Journal
AMERICAN ECONOMIC REVIEW
Volume 105, Issue 11, Pages 3489-3529Publisher
AMER ECONOMIC ASSOC
DOI: 10.1257/aer.20121493
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We address the role of psychological frictions in the incomplete take-up of 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.
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