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Child benefit support and method of payment: evidence from a randomized experiment in Belgium

TitleChild benefit support and method of payment: evidence from a randomized experiment in Belgium
Publication TypeOther Journal Article
Year of Publication2010
AuthorsHuysentruyt, M., & Lefevere E.
JournalAmerican Economic Journal: Economic Policy
Volume2
Issue2
Pagination163-184
Abstract

We examine the effects of information and information presentation format on individuals' choice of payment method in a large randomized experiment carried out with the Belgian National Office for Family Benefits. We find that a one-time mailing providing information about method of payment for child benefit support caused a fourfold increase in parents' decision to switch from payment by check to electronic payment. Simple, low-cost supplements significantly raised people's responsiveness to the mailing. Our results suggest that complexity and information (processing) costs pose significant barriers to transitioning to electronic payment methods, and that deliberate efforts to lower these costs can contribute to large behavioral changes.

URLhttp://pubs.aeaweb.org/doi/pdfplus/10.1257/pol.2.2.163
DOI10.1257/pol.2.2.163
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