Behavioral Economics Policy Impact and Future Directions (2023) / Chapter Skim
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7 Social Safety Net Benefits
7 Social Safety Net Benefits
Pages 127-138
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From page 127... ...
The federal government also provides major assistance through income tax programs, particularly the Earned Income Tax Credit (EITC) , which provides for significant tax credits to low-income families with earnings, with most support going to families with children.
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From page 128... ...
Subsidized Housing Only about 21 percent of eligible families are estimated to receive housing subsidies for which they are eligible. However, this is largely because housing agencies offer only a fixed number of public housing units and housing vouchers, and demand far exceeds the supply; there are long waiting lists for these programs, sometimes as long as five years (Kingsley, 2017)
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From page 129... ...
POSSIBLE EXPLANATIONS FOR LOW PARTICIPATION Traditional economic models would predict that all eligible individuals should be interested in participating in these programs because doing so would increase their level of economic resources, and that participation rates would be very high for people who have few resources in the absence of the available government assistance. A number of hypotheses from behavioral economics have been suggested for low take-up rates, including psychological predispositions, people's ability to acquire and process information, perceptions of perceived benefits that do not reflect actual ones, and people's ability to cope with the often onerous bureaucratic requirements.
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From page 130... ...
But even more burdensome are the time and paperwork requirements needed to establish eligibility, which may entail submission of pay stubs, verification of assets and bank balances, reports and verification of the composition of the family and who pays for what, documentation of child care costs and rent, and many other items. While these rules and their consequent compliance burden may stem from an effort to determine eligibility as accurately as possible and to prevent fraud by requiring documentation of income and assets, research on low-income people has shown that these administrative burdens loom large in discouraging application, especially because behavioral factors, such as the cognitive barriers, are particularly prevalent among low-income people (Mullainathan & Shafir, 2013)
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From page 131... ...
In the 2000s, the federal government allowed states to adopt policies to reduce application costs, including online application and management, electronic debit cards, simplified reporting, and longer recertification intervals. Cross-state comparisons show that these policies significantly increased participation, with a 37 percent increase over a 16-year period (Ganong & Liebman, 2018; Dickert-Conlin et al., 2021)
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From page 132... ...
Called the Behavioral Interventions to Advance Self-Sufficiency project, it involved 15 state and local agencies concerned with child support, child care, and work support programs that involved more than 100,000 clients. The behavioral interventions tested involved an initial phase of identifying bottlenecks and barriers in the 2The Office of Management and Budget has recognized this issue and recently issued a memo to all federal agencies on how to improve access to public benefit programs by reducing administrative burden: see https://www.whitehouse.gov/wp-content/uploads/2022/04/M-22-10.pdf 3The study did not collect data on actual applications.
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From page 133... ...
For example, one study showed a positive effect of 8–9 percentage points in response to a variety of letters mailed to seemingly eligible households that had not filed for the credit. However, in similar studies, postcard-style mailings to larger samples of eligible households yielded positive but very small effects (1% or less; Bhargava & Manoli, 2015; Guyton et al., 2017; Goldin, Homonoff, & Meckel, 2022)
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From page 134... ...
• Many eligible individuals and families lack information about complex program requirements, and low levels of education and literacy impede their capacity to acquire the information they need to accurately estimate how likely they are to receive benefits. • At least some individuals and families perceive social stigma associ ated with participating in social safety net programs; this reflects the importance of social norms in their decision-making processes.
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From page 135... ...
• A few costly large-scale interventions, particularly those imple mented by the U.S. Department of Agriculture for SNAP, appear to have had positive effects on take-up with interventions that provided additional information, simplified application forms, and otherwise reduced the administrative burden of applying but were more costly.
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From page 136... ...
American Economic Review, 105(11)
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From page 137... ...
. Conse quences of administrative burden for social safety nets that support the healthy develop ment of children.
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From page 138... ...
. Trends in USDA Supplemental Nutrition Assistance Program participation rates: Fiscal year 2016 to fiscal year 2019.
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