• AEA in the news
  • December 15, 2015

Here’s an amazingly simple way to cut poverty

A 2006 IRS form.

Rob Hill Photo/Bigstock

Vox covered a paper on earned-income tax credit (EITC) benefits appearing in the November issue of the American Economic Review. In Psychological Frictions and the Incomplete Take-Up of Social Benefits: Evidence from an IRS Field Experiment, authors Saurabh Bhargava and Dayanand Manoli find that many low-income taxpayers who are eligible for the EITC fail to claim it due to low awareness and poor understanding of the benefits, rather than stigma or application costs. As much as $7 billion goes unclaimed each year.