Overindebtedness and debt relief: Evidence from a randomized experiment at the Swedish Enforcement Authority

Last registered on May 26, 2022
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Pre-Trial

Trial Information

General Information

Title
Overindebtedness and debt relief: Evidence from a randomized experiment at the Swedish Enforcement Authority
RCT ID
AEARCTR-0009356
Initial registration date
May 26, 2022

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
May 26, 2022, 11:46 AM EDT

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

Locations

Country
Sweden
Region

Primary Investigator

Name
Matz Dahlberg
Affiliation
Uppsala University
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Other Primary Investigator(s)

PI Name
Mattias Nordin
PI Affiliation
Uppsala university
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PI Name
Linna Martén
PI Affiliation
Stockholm university
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PI Name
Mikael Lundholm
PI Affiliation
Mid Sweden University
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Additional Trial Information

Status
On going
Start date
2022-04-29
End date
2025-12-31
Keywords
Finance & Microfinance, Health, Labor, Welfare
Additional Keywords
Overindebtedness
JEL code(s)
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
Many overindebted individuals are subject to debt enforcement without any possibility of ever repaying their debts. Debt relief, which in Sweden is a five-year program, is realistically their only chance out of overindebtedness. However, many do not apply for debt relief. This study aims to investigate both how overindebted individuals may be motivated to apply for debt relief and what the individual consequences of debt relief are. For the former question we relate to the literature on how targeted information may affect take-up for various means-tested social benefits. For the latter question, previous research has mainly studied correlations in observational data and, e.g., found that while overindebtness correlates with bad outcomes (e.g., physical and mental illness), it is not clear that the Swedish debt relief program solves any of these problems. We contribute with causal evidence by taking advantage of a randomized intervention at the Swedish Enforcement Agency. This intervention targets information about debt relief towards overindebted individuals. We employ register data to investigate take-up of debt relief for the treated individuals compared to the non-treated individuals in the control group. We also examine the impact on labor market and health outcomes. These results are intended to inform policy discussions about the design of the debt relief program in the Swedish context and across other similar welfare regimes and regulatory environments.
External Link(s)

Registration Citation

Citation
Dahlberg, Matz et al. 2022. "Overindebtedness and debt relief: Evidence from a randomized experiment at the Swedish Enforcement Authority." AEA RCT Registry. May 26. https://doi.org/10.1257/rct.9356-1.0
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Experimental Details

Interventions

Intervention(s)
The intervention consists of one attempt at contacting the treated individual by case handlers at the Swedish Enforcement Authority (SEA). The aim of the contact is to provide information about debt relief and to incentivize the individual to apply. The main priority is to make contact by phone. If this is not possible, the individual is sent a letter and (if possible) a text message.
Intervention Start Date
2022-04-29
Intervention End Date
2022-05-31

Primary Outcomes

Primary Outcomes (end points)
APPLY: the individual applies for debt relief.
GRANTED: the individual is granted debt relief.

Primary Outcomes (explanation)
APPLY will be measured six months after the end date of the intervention. I.e., APPLY is an indicator for whether the individual applied for debt relief somewhere between 2022-04-29 to 2022-11-30.

GRANTED is an indicator taking the value of one if APPLY=1 and the application was approved and zero otherwise. That is, an application that is handed in between 2022-04-29 and 2022-11-30, but where a decision is made after 2022-11-30 will also be included.

Secondary Outcomes

Secondary Outcomes (end points)
Aside from the primary outcomes, we will also study other aspects, including

TERMINATED: the individual has been granted debt relief but has been terminated from the program during its five-year duration.
CONCLUDED: the indiviudal has been granted debt relief and concluded the five-year program.
EMPLOYED: the individual is employed.
INCOME: the individual´s annual income.
DEBT: the individual´s total debt subject to enforcement at the SEA.
MEDICINE: the individual is prescribed medicines that indicate various forms of somatic and mental illness.
HEALTHCARE: the individual has been subject to out- or inpatient care for conditions related to stress, mental illness, or substance abuse.
Secondary Outcomes (explanation)
We have not completely decided on the secondary outcomes to study as it will depend on the strength of the primary outcomes (i.e., we can think of it as a "first stage". That is: If there is a strong effect of the experiment on the probability of being granted debt relief, then it is more likely that we can study labor market and health outcomes. The plan will be updated to specify more on the secondary outcomes.

Experimental Design

Experimental Design
Overindebted individuals subject to debt enforcement at the Swedish Enforcement Authority are included in the trial based upon pre-determined inclusion criteria that identify them as likely to qualify for debt relief and as having had recent contact with the authority. The individuals are randomized to treatment (n=2,000) and control (n=1,647) groups in five stratas corresponding to geographically organized debt enforcement divisions at the SEA.
Experimental Design Details
Not available
Randomization Method
Randomization done in Excel
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
0
Sample size: planned number of observations
3,647 individuals
Sample size (or number of clusters) by treatment arms
2,000 individuals in treatment group and 1,647 individuals in control group
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
For APPLY. If the baseline application rate (in the control group) during six months is 10 percent, then there is 80 percent power for rejecting the sharp null when the treatment effect is a little more than 3.5 percentage points (i.e., an application rate of more than 13.5 percent in the treatment group. See attached analysis plan.
Supporting Documents and Materials

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IRB

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number
Analysis Plan

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