How can we better connect low-income families to their stimulus payments?
Project Summary
In response to the Covid-19 pandemic, the United States government disbursed a range of income-based stimulus payments, including an expanded Child Tax Credit (CTC) and three rounds of Economic Impact Payments (EIP), to provide economic aid quickly to middle- and low-income Americans. But because these payments were disbursed through the tax system, millions of people with very low incomes were at risk of missing out. In four large-scale randomized evaluations, we tested methods of increasing claiming of the expanded CTC and other economic impact payments. We found that light-touch outreach was highly effective, and cost-effective, at increasing CTC and EIP claims, but higher touch outreach in the form of proactive calling yielded minimal additional benefit – and came at a much higher cost.
Why is this issue important?
The EIPs and expanded CTC disbursed during the Covid-19 pandemic lifted millions of Americans out of poverty and reduced child poverty rates to a record low. But because these credits were disbursed automatically through the tax system, families whose income fell below the tax filing threshold – so-called “non-filers” – were at risk of missing out on these critical anti-poverty benefits if they didn’t take proactive action to claim them. Research suggests that 25% of Californians enrolled in safety-net programs were at risk of missing out on the third round of pandemic-related stimulus payments because they had not filed a return. There is extensive evidence that informational, logistical, and psychological barriers can deter people from interacting with government programs – even when they stand to benefit from doing so. Understanding these barriers, and how to reduce them, is critical for connecting low-income Americans with vital services and programs such as the economic impact payments.
What are we doing?
From Fall 2021 to Fall 2022, we collaborated with the California Policy Lab to support the California Department of Social Services (CDSS) in conducting four targeted outreach campaigns, each of which was run as part of a randomized evaluation. In all four studies, CDSS sent outreach to low-income Californians to encourage them to use a simplified filing portal, such as GetCTC.org or GetYourRefund.org – both created by Code for America (CfA) – or to file a full tax return to claim the expanded CTC or other available EIPs. All four outreach campaigns were targeted to households enrolled in either California’s Supplemental Nutrition Assistance Program (SNAP) or Temporary Assistance for Needy Families (TANF) program. We also used data from the Franchise Tax Board (FTB) to identify “non-filers” – individuals who had not filed or been claimed on a tax return in 2018 or 2019 and were thus more likely to miss out on anti-poverty tax credits.
Across all four studies, we sought to answer four research questions: (1) Does receiving information about available anti-poverty tax credits increase claiming? What type of message framing is most effective? Is informational outreach more effective among a better targeted sample? Is higher-touch outreach (e.g., proactive calling) more effective than lighter-touch outreach?
What have we learned?
We found that all tested forms of light-touch outreach – recorded voice messages, emails, and text messages – had modest but significant impacts on filing behavior, and are highly cost-effective. For every $1 spent on recorded voice messages and emails, roughly $58 and $8,882 in benefits, respectively, were disbursed to low-income families. We did not see a clear or consistent impact of message content or framing on filing behavior, and while light-touch outreach appears to have a larger impact among a better targeted sample – likely non-filers – it is unclear whether more precise targeting is cost-effective in this context.
We also found that higher-touch outreach in the form of proactive phone calls from navigators may slightly increase filing compared to light-touch outreach alone, but not enough to offset its high cost. Offering passive assistance – a hotline that beneficiaries could call of their own accord – cost approximately $142 per additional return submitted, while offering opt-out assistance (proactive calls) cost $1,062 per additional return submitted.