Refund to Savings

Grinstein‐Weiss, Michal; Comer, Krista; Russell, Blair; Key, Clinton; Perantie, Dana C.; Ariely, Dan

doi:10.1057/9781137482372.0009

Cited by 5 publications

(9 citation statements)

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“…Similarly, many families lack emergency savings, and this makes it difficult for them to cope with common financial exigencies such as a car repair or a trip to the hospital (Grinstein‐Weiss et al ). Half of American households—and 60% of low‐income households—report that they could not come up with $2,000 in an emergency (Grinstein‐Weiss et al ; Lusardi, Schneider, and Tufano ; see also FINRA Investor Education Foundation ). Without stored liquid assets, households often turn to costly alternative financial services, sometimes transforming a minor emergency into a major financial setback (Shah, Mullainathan, and Shafir ).…”

Section: Three Trendsmentioning

confidence: 99%

“…The receipt of a large refund at tax time, owing to the Earned Income Tax Credit or the Child Tax Credit, provides another opportunity for families to learn about and accumulate savings (Romich et al ). The Refund to Savings initiative, for example, uses a free electronic tax‐filing platform to help low‐income households convert tax‐refund windfalls, such as those from the Earned Income Tax Credit, into savings (Grinstein‐Weiss et al ).…”

Section: Action For Financial Capabilitymentioning

confidence: 99%

See 1 more Smart Citation

Creating Financial Capability in the Next Generation: An Introduction to the Special Issue

Sherraden¹,

Grinstein‐Weiss²

2015

Journal of Consumer Affairs

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Section: Three Trendsmentioning

confidence: 99%

Section: Action For Financial Capabilitymentioning

confidence: 99%

Creating Financial Capability in the Next Generation: An Introduction to the Special Issue

Sherraden¹,

Grinstein‐Weiss²

2015

Journal of Consumer Affairs

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“…Of the recontacted HFS1 participants, 5,157 participated in HFS2, a response rate of 39.6%. The low response rate for HFS1 may raise concerns about selection bias, but other research has examined the characteristics between the full TTFE population and the participants in both waves of the survey and found few differences between the TTFE population and survey respondents; though survey respondents did have slightly higher incomes than the general TTFE population (Grinstein‐Weiss et al )…”

Section: Experimental Designmentioning

confidence: 99%

“…Given the progressive nature of federal income tax rates and the existence of means‐tested refundable tax credits, such as the Earned Income Tax Credit and the Child Tax Credit, LMI households often count on the annual refund as an important windfall that facilitates major purchases, repayment of debt, and saving (Mendenhall et al ; Smeeding, Phillips, and O'Connor ). Research on LMI tax filers has found that the most common reported usage of the tax refund is to pay down debt; these filers reported that 43% of their tax refund went toward debt repayment, 23% went to immediate consumption, and the remaining third went to savings (Grinstein‐Weiss et al ). This same research found that spending the refund on nonessentials was relatively rare and that the most common reason by far to save the refund was for emergencies, as over three‐fourths of LMI filers who saved the refund did so for emergencies while substantially smaller proportions of filers saved for special purchases or long‐term goals like retirement.…”

Section: Introductionmentioning

confidence: 99%

“…First, the limited effects may stem purely from the financial constraints LMI households face, as lower incomes tend to mean less flexibility in managing one's finances. Nudges to promote tax‐time savings thus run up against the pressing financial needs of filers including paying off existing debts or covering essential purchases, as evidenced by the aforementioned research showing that LMI tax filers spent almost two‐thirds of their refund on immediate consumption or paying down debt (Grinstein‐Weiss et al ).…”

Section: Introductionmentioning

confidence: 99%

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Encouraging Tax‐Time Savings with a Low‐Touch, Large‐Scale Intervention: Evidence from the Refund to Savings Experiment

Roll¹,

Russell²,

Perantie³

et al. 2018

Journal of Consumer Affairs

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Low‐ and moderate‐income households often struggle to save, but the annual tax refund represents a prime opportunity for these households to save toward their financial goals or build their emergency savings. This paper presents the results of a randomized, controlled experiment embedded in a free tax‐preparation product offered in 2013 to low‐ and moderate‐income households. The experiment involved approximately 470,000 filers and assessed the impact of behavioral interventions on their savings behaviors. The results show that filers exposed to the treatments, which involved the established behavioral‐economics techniques of anchoring, choice architecture, and persuasive messaging, were more likely than a control group to save their tax refund and, on average, saved more of the refund. A follow‐up survey of these tax filers found that the treatments were associated with saving more of the tax refund six months after filing. The findings also show that anchors encouraging filers to deposit certain amounts are more effective than persuasive messaging emphasizing savings.

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Interventions designed to improve financial capability: A systematic review

Birkenmaier

Maynard

Kim

2022

Campbell Systematic Reviews

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Background There is growing recognition that people need stronger financial capability to avoid and recover from financial difficulties and poverty. Researchers are testing financial capability interventions with adults, children, immigrant populations and other groups, but little is known about the effectiveness of financial capability interventions on financial behaviour and financial outcomes. Objectives The purpose of this review is to inform practice and policy by examining and synthesizing evidence of the effects of interventions designed to improve financial capability. Financial capability interventions combine financial education and financial products and/or services. The research questions are: (a) What are the effects of interventions designed to improve financial capability on financial behaviour and financial outcomes? and (b) Does study(design), intervention (dosage, duration, type) or sample (age) characteristics relate to the magnitude of effect size? Methods We conducted two identical rounds of electronic searches for two different time periods. In Round 1 searched for studies through May, 2017 and Round 2 searched from May, 2017 through May, 2020. For both rounds, we identified and retrieved both published and unpublished studies, including conference proceedings, through a comprehensive search that included multiple electronic databases, grey literature sources, organizational websites, government websites and reference lists of reviews and relevant studies. We also conducted forward citation searching using Google Scholar to search for studies citing the included studies. We also conducted a search on Google using key terms. We hand searched the table of contents of selected journals to identify potentially eligible reports not properly indexed. Finally, experts who were study or sub‐study authors of prior studies were contacted in an attempt to obtain unpublished studies, studies in process and published studies missed in the database search. Selection Criteria To be eligible for this review, the intervention must have included a financial education component and a financial product or service. Studies must have also been conducted in any of the 35‐member countries of the OECD, and included a financial behaviour or financial outcome. To meet the criteria for delivering financial education, interventions must have delivered information about: (1) a variety of general financial concepts and behaviours, or advice about financial behaviours); (2) a specific financial topic; (3) a specific product; and/or (4) a specific service. To meet the criteria for access to a financial product or service, interventions must have facilitated access to one or more of the following: (1) a child development account; (2) a retirement account through an employer; (3) a ‘second chance’ checking account; (4) a matched savings account; (5) a financial service, such as financial counselling or coaching; (6) a bank account; (7) an investment vehicle; or (8) a home mortgage loan product. Data Collection and An...

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Refund to Savings

Cited by 5 publications

References 0 publications

Creating Financial Capability in the Next Generation: An Introduction to the Special Issue

Creating Financial Capability in the Next Generation: An Introduction to the Special Issue

Encouraging Tax‐Time Savings with a Low‐Touch, Large‐Scale Intervention: Evidence from the Refund to Savings Experiment

Interventions designed to improve financial capability: A systematic review

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