How to Cut Poverty Rates Right Now

Not how people sign up for welfare anymore.

Photograph: Fox Photos/Getty Images

Why aren't America's public-assistance programs helping more people out of poverty? One important answer is that too many people who could benefit don't sign up. Just 32 percent of those eligible for welfare enroll, along with 64 percent for Supplemental Security Income. And nonusers are often the people who need help the most.

QuickTake Safety Net

But fixing this problem may simply be a matter of persuasion. In 2010, two economists got the Internal Revenue Service to test whether better or more frequent messages could entice additional eligible taxpayers to claim the earned income tax credit. This benefit amounts, on average, to about a month's worth of income, but 20 percent of those who could take advantage of it don't.

Looking at 35,050 tax filers in California who failed to respond to an IRS notice of their EITC eligibility, the economists found that merely sending a second letter a few months later prompted 14 percent to sign up. Making that letter very clear -- with simple language, an easy-to-read font and well-spaced text -- boosted the response rate by another 9 percentage points. And telling people how much money they could get increased their odds of participating by another 8 percentage points.

Taken together, those three small changes -- repetition, simplification and disclosure of potential benefits -- persuaded 31 percent more eligible tax filers to claim the earned income tax credit. If the same changes were made nationwide, they could provide tax credits for millions more needy families.

It stands to reason that smarter messaging could also increase sign-ups for other social programs -- even Obamacare, which has struggled to persuade most of those who qualify for subsidized insurance to buy it.

Raising people out of poverty is a complex challenge that calls for efforts on multiple fronts, from schools to housing to the job market. But one easy strategy to relieve the burden for many families right away may come down to a simple shift in the way the government speaks to them.

To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at davidshipley@bloomberg.net.