One Weird Trick to Get Americans to Claim the Money the Government Owes Them

Americans passed up more than $10 billion worth of stimulus checks in 2020. | iStock/NoDerog

The idea of passing up free money from the government might seem unthinkable at a time when bank websites crash from the sheer number of customers anticipating the arrival of their stimulus checks and “stimmy” payments trend on social media. Yet each year, vulnerable Americans forfeit billions of dollars in official aid.

In 2020, nine million people did not claim the first round of Economic Impact Payments, losing out on about $10.4 billion. And approximately 20% of eligible taxpayers don’t claim the Earned Income Tax Credit (EITC), relinquishing an estimated $7.3 billion annually.

This participation gap persists even when people recognize they may qualify for government benefits and can access them, a conundrum that has long stumped policymakers. Solving this problem, however, could be as easy as instilling a sense of psychological ownership in people eligible for assistance.

“The literature defines psychological ownership as the extent to which a target feels like it’s yours,” says Wendy De La Rosa, a PhD student in marketing at Stanford Graduate School of Business. “Importantly, it does not require actual legal ownership. We can feel a sense of ownership over things that we do not legally own.”

De La Rosa coauthored a recently published study in Proceedings of the National Academy of Sciences exploring the role of psychological ownership in closing the gap in benefits claims. The study found that simple, subtle, and inexpensive interventions can prompt people to apply for the resources that belong to them, from pandemic stimulus checks to tax credits.

The study is the first large-scale field investigation into the impact of psychological ownership on social welfare. It was coauthored with Stephanie M. Tully, an assistant professor of marketing at Stanford GSB; Eesha Sharma, an assistant professor of marketing at the Fowler College of Business at San Diego State University, and Eric Giannella and Gwen Rino, both data scientists for the nonprofit Code for America.

The researchers sought to learn how to overcome the aversion that many Americans feel toward taking government “handouts,” a widespread attitude that prevents millions from taking even small steps toward getting economic assistance. “If it’s true that this aversion toward help is stopping some of the population from receiving government benefits, or at least expressing interest in receiving government benefits, then, to the extent that we could change these perceptions, we would be likely to change interest,” De La Rosa says. “And one of the ways to change perceptions is to increase the sense of psychological ownership over those benefits. If I’m telling you, ‘These government benefits belong to you. You have $3,400, or whatever it is, that belongs to you,’ now all of a sudden, you don’t feel like you’re asking for help. You’re claiming what’s yours.”

Claiming What’s Yours

In four experiments with low-income individuals randomly pulled from lists generated by Code for America, the researchers determined that psychological ownership messages increased people’s interest in claiming government benefits by 20% to 128%.

In the first experiment, more than 9,900 test subjects received an email or text message from a representative of CalFresh, California’s version of the federal Supplemental Nutrition Assistance Program, once known as food stamps. While the control message told people that they might be eligible for a tax credit of a certain amount and that it was easy to file their taxes, the test message added that the tax credit “belongs to you.” All participants were provided with a link to a website that could help them file their taxes for free online.

By emphasizing that the money belonged to the recipients, the second message gave people a sense of psychological ownership. Nearly 30% of individuals who received it visited the website compared to less than 16% of those who received the control message. A similar experiment with a psychological ownership frame alerting low-income Californians about federal stimulus payments also increased website visits.

Another experiment showed that psychological ownership interventions can be more effective than those that emphasize deadlines or social norms. More than 9,800 low-income individuals received one of four messages. The control message told them they were eligible for an EITC of a certain amount. The psychological ownership message notified them that a tax credit “belonged” to them. That message outperformed the control message, a message reminding them to file their taxes before the deadline, and a “social norm” message that mentioned that millions of people like them had already filed.

However, the control message outperformed the social norm message, signaling to the researchers the necessity of distinguishing which behavioral interventions work best in particular circumstances. “We have these tools as behavioral scientists to use different interventions, but I think that this really highlights that you need to understand the context in which they will work,” Tully says. “In certain contexts some might work better than others. So even though the social norm message has been really effective in some contexts, it was actually harmful in this context, and in this study, psychological ownership outperformed everything else, though I don’t expect that it would always outperform everything else.”

In the final experiment, 810 paid participants who had been negatively affected financially by the pandemic read one of two messages about available COVID-19 relief funds. As predicted, more people in the psychological ownership group (68%) than in the control group (54%) chose to receive additional information about receiving the money. Participants in the former group also reported less discomfort asking for help and were more likely to visit an informational website.

A Sense of Belonging

Overall, the four experiments indicated that the gap in claiming benefits involves not only people’s ability to claim the money but also their desire to apply for it in the first place. The findings, the researchers say, should encourage policymakers to rethink how government benefits are presented to the public. By framing benefits as money that belongs to qualifying individuals rather than aid to people requiring assistance, potential recipients’ perceptions of benefits might change, making them more comfortable applying for money that could help them.

To emphasize the psychological ownership of government benefits, Tully says, policymakers should consider renaming benefits programs and using marketing language that reinforces the idea that benefits belong to those eligible for them. “The government benefit names in and of themselves might confer a sense of psychological ownership,” she says. The possibility that a sense of ownership over benefits may impact public response toward those benefits is not entirely new: “The makeup of Social Security was created, in part, to give people a sense of ownership over their funds. We pay into Social Security, and we feel as though we’re getting our money back at the end, even though that’s not exactly how it works. So, this idea has been under the radar for a while now.”

If government benefits are portrayed as handouts, then more Americans will feel that even applying for them is asking for help rather than claiming what is theirs. The truth, Tully says, is that these benefits were designed to be distributed to these individuals and “they should have a right to them.”

De La Rosa agrees that how the government describes benefits is crucial. “How we talk about benefits has downstream consequences on people’s behaviors,” she says. “If millions of dollars are sitting there and people who are out there suffering aren’t claiming those benefits, let’s take a hard look at how we’re communicating about those benefits.”