Refund to Savings

​The Refund to Savings (R2S) Initiative is the largest saving experiment conducted in the United States to date. R2S is a collaboration of academic researchers from the Center for Social Development at Washington University in St. Louis and Duke University, and Intuit, Inc., the makers of TurboTax tax preparation software. R2S builds a saving-promotion experiment into the TurboTax Free File Online product that is available free to low- and moderate-income households. R2S experiments measure the effect of interventions informed by behavioral economics that seek to increase saving at tax time. The tax refund is the largest check most households receive all year, and because it is outside of normal budgets and income, it may present a golden moment to build savings.

The low saving rate in American households has placed people across the income distribution at risk of financial insecurity and poverty. About half of households do not have the resources in savings to replace one month’s income, and the same proportion do not think they could locate $2,000 to pay for an unexpected expense.

This has drawn the attention of the policy community. In response, policymakers have considered expanding support for financial literacy education, increasing access to saving vehicles, and using tax incentives to promote saving. However, the evidence on these programs is mixed. This has led some scholars and policy analysts to draw on lessons from behavioral economics to design defaults and frameworks that could encourage individuals to save more of their incomes. The research activities of R2S will give unique and timely evidence on the dynamics of saving among low- and moderate-income households and will demonstrate if interventions informed by behavioral economics can stimulate saving.