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

Marieke Huysentruyt and Eva Lefevere

No 802, Working Papers from Herman Deleeck Centre for Social Policy, University of Antwerp

Abstract: We present evidence from a randomized field 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 Benefits 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.

Keywords: Social security payments; Method of payment; Financial exclusion; Psychology and economics; Behavioural economics; Cues (search for similar items in EconPapers)
JEL-codes: D03 D6 (search for similar items in EconPapers)
Date: 2008-12
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Persistent link: https://EconPapers.repec.org/RePEc:hdl:wpaper:0802

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