Abstract
Using a randomized field experiment in the Swedish pension system, we investigate whether receiving an information letter affects the take-up rate of the housing allowance for pensioners. We also investigate whether the framing of the information letter affects take-up. The results show that simple information letters had a dramatic effect on the application rate and subsequent take-up rate: the baseline application rate in the targeted control population was only 1.4 percent while the corresponding rates in the different treatment groups were between 9.9 and 12.1 percent. The letter that addressed common misconceptions about the benefit caused significantly higher submission and acceptance rates. The letters had a substantial economic effect on the applicants. We estimate that the applicants, induced by the treatment, increased their monthly incomes by around 10 percent.
Highlights
A common feature of various means-tested social benefit programs is that the targeted individuals fail to take up their benefits (Currie 2006)
The results show that simple information letters had a significant effect on the application rate and subsequent take-up
There is a clear difference between the control group, on the one hand, and the different treatment groups, on the other hand
Summary
A common feature of various means-tested social benefit programs is that the targeted individuals fail to take up their benefits (Currie 2006). The only letter that had a significantly different effect from the basic information letter was the letter that addressed common misconceptions about the benefit’s eligibility criteria This group had the highest application rate of 12.1% compared to the basic letter of 9.9%. The applications in the control group were accepted in almost 3 out of 4 cases, while up to 50% of the applications in the treatment group were declined These findings suggest that there is strong positive self-selection among the applicants in the treatment group and that the information letters pushed some individuals to apply even though they were not eligible. Demonstrating the eligibility criteria using simple examples might be the most effective tool to get eligible individuals to apply This is in line with the finding in Bhargava and Manoli (2015) that simplified information about the benefit had larger effects.
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