive the Winter Fuel Payment?