Publications: Refund to Savings (R2S)

This experiment tested combinations of behavioral strategies to promote savings including (1) asking filers at the start of tax preparation to pre-commit to saving their refund, and (2) choice architecture manipulations that emphasized directly depositing their refund into savings accounts or savings bond purchases.

In this paper, we explore the impact that slack resources and technology can have on individuals’ entrepreneurial aspirations.

In this paper, we explore the impact that slack resources and technology can have on individuals’ entrepreneurial aspirations.

The Earned Income Tax Credit (EITC) provides substantial financial support to low-income workers, yet around a quarter of EITC payments are estimated to be erroneous or fraudulent. Beginning in 2017, the Protecting Americans from Tax Hikes Act of 2015 requires the Internal Revenue Service to spend additional time processing early EITC claims, delaying the issuance of tax refunds. Leveraging unique data, we investigate how delayed tax refunds affected the experience of hardship and unsecured debt among EITC recipients. We find that early filers experienced increased food insecurity relative to later filers after the implementation of the refund delay.

Tax refunds are an opportunity for Earned Income Tax Credit (EITC) recipients to build emergency savings. Randomly assigned behavioral interventions in 2015 and 2016 have statistically significant impacts on refund saving take-up and amounts among EITC recipients who filed their taxes online. From a survey experiment, we also find that EITC recipients have a 49 percent and 59 percent increased likelihood of deferring 20 percent of their refunds for six months when hypothetically offered 25 and 50 percent savings matches (p < .001), respectively. These findings can inform policy development related to encouraging emergency saving at tax time.

Many U.S. households—especially those with low- to moderate-incomes (LMI)—struggle to save for retirement. To address this issue, the Department of the Treasury launched myRA, a no-fee retirement account designed primarily to help people who lacked access to employer-sponsored plans build retirement savings. In this paper, we report findings from two myRA-focused field experiments, both of which were administered to well over 100,000 LMI online tax filers before and during the 2016 tax season. The first experiment involved sending one of three different myRA-focused email messages to tax filers immediately prior to tax season, and the second experiment involved incorporating myRA-focused messages and choice architecture directly into an online tax filing platform. Messages were chosen to address different barriers to retirement savings LMI households may face. We find that, though the general level of interest in myRA was very low in this population, interest and enrollment in myRA depends heavily on the way in which the benefits of the accounts are framed. Results from both experiments indicate that messages emphasizing the possibility of receiving a larger refund in the future were the most effective at increasing interest in myRA, while messages focused around the simplicity and ease of use of the accounts were less effective. We also conduct several subsample analyses to investigate the extent to which these effects differed by key household characteristics.

The Earned Income Tax Credit (EITC) provides substantial financial support to low-income workers, yet around a quarter of EITC payments are estimated to be erroneous or fraudulent. Beginning in 2017, the Protecting Americans from Tax Hikes Act of 2015 requires the Internal Revenue Service to spend additional time processing early EITC claims, delaying the issuance of tax refunds. Leveraging unique data, we investigate how delayed tax refunds affected the experience of hardship and unsecured debt among EITC recipients. We find that early filers experienced increased food insecurity relative to later filers after the implementation of the refund delay.

Much of the literature on household finances tends to focus on discrete or relatively objective measures like savings, debt, economic mobility, and there has been a lack of research on holistic measures of financial well-being. This gap is due in part to the absence of a common understanding of how to define and measure financial well-being; a gap that was recently addressed by the Consumer Financial Protection Bureau’s development of a financial well-being scale. However, the research on this scale is still scarce and little is known about how financial well-being evolves over time. To that end, this paper uses a two-wave survey of low- and moderate-income tax filers to present the first longitudinal analysis of the CFPB’s financial well-being scale. Using a combination of descriptive analysis, OLS regression, and fixed effects panel regression, we assess (1) the stability of financial well-being over a six-month period; (2) the extent to which household characteristics predict volatility in financial well-being; and (3) the relationship between the experience of adverse financial events, including financial shocks and material hardships, and financial well-being. We find that financial well-being scores are extremely stable over the short-term, and that household characteristics are generally not strong predictors of financial well-being changes. We also find that, while adverse financial events like the loss of a job are significantly associated with declines in financial well-being, these changes are not large. These findings have implications for researchers and practitioners interested in using the financial well-being scale in program and policy evaluations.

This paper investigates how saving the federal tax refund affects gig economy participation for low-income online tax filers in the six months following tax filing. Using longitudinal survey and administrative data, we leverage random assignment in a unique refund savings experiment as an instrument for refund savings. We find significant heterogeneity in estimated effects that are consistent […]

The number of individuals with student loan debt who do not earn their degrees is on the rise; nevertheless, there is little research that demonstrates the financial conditions and circumstances of these individuals. We address this knowledge gap by comparing the financial outcomes of student debt-holders who started college but did not earn a degree—those […]

As the gig economy plays an increasingly important role in the labor market, there is a need to understand the economic factors that influence participation in this sector. In this paper, we investigate how saving the federal tax refund affects gig economy participation for low-income online tax filers in the six months following tax filing. […]

Sun, S., Roll, S. P., Kondratjeva, O., Bufe, S., & Grinstein-Weiss, M. (2019, March). Assessing the Short-Term Stability of Financial Well-Being in Low- and Moderate-Income Households. (SPI Research Brief No. 19-01). St. Louis, MO: Washington University, Social Policy Institute.