Caplan might be counting the palatability of public assistance as one of the "other things equal" when comparing the effect of a public benefit on Walmart salaries. I don't know how much of a factor such shame is.

Some parents, she said, don’t encourage their children academically, and even actively discourage them from doing well, because they view disability as a “source of income,” and think failure will help the family receive a check.

-

And if you have a floor amount of money where it is 'worth it' to take a job and dedicate your time to employment, then Wal-Mart benefits from that floor being otherwise occupied by government programs.

I disagree (though I thought the same way before the Salary Quiz conversation).

Say my floor is $2000 per month to work part time at Walmart. Anything less than that is not worth the trouble and I won't work at Walmart at all.

Say a new benefit appears that gives me $500 per month. Does my floor now change to $1500? No. It's the same miserable work and I demand the same $2000 to do it. The extra $500 makes me more comfortable than I was before. If I make any change at all, it will be to increase my floor, since I need the income from Walmart a little less now.

I think the right way to take palatability into consideration is to estimate a shame cost. If I have to choose between rubbing a magic lantern every month to get $500 or applying for a government benefit for $500, I'll take the lantern. Even if the lantern only gives me $450, I'll choose the lantern. But if the lantern payoff drops to $250, I'll swallow my pride and get on the dole.

So what appears to be a $500 public benefit is only worth $250 to me. It is still a benefit, and it still has the effect of increasing my wage floor for working at Walmart.

Therefore, if I ask myself

"If I was in charge of Wal-Mart, would I encourage a social pressure [against accepting public assistance]..."

it's clear that I would encourage such social pressure, because it reduces the value of the "competition" from public benefits. If that pressure is sufficiently large, it will completely eliminate the value of the alternative form of income. Then we are back where we started, before the benefit was introduced, and my wage floor is back to $2000.