Why are Benefits Left on the Table? Assessing the Role of Information Complexity

Bhargava & Manoli (2013)
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Summary by 
Mark Egan

The authors conduct a field experiment with the IRS to examine why people fail to collect benefits they are eligible for. They sent letters to 35,050 California taxpayers who filed their taxes but didn’t claim their 2009 Earned Income Tax Credit (EITC) despite being eligible for it. They varied the text of the mailings to create 3 different conditions The results show that all the mailings substantially increase the likelihood of subsequent year take-up, with the two treatments being more effective than the control. The authors project that applying the tested interventions to all filing non-claimants could reduce incomplete take-up among filers from 10% to 7%.