When the Biden administration expanded the Child Tax Credit in 2021 with direct cash payments of up to $3,600 to alleviate child poverty, millions of the most vulnerable families never received the automatic payments because they didn’t have a digital connection with the Internal Revenue Service through a previous income tax filing online. The burden was on those families to seek out the public benefit.
To boost awareness, the government launched a messaging campaign to let families know that up to $3,600 a year was waiting for them. But months later, millions of dollars were still unclaimed.
A new study led by Wharton marketing professor Wendy De La Rosa pinpoints the reason why so many Americans left money on the table: The large amount seemed like an abstraction because people don’t think about money on a yearly basis. Through a series of experiments, the researchers found that people were more likely to collect the money if it was conveyed as a monthly or weekly amount — $300 or $69 — similar to how they budget.
Author(s): Angie Basiouny
Publication Date: 11 Oct 2022
Publication Site: Knowledge @ Wharton