NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Publications by Erin T. Bronchetti

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March 2011When a Nudge Isn't Enough: Defaults and Saving Among Low-Income Tax Filers
with Thomas S. Dee, David B. Huffman, Ellen Magenheim: w16887
Recent evidence suggests that the default options implicit in economic choices (e.g., 401(k) savings by white-collar workers) have extraordinarily large effects on decision-making. This study presents a field experiment that evaluates the effect of defaults on savings among a highly policy-relevant population: low-income tax filers. In the control condition, tax filers could choose (i.e., opt in) to receive some of their federal tax refund in the form of U.S. Savings Bonds. In the treatment condition, a fraction of the tax refund was automatically directed to U.S. Savings Bonds unless tax filers actively chose another allocation. We find that the opt-out default had no impact on savings behavior. Furthermore, our treatment estimate is sufficiently precise to reject effects as small as one-...

Published: “When a Nudge isn’t Enough: Defaults and Saving among Low - Income Tax Filers,” with Erin Bronchetti, David Huffman, and Ellen Magenheim, National Tax Journal 66(3), September 2013, 609 - 634.

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