Panel Paper: Nudging Singles to Work: Using Behavioral Economics to Increase Receipt of a Simulated Earned-Income Tax Credit

Friday, November 7, 2014 : 9:10 AM
Santa Ana (Convention Center)

*Names in bold indicate Presenter

Nadine Dechausay1, Marie-Andree Somers1, Leigh Reardon1, Clay Voorhees2, David Butler1 and Caitlin Anzelone1, (1)MDRC, (2)Michigan State University
The federal Earned Income Tax Credit (EITC), which supplements the earnings of families by as much as $6,000 a year, is the largest and most successful antipoverty program in the United States. It has significantly increased income among poor families, lifting 6.6 million people out of poverty nationally in 2011 alone and contributing to substantial increases in employment among single mothers. But, the federal EITC for single tax filers—which is capped at a maximum annual payment of only $487—is much less generous and, as a result, less effective at increasing employment and reducing poverty.

Paycheck Plus, developed by the Center for Economic Opportunity, offers 3,000 single tax filers in New York City a “bonus” of up to $2,000 during the 2014-2017 tax years. The incentive is designed to supplement the EITC outside of the tax system and will be evaluated through a random assignment design. In order to earn the supplement, program group members must be aware of the program, change their behavior to engage in work, and file their taxes at special sites or mail a copy of their completed application to a specific location. These programmatic details have the potential to lower participation in the program. To counter this, the Behavioral Interventions to Advance Self-Sufficiency team launched a behaviorally-informed marketing strategy to increase tax filing or engagement with the tax filing site in the first program year.  This presentation will discuss how behavioral economics concepts were embedded in the program’s ongoing marketing and outreach to participants.