Understanding demand for overdraft protection and evaluating tax refund expectations and allocations: Evidence from a randomized experiment incentivizing tax filing

Last registered on January 22, 2025

Pre-Trial

Trial Information

General Information

Title
Understanding demand for overdraft protection and evaluating tax refund expectations and allocations: Evidence from a randomized experiment incentivizing tax filing
RCT ID
AEARCTR-0015256
Initial registration date
January 21, 2025

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
January 22, 2025, 9:21 AM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

There is information in this trial unavailable to the public. Use the button below to request access.

Request Information

Primary Investigator

Affiliation
Harvard University

Other Primary Investigator(s)

PI Affiliation
University of Chicago Booth School of Business

Additional Trial Information

Status
In development
Start date
2025-01-22
End date
2025-12-31
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
We will implement a randomized controlled trial (RCT) to test how financial incentives impact tax filing and how individuals value various financial incentives. We partner with a large financial technology company that provides online banking services and offers free in-app tax filing. We will randomly assign 1.4 million users to receive a series of emails and push notifications reminding them to file during the upcoming tax season, along with a cash incentive ($5 or $10), an increase in their fee-free overdraft limit ($10 or $20), or no incentive. In a complementary survey, we will elicit users’ perceptions of filing taxes, their expected tax refunds or obligations, and how they would allocate a hypothetical tax refund. With administrative transactions data, we will observe users’ tax filing dates, realized tax refunds or obligations, and spending behavior. This design will allow us to (1) estimate the effect of cash and overdraft incentives on tax filing, (2) compare preferences for cash versus overdraft protection, (3) measure the realized amount and allocation of tax refunds, and (4) compare realized behavior with users’ expectations and intentions. This study will contribute to the literature on financial decision-making among low-income households and inform effective strategies for building financial resilience.
External Link(s)

Registration Citation

Citation
Kluender, Raymond and Matthew Notowidigdo. 2025. "Understanding demand for overdraft protection and evaluating tax refund expectations and allocations: Evidence from a randomized experiment incentivizing tax filing." AEA RCT Registry. January 22. https://doi.org/10.1257/rct.15256-1.0
Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2025-01-22
Intervention End Date
2025-04-15

Primary Outcomes

Primary Outcomes (end points)
In-app tax filing
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
See pre-analysis plan for full details
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
We will provide randomized incentives to file taxes in-app through our fintech partner.
Experimental Design Details
Not available
Randomization Method
By computer
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
Approximately 1.4 million individual users
Sample size: planned number of observations
Approximately 1.4 million individual users
Sample size (or number of clusters) by treatment arms
1. $5 cash incentive group (N = 75,000) - receives access to the embedded tax filing system with reminders to file and a $5 cash incentive
2. $10 cash incentive group (N = 75,000) - receives access to the embedded tax filing system with reminders to file and a $10 cash incentive
3. $10 overdraft incentive group (N = 300,000) - receives access to the embedded tax filing system with reminders to file and an offer to extend their overdraft limit by $10 for one month
4. $20 overdraft incentive group (N = 300,000) - receives access to the embedded tax filing system with reminders to file and an offer to extend their overdraft limit by $20 for one month
5. Message-only control group (N = 550,000) - receives access to the embedded tax filing system with reminders to file but no incentives)
6. Hold-out group (N = 100,000) - does not receive access to the embedded tax filing system, receives no messages about filing and no incentives
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number
Analysis Plan

There is information in this trial unavailable to the public. Use the button below to request access.

Request Information