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Psychological Frictions and the Incomplete Take-Up of Social Benefits: Evidence from an IRS Field Experiment in the United States
Last registered on September 29, 2016

Pre-Trial

Trial Information
General Information
Title
Psychological Frictions and the Incomplete Take-Up of Social Benefits: Evidence from an IRS Field Experiment in the United States
RCT ID
AEARCTR-0001612
Initial registration date
September 29, 2016
Last updated
September 29, 2016 3:58 AM EDT
Location(s)
Primary Investigator
Affiliation
Other Primary Investigator(s)
PI Affiliation
Carnegie Mellon University
Additional Trial Information
Status
Completed
Start date
2009-01-01
End date
2011-05-31
Secondary IDs
Abstract
We address the role of "psychological frictions" in the incomplete take-up of earned income tax credit (EITC) benefits with an IRS field experiment. We specifically assess the influence of program confusion, informational complexity, and stigma by evaluating response to experimental mailings distributed to 35,050 tax filers who failed to claim $26 million despite an initial notice. While the mere receipt of the mailing, simplification, and the heightened salience of benefits led to substantial additional claiming, attempts to reduce perceived costs of stigma, application, and audits did not. The study, and accompanying surveys, suggests that low program awareness/understanding and informational complexity contribute to the puzzle of low take-up.
Registration Citation
Citation
Bhargava, Saurabh and Dayanand Manoli. 2016. "Psychological Frictions and the Incomplete Take-Up of Social Benefits: Evidence from an IRS Field Experiment in the United States." AEA RCT Registry. September 29. https://doi.org/10.1257/rct.1612-1.0.
Former Citation
Bhargava, Saurabh and Dayanand Manoli. 2016. "Psychological Frictions and the Incomplete Take-Up of Social Benefits: Evidence from an IRS Field Experiment in the United States." AEA RCT Registry. September 29. https://www.socialscienceregistry.org/trials/1612/history/10898.
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Experimental Details
Interventions
Intervention(s)
Subjects in the experiment were either sent a control or one of several treatment mailings. Mailings consisted of three components: a notice, informing the recipient of possible program eligibility and briefly explaining the purpose of the EITC program; a worksheet, featuring a series of eligibility statements; and an envelope containing the two. Treatment mailings varied the mailing components by a combination of the following mechanisms: complexity (length or design), the type of program information provided (cost/benefit, penalty, or general), or by changing the emphasis on stigma (social influence or earned income).
Intervention Start Date
2010-11-01
Intervention End Date
2010-11-30
Primary Outcomes
Primary Outcomes (end points)
Response to mailing, Disbursed benefits, Denied claims
Primary Outcomes (explanation)
Secondary Outcomes
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
This trial strategically modified the content and appearance of IRS tax mailings and distributed these to tax filers from California who failed to claim their 2009 Tax Year EITC credit despite presumed eligibility and the receipt of a first reminder notice. Each mailing, consisting of a reminder notice, claiming worksheet, and a return envelope, communicated program eligibility and offered recipients an additional opportunity to claim. We use the differential response to these mailings to draw inferences about the relative importance of three explanations for non-claiming: the misconstrual of program incentives and/or lack of credit awareness (confusion), the informational complexity of claiming, and program stigma. We define the latter as including both the social stigma conventionally discussed by economists, as well as the more identity-driven personal stigma recognized by psychologists as potentially important even in the absence of needing to claim the credit in public.
Experimental Design Details
Randomization Method
Subjects were assigned to a notice, worksheet, and envelope with three independent randomized assignments. All randomizations were conducted within blocks defined by zip code and the presence of eligible dependents - yielding a total of 3,483 blocks. Treatments were randomized with equal sample weights with three exceptions: The control notice was over-sampled (x4) to heighten the statistical power for pair-wise comparisons; the benefit display notices were over-sampled (x3) to power tests of differentiation across listed benefit amounts; finally, at the behest of the IRS, the lengthier complex worksheet was limited to 25 percent of the sample.
Randomization Unit
Individual
Was the treatment clustered?
No
Experiment Characteristics
Sample size: planned number of clusters
35,050 individuals
Sample size: planned number of observations
35,050 observations
Sample size (or number of clusters) by treatment arms
Complex notice - 3,676
Complex worksheet - 10,979
Benefit display - 6,761
Transaction cost - 3,475
Indemnification message - 17,027
Envelope message - 17,044
Informational flyer - 4,019
Emphasis on earned income - 1,844
Social influence - 1,753
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
Post-Trial
Post Trial Information
Study Withdrawal
Intervention
Is the intervention completed?
Yes
Intervention Completion Date
November 30, 2010, 12:00 AM +00:00
Is data collection complete?
Yes
Data Collection Completion Date
May 30, 2011, 12:00 AM +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
35,050 individuals
Was attrition correlated with treatment status?
Final Sample Size: Total Number of Observations
35,050 individuals
Final Sample Size (or Number of Clusters) by Treatment Arms
Data Publication
Data Publication
Is public data available?
No

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Program Files
Program Files
Reports and Papers
Preliminary Reports
Relevant Papers
Abstract
Psychological Frictions and the Incomplete Take-Up of Social Benefits: Evidence from an IRS Field Experiment
Citation
Bhargava, Saurabh and Dayanand Manoli. 2015. "Psychological Frictions and the Incomplete Take-Up of Social Benefits: Evidence from an IRS Field Experiment." American Economic Review 105(11): 3489-3529.