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Nudges and Learning: Evidence from Informational Interventions for Low-Income Taxpayers

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  • Dayanand S. Manoli
  • Nicholas Turner

Abstract

Can one-time informational interventions cause permanent changes in benefit take-up? In the context the Earned Income Tax Credit, we find evidence that reminding individuals of their eligibility has meaningful effects. Reminder notices have the largest effect among taxpayers without kids, persuading nearly 80 percent of taxpayers in the notice year to claim the credit. The effect of the notice quickly attenuates to roughly 22 percent only one year later. We find that this pattern holds across two experimental settings, one that tests the effect of being sent a notice and one that tests variations in the content of the notices.

Suggested Citation

  • Dayanand S. Manoli & Nicholas Turner, 2014. "Nudges and Learning: Evidence from Informational Interventions for Low-Income Taxpayers," NBER Working Papers 20718, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:20718
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    2. Mascagni, Giulia & Mengistu, Andualem T. & Woldeyes, Firew B., 2018. "Can ICTs Increase Tax? Experimental Evidence from Ethiopia," Working Papers 13845, Institute of Development Studies, International Centre for Tax and Development.
    3. Bastani, Spencer & Giebe, Thomas & Miao, Chizheng, 2020. "Ethnicity and tax filing behavior," Journal of Urban Economics, Elsevier, vol. 116(C).
    4. Giulia Mascagni, 2018. "From The Lab To The Field: A Review Of Tax Experiments," Journal of Economic Surveys, Wiley Blackwell, vol. 32(2), pages 273-301, April.
    5. David Neumark & Katherine E. Williams, 2020. "Do State Earned Income Tax Credits Increase Participation in the Federal EITC?," Public Finance Review, , vol. 48(5), pages 579-626, September.
    6. Walker, Brigham, 2023. "Price and saliency in health care: When can targeted nudges change behaviors?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 107(C).
    7. Jeffrey P. Clemens & Jonathan M. Leganza & Alex Masucci, 2021. "Plugging Gaps in Payment Systems: Evidence from the Take-Up of New Medicare Billing Codes," CESifo Working Paper Series 9209, CESifo.
    8. Belnap, Andrew & Welsch, Anthony & Williams, Braden, 2023. "Remote tax authority," Journal of Accounting and Economics, Elsevier, vol. 75(2).
    9. Jeffrey Clemens & Michael J. Wither, 2021. "When Is Tinkering with Safety Net Programs Harmful to Beneficiaries?," NBER Working Papers 29028, National Bureau of Economic Research, Inc.
    10. Wu, Derek & Meyer, Bruce D., 2023. "Certification and Recertification in Welfare Programs: What Happens When Automation Goes Wrong?," IZA Discussion Papers 16294, Institute of Labor Economics (IZA).
    11. Jeffrey Clemens, 2016. "Redistribution through Minimum Wage Regulation: An Analysis of Program Linkages and Budgetary Spillovers," Tax Policy and the Economy, University of Chicago Press, vol. 30(1), pages 163-189.
    12. Nyman, Pär & Aggeborn, Linuz & Ahlskog, Rafael, 2022. "Filling in the blanks. How does information about the Swedish EITC affect labour supply?," Working Paper Series 2022:9, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    13. Nyman, Pär & Aggeborn, Linuz & Ahlskog, Rafael, 2023. "Filling in the blanks: How does information about the Swedish EITC affect labour supply?," Labour Economics, Elsevier, vol. 85(C).

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    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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