Attention vs Choice in Welfare Take-Up: What Works for WIC?

TL;DR

This paper models welfare take-up as a two-stage process involving attention and active choice, revealing heterogeneity and showing that choice nudges are more effective than attention boosts, supported by empirical evidence from WIC programs.

Contribution

It introduces a two-stage model distinguishing attention and choice in welfare take-up, and empirically tests policy interventions using WIC data and pilot experiments.

Findings

Choice nudging outperforms attention boosting in increasing take-up.

Substantial heterogeneity exists in household attention and decision-making.

Choice nudges significantly improve program retention.

Abstract

Incomplete take-up of welfare benefits remains a major policy puzzle. This paper decomposes the causes of incomplete welfare take-up into two mechanisms: inattention, where households do not consider program participation, and active choice, where households consider participation but find it not worthwhile. To capture these two mechanisms, we model households' take-up decision as a two-stage process: attention followed by choice. Applied to NLSY97 data on the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), our model reveals substantial household-level heterogeneity in both attention and choice probabilities. Furthermore, counterfactual simulations predict that choice-nudging policies outperform attention-boosting policies. We test this prediction using data from the WIC2Five pilot program that sent choice-nudging and attention-boosting text messages to different households. Consistent with the counterfactual prediction, choice-nudging messages increased retention much more effectively than attention-boosting messages.