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American Economic Journal: Applied Economics: Vol. 2 No. 2 (April 2010)

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Information, Preferences, and Public Benefit Participation: Experimental Evidence from the Advance EITC and 401(k) Savings

Article Citation

Jones, Damon. 2010. "Information, Preferences, and Public Benefit Participation: Experimental Evidence from the Advance EITC and 401(k) Savings." American Economic Journal: Applied Economics, 2(2): 147-63.

DOI: 10.1257/app.2.2.147

Abstract

Within a field experiment, I present a treatment group with reductions in information, administrative, stigma, and procrastination costs associated with the Advance EITC. The treatment increases Advance participation from 0.3 to 1.2 percent. Another treatment simultaneously encourages 401(k) savings, increasing 401(k) participation from 46 to 50 percent. However, there is no additional increase in Advance participation when coupled with the 401(k) treatment, casting doubt on a long-term forced savings motive. The results indicate that EITC recipients actively forgo the Advance. Further work is needed to identify what underlies these preferences. Possible explanations include uncertainty and/or short-term forced savings motives. (JEL D14, D82, H23, H24, H31)

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Appendix (2.30 MB)

Authors

Jones, Damon (Stanford Institute for Economic Policy Research, Stanford U and U Chicago)

JEL Classifications

D14: Personal Finance
D82: Asymmetric and Private Information
H23: Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
H24: Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
H31: Fiscal Policies and Behavior of Economic Agents: Household

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