Saving Incentives for Low- and Middle-Income Families: Evidence from a Field Experiment with H&R Block

William Gale, Jeffrey Liebman (), Emmanuel Saez, Esther Duflo and ,
Authors registered in the RePEc Author Service: Peter Orszag

No 5332, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper analyzes the effects of a large randomized field experiment carried out with H&R Block, offering matching incentives for IRA contributions at the time of tax preparation. About 14,000 H&R Block clients, across 60 offices in predominantly low and middle-income neighbourhoods in St. Louis, were randomly offered a 20 percent match on IRA contributions, a 50 percent match, or no match (the control group). The evaluation generates two main findings. First, higher match rates significantly raise IRA participation and contributions. Take-up rates were 3 percent for the control group, 8 percent in the 20 percent match group, and 14 percent in the 50 percent match group. Average IRA contributions (including non-contributors, excluding the match) for the 20 percent and 50 percent match groups were 4 and 7 times higher than in the control group, respectively. Second, several additional findings are inconsistent with the full information, rational-saver model. In particular, we find much more modest effects on take-up and amounts contributed from the existing Saver?s Credit, which provides an effective match for retirement saving contributions through the tax code; we suspect that the differences may reflect the complexity of the Saver's Credit as enacted, and the way in which its effective match is presented. Taken together, our results suggest that the combination of a clear and understandable match for saving, easily accessible savings vehicles, the opportunity to use part of an income tax refund to save, and professional assistance could generate a significant increase in contributions to retirement accounts, including among middle- and low-income households. This strategy would not, however, produce contribution rates anywhere near 100 percent.

Keywords: Retirement savings; Field experiment (search for similar items in EconPapers)
JEL-codes: H0 (search for similar items in EconPapers)
Date: 2005-10
New Economics Papers: this item is included in nep-exp and nep-pbe
References: View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
https://cepr.org/publications/DP5332 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Saving Incentives for Low- and Middle-Income Families: Evidence from a Field Experiment with H&R Block (2006)
Working Paper: Saving incentives for low- and middle-income families: Evidence from a field experiment with h&r block (2005)
Working Paper: Saving Incentives for Low- and Middle-Income Families: Evidence from a Field Experiment with H&R Block (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:5332

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP5332

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().