Code for: Tax Refund Uncertainty: Evidence and Welfare Implications

Principal Investigator(s): View help for Principal Investigator(s) Sydnee Caldwell, University of California, Berkeley; Scott Nelson, University of Chicago. Booth School of Business; Daniel Waldinger, New York University

Version: View help for Version V1

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Project Citation:

Caldwell, Sydnee, Nelson, Scott, and Waldinger, Daniel. Code for: Tax Refund Uncertainty: Evidence and Welfare Implications. Nashville, TN: American Economic Association [publisher], 2023. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2023-03-09. https://doi.org/10.3886/E158281V1

Project Description

Summary: Transfers paid through annual tax refunds are a large but uncertain source of income for poor households. We document that low-income tax-filers have substantial subjective uncertainty about these refunds. We investigate the determinants and consequences of refund uncertainty by linking survey, tax, and credit bureau data. On average, filers' expectations track realized refunds. More uncertain filers have larger differences between expected and realized refunds. Filers borrow in anticipation of their refunds, but more uncertain filers borrow less, consistent with precautionary behavior. A simple consumption-savings model suggests that refund uncertainty reduces the welfare benefits of the EITC by about 10 percent.

Funding Sources: Washington Center for Equitable Growth

Scope of Project

Subject Terms: tax refunds; uncertainty; welfare; EITC

JEL Classification:
      H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
      H53 National Government Expenditures and Welfare Programs
      I38 Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs

Geographic Coverage: Boston, MA

Time Period(s): 1/1/2016 – 12/31/2016

Collection Date(s): 1/1/2016 – 12/31/2016

Universe: Tax filers who had their taxes prepared at one of the Boston Tax Help Coalition's tax sites in spring 2016.

Data Type(s): program source code

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Published Versions

V1 [2023-03-09]

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