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Saving Incentives for Low- and Middle-Income Families: Evidence from a Field Experiment with H&R Block

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  • Esther Duflo
  • William Gale
  • Jeffrey Liebman
  • Peter Orszag
  • Emmanuel Saez

Abstract

We analyze a randomized experiment in which 14,000 tax filers in H&R Block offices in St. Louis received matches of zero, 20 percent, or 50 percent of IRA contributions. Take-up rates were 3 percent, 8 percent, and 14 percent, respectively. Among contributors, contributions, excluding the match, averaged $765 in the control group and $1100 in the match groups. Taxpayer responses to similar incentives in the Saver's Credit are much smaller. Taxpayers did not game the experiment by receiving a match and strategically withdrawing funds. Tax professionals significantly influenced contribution choices. These results suggest that both incentives and information affect behavior.

Suggested Citation

  • Esther Duflo & William Gale & Jeffrey Liebman & Peter Orszag & Emmanuel Saez, 2006. "Saving Incentives for Low- and Middle-Income Families: Evidence from a Field Experiment with H&R Block," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 121(4), pages 1311-1346.
    • Handle: RePEc:oup:qjecon:v:121:y:2006:i:4:p:1311-1346.
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    File URL: http://hdl.handle.net/10.1093/qje/121.4.1311
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    References listed on IDEAS

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    1. Leonard E. Burman & William G. Gale & Matthew Hall & Peter R. Orszag, 2006. "Distributional Effects of Defined Contribution Plans and Individual Retirement Arrangements," Palgrave Macmillan Books, in: Dimitri B. Papadimitriou (ed.), The Distributional Effects of Government Spending and Taxation, chapter 3, pages 69-111, Palgrave Macmillan.
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    4. James J. Choi & David Laibson & Brigitte C. Madrian, 2005. "$100 Bills on the Sidewalk: Suboptimal Saving in 401(k) Plans," Levine's Bibliography 784828000000000649, UCLA Department of Economics.
    5. James M. Poterba & Steven F. Venti & David A. Wise, 1996. "How Retirement Saving Programs Increase Saving," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 91-112, Fall.
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    7. Eckel, Catherine C. & Grossman, Philip J., 2003. "Rebate versus matching: does how we subsidize charitable contributions matter?," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 681-701, March.
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    More about this item

    JEL classification:

    • H0 - Public Economics - - General
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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