The persuasive role of information: The case of EITC reminders by mail

Abstract

While the cost estimates of reminders by mail are readily available for policy-makers, estimation of their benefits requires thoughtful analysis. For this purpose, we used data about earned income tax credit (EITC) reminders by mail which the Israel Tax Authority sent to eligible applicants during the period of 2008–2011. Using a framework of repeated letters, we identify those who applied for the EITC in response to such a reminder. Using an analytical framework of learning, we characterised different types of reactions to these reminders, with an emphasis on their role in persuading individuals to apply. We estimate the persuasive role of receiving reminders – which prompts an increased uptake – at 1.5%. Using independently-performed questionnaires, we characterise the ‘letter-dependent’ population, defined as those who depended on receiving reminders for requesting the EITC transfer. We find that these applicants were older; they received a lower transfer, they had a fair level of knowledge of the programme and they did not actively seek out information about the amount of the expected transfer.