Why are Benets Left on the Table? Assessing the Role of Information, Complexity, and Stigma on Take-up with an IRS Field Experiment

We address the puzzle of incomplete take-up with a unique …eld experiment in collaboration with the IRS. Speci…cally, we test the role of program information (regarding bene…ts, costs, and rules), informational complexity, and stigma on response to experimental mailings notifying 35,050 eligible individuals of $26m in unclaimed EITC bene…ts. We …nd residual increases in take-up due to the mere receipt of a mailing (response of 0.14); simpli…cation (+0.09 relative to mere receipt); and the display of bene…ts (+0.08 relative to mere receipt plus simpli…cation). Surveys a¢ rm pervasive low awareness and misconstrual of program incentives among eligibles. Our estimates suggest that the tested interventions could reduce incomplete EITC take-up from 25% to 22%. (JEL D03 C93 H24 M38) We extend a special thanks to Alan Auerbach, Dan Black, Raj Chetty, Stefano DellaVigna, Jon Guryan, Jesse Shapiro, and Oleg Urminsky for their invaluable insight and support. We also thank seminar participants at Carnegie Mellon, Chicago Booth, Columbia University, Cornell University, the Harris School of Public Policy, Harvard University, U.C. Berkeley, and the University of Wisconsin. We are additionally indebted to Leila Agha, Joe Altonji, Linda Babcock, Marianne Bertrand, Jim Berry, David Card, Kerwin Charles, Amy Finkelstein, Ray Fisman, John Friedman, Je¤ Grogger, Jon Gruber, Hilary Hoynes, Erin Johnson, Damon Jones, Larry Katz, Botond Koszegi, Kara Leibel, George Loewenstein, Brigitte Madrian, Bhash Mazumder, Bruce Meyer, Sendhil Mullainathan, Kevin Mumford, Ted O’Donoghue, Matthew Rabin, Emmanuel Saez, Dick Thaler, Heidi Williams, and George Wu for comments. We are grateful to collaborators at the IRS of whom Ciyata Coleman, Dick Eggleston, Amy Pitter, and Dean Plueger warrant special mention. Finally, we thank Christine Cheng, Gladys Nichols, and Rolando Palacios for assistance with the surveys.