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Child Benefit Support and Method of Payment: Evidence from a Randomized Experiment in Belgium

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  • Marieke Huysentruyt
  • Eva Lefevere
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    Abstract

    We examine the effects of information and information presentation format on individuals' choice of payment method in a large randomized experiment carried out with the Belgian National Office for Family Benefits. We find that a one-time mailing providing information about method of payment for child benefit support caused a fourfold increase in parents' decision to switch from payment by check to electronic payment. Simple, low-cost supplements significantly raised people's responsiveness to the mailing. Our results suggest that complexity and information (processing) costs pose significant barriers to transitioning to electronic payment methods, and that deliberate efforts to lower these costs can contribute to large behavioral changes. (JEL D83, J13)

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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/pol.2.2.163
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    Bibliographic Info

    Article provided by American Economic Association in its journal American Economic Journal: Economic Policy.

    Volume (Year): 2 (2010)
    Issue (Month): 2 (May)
    Pages: 163-84

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    Handle: RePEc:aea:aejpol:v:2:y:2010:i:2:p:163-84

    Note: DOI: 10.1257/pol.2.2.163
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    1. Esther Duflo & Emmanuel Saez, 2002. "The Role of Information and Social Interactions in Retirement Plan Decisions: Evidence from a Randomized Experiment," NBER Working Papers 8885, National Bureau of Economic Research, Inc.
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    9. Janet Currie, 2004. "The Take Up of Social Benefits," NBER Working Papers 10488, National Bureau of Economic Research, Inc.
    10. Justine S. Hastings & Jeffrey M. Weinstein, 2008. "Information, School Choice, and Academic Achievement: Evidence from Two Experiments," The Quarterly Journal of Economics, MIT Press, vol. 123(4), pages 1373-1414, November.
    11. Keller, Punam Anand & Block, Lauren G, 1997. " Vividness Effects: A Resource-Matching Perspective," Journal of Consumer Research, University of Chicago Press, vol. 24(3), pages 295-304, December.
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    13. Beth Osborne Daponte & Seth Sanders & Lowell Taylor, 1999. "Why Do Low-Income Households not Use Food Stamps? Evidence from an Experiment," Journal of Human Resources, University of Wisconsin Press, vol. 34(3), pages 612-628.
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