Behavioral Interventions to Increase Tax-Time Saving: Evidence from a National Randomized Trial

We provide new large-scale experimental evidence on policies that aim to boost household saving out of income tax refunds. Households that filed income tax returns with an online tax preparer and chose to receive their refund electronically were randomized into eight treatment groups, which received...

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Bibliographic Details
Published in:The Journal of consumer affairs 2017-03, Vol.51 (1), p.3-26
Main Authors: GRINSTEIN-WEISS, MICHAL, RUSSELL, BLAIR D., GALE, WILLIAM G., KEY, CLINTON, ARIELY, DAN
Format: Article
Language:English
Subjects:
Analysis
Economic aspects
Households
Income taxes
Internet
Methods
Retirement
Savings
Tax consultants
Tax preparation
Tax preparation services
Tax refunds
Tax returns
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Summary:We provide new large-scale experimental evidence on policies that aim to boost household saving out of income tax refunds. Households that filed income tax returns with an online tax preparer and chose to receive their refund electronically were randomized into eight treatment groups, which received different combinations of motivational saving prompts and suggested shares of the refund to save—25% and 75%—and a control group, which received neither. In treatment conditions where they were presented, motivational prompts focused on various savings goals: general, retirement, or emergency. Analysis reveals that higher suggested that allocations generated increased allocations of the refund to savings but that prompts for different reasons to save did not. These interventions, which draw on lessons from behavioral economics, represent potentially low-cost, scalable tools for policy makers interested in helping low-and moderate-income households build savings.
ISSN:0022-0078
1745-6606
DOI:10.1111/joca.12114