Government Benefits

One unfortunate characteristic of government benefits such as unemployment or various types of social welfare payments is that people who work the system may stretch the truth and receive the benefits while similarly situated people who are more honest don't qualify for the benefits.

It is difficult and expensive to discover fraud, so to the extent possible benefits should be designed to limit misuse. For example, benefits could be structured so everyone is entitled to a certain amount of benefits over their lifetime, with an absolute ceiling regardless of circumstances, and a cash payment for unused benefits upon retirement. That way those who behave honestly aren't subsidizing the dishonest.