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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 present evidence from a randomized Öeld experiment explictly designed to shed light on the role of standard information, goal framed information, and decision task complexity in individualsí choice of payment method. The experiment encouraged 19,707 Clients of the Belgian National O¢ ce for Family BeneÖts to change from benefit payment by check to payment via direct transfer via a one-time mailing. The direct mailings multiplied the switching rate of these treated individuals (relative to the controls) by more than four times, showing that simply providing information can result in a very large behavioural change. Interestingly, foreigners were much more reponsive to the direct mailings than Belgians. Furthermore, simple, lowcost supplements to the standard information can amplify the magnitude of the behavioural responses. Adding both a flyer and a specific plan supplement to the standard letter not only yielded the largest effects on individuals' method of payment choice, but also appeared to speed up the decision to switch. We provide a simple, behavioural economics' interpretation to account for our results.

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    File URL: http://www.centrumvoorsociaalbeleid.be/sites/default/files/20090105135559ASIY.pdf
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    Bibliographic Info

    Paper provided by Herman Deleeck Centre for Social Policy, University of Antwerp in its series Working Papers with number 0802.

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    Date of creation: Dec 2008
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    Handle: RePEc:hdl:wpaper:0802

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    Web page: http://www.centreforsocialpolicy.eu
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    Related research

    Keywords: Social security payments; Method of payment; Financial exclusion; Psychology and economics; Behavioural economics; Cues;

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    1. Anna Aizer, 2003. "Low Take-Up in Medicaid: Does Outreach Matter and for Whom?," American Economic Review, American Economic Association, vol. 93(2), pages 238-241, May.
    2. Anna Aizer, 2007. "Public Health Insurance, Program Take-Up, and Child Health," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 400-415, August.
    3. John List & David Reiley, 2008. "Field experiments," Artefactual Field Experiments 00091, The Field Experiments Website.
    4. Dynarski, Susan M. & Scott–Clayton, Judith E., 2006. "The Cost of Complexity in Federal Student Aid: Lessons from Optimal Tax Theory and Behavioral Economics," National Tax Journal, National Tax Association, vol. 59(2), pages 319-56, June.
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