Behavioural Insights & Poverty · Your account number: Dear Toby You are in arrears, and being...

Behavioural Insights & Poverty

Kizzy Gandy

Belgium – 21 November 2017

Outline of presentation

1. About the team

2. Introduction to behavioural insights

3. Relationship between poverty and decision-making

4. Examples of BIT’s work

5. BIT’s project methodology

6. Questions

About the team

We were the first government institution dedicated to applying behavioural science

“Our government will find intelligent ways to encourage, support and enable people to make better choices for themselves.”

We are now a social purpose company with offices around the world

2010 2012-13 20152014 2016

Employees

The focus of our work

BEHAVIOURAL INSIGHTSEXPERIMENTAL

METHODS

Introduction to behavioural insights

What are Behavioural Insights?

Behavioural Insights

Psychology

Ethnography

Behavioural Economics

Neuroscience

Understanding how people behave in practice so that we can design policy, programs and services better

Which would you choose?

Option A:

Internet-only subscription for $59

Option C:

Print-and-Internet subscription for $125

Option A:

Internet-only subscription for $59

Option B:

Print-only subscription for $125

Option C:

Print-and-Internet subscription for $125

What people want depends on how choices are presented

Two Options Irrelevant Alt.

Source: Dan Ariely experiment with students

We use cognitive short-cuts to make hundreds of decisions every day

Present bias

Present bias – an adaptive trait when resources were scarce?

McClure, S. M., Laibson, D. I., Loewenstein, G., & Cohen, J. D. (2004). Separate neural systems value immediate and delayed monetary rewards. Science, 306(5695), 503-507.

Immediate reward = limbic system (emotion)

Deferred reward = prefrontal cortex (cognition)

It’s often more effective to change the environment, instead of human cognition

Nudging has a long history

Regulation

Incentives

Information

Behavioural insights improve traditional tools for policy making…

…especially when combined with rigorous testing

Two different ways of applying behavioural insights

High-level policy(goals, rules, structures, funding, “terms of the debate”)

Opportunistic delivery(timing, wording, design, friction costs, trial and error)

ge“S

Testing small, low cost interventions can greatly improve the effectiveness of public policies

Doctors who say they are most familiar with antibiotic guidelines are the least likely to follow them (Linder et al, 2010).

10 million deaths and $100 trillion in unachieved GDP a year by 2050

The great majority (80%) of practices in London prescribe fewer antibiotics per

head than yours

The letter saved 73,406 doses of antibiotics across 791 practices

July August September October November December January February March

Control Treatment

The UK Government has set aside £23m to reduce prescribing by 1% which is close to our overall impact of 0.85% (when sent to everyone) but our intervention cost virtually nothing

Japan: Nudge Unit of Japan

UK: (i) The Behavioural Insights Team (BIT); & (ii) nudge units in 13 departments

Singapore: (i) BIT Singapore; (ii) Prime Minister’s Office; & (iii) Ministry of Manpower

‘Nudge Units’ around the world

Denmark: The Danish Nudging Network

Norway: Greenudge

Finland: Prime Minister’s Office

Sweden: Swedish Nudging Network

Netherlands: (i) Ministry of Economic Affairs; & (ii) Ministry of Infrastructure & the Environment

Canada: (i) BIU, Provincial Government of Ontario; (ii) Innovation Hub, The Privy Council Office; & (iii) BEAR University of Toronto

Chicago: Chicago Nudge Unit

Washington DC: White House Social and Behavioural Sciences Team

NYC: (i) BIT North America; & (ii) Ideas42

Canberra: Behavioural Economics Team of the Australian Government

Sydney: (i) BIT Australia; & (ii) Behavioural Insights Unit, New South Wales

Melbourne: Department of Premier and Cabinet, Victoria

European Commission: Behavioural Science and Foresight Team

World Bank:Global Insights Initiative

OECD: Behavioural science coordination

Germany: Chancellor’s Office

Kuwait: Behavioural Insights Unit

New Zealand: BIT New Zealand

Ireland: Behavioural Economics Unit

Indonesia: DG Tax BI Task Force

Bangladesh: a2i BI team

Poverty and decision-making

1 How does poverty affect decision-making and vice versa?

2What can policy-makers learn from behavioural science to prevent and reduce poverty?

Emerging research on scarcity

5,9%5,2%

Pre harvest Post harvest

Mani, Mullainathan, Shafir & Zhao (2013). Poverty impedes cognitive function. Science. 341(6149), 976-

Cognitive errors made by Indian sugar cane farmers

A holistic approach

Examples of BIT’s work to boost different forms of capital

Cognitive capital

• Mortgage arrears

• Housing vouchers

How can we encourage borrowers in long-term mortgage arrears to contact their lender?

Reciprocity and loss aversion

Your account number:

Dear Toby

You are in arrears, and being charged substantial fees. Please contact us now so we can help.

01923 280324

You’ve missed or under-paid a number of payments on your loan account XXXXX, putting you in arrears since XXXX, and we’ve been unable to contact you recently. You are currently being charged £53 every month you fail to make the full monthly payment. By being in arrears you also face paying significantly more interest on your loan.

These fees are avoidable, but if you do nothing they will continue to be charged.

Even if you are having financial difficulty or are unable to make your full monthly payments every month, there is a good chance I can help you avoid these fees, and get you back on track, by setting up a more manageable payment plan.

I can only help you avoid these ongoing charges if you get in touch, so please do contact me on 01923 280324. You can ask for me personally, and I’ll do my best to find a solution.

Yours sincerely,

These fees are avoidable, but if you do nothing they will continue to be charged.

…there is a good chance I can help you avoid these fees…

‘Call to action’ and salience

35% increase in households making contact with Central Home Loans

How can we encourage housing voucher tenants to recertify?

Reciprocity or social norms

Join thousands of tenants in NYC and submit your Annual Recertification online!

We created an account just for you to submit your Annual Recertification online!

“Reciprocity” “Social norms”

People care what their neighbours do!

New NYCHA residents that recertified online and on time

Social capital

• Adult skills

• Uni application

How can we help 16-19 year olds persist with maths and English?

Hi Jane, please ask Alice to explain the four operations in maths. Also ask her: when does order matter? Thanks, Uxbridge College.

Upcoming deadlines

Useful websites

College activities

Academic resources

Exam dates

Course content

Students nominated a Study Supporter to receive weekly SMS

Study Supporter Survey

Opted out Opted in

Supporters not texted (control)

Supporters texted

(treatment)

n = 1,476

How the trial was structured

19%22%

Did not opt in Opted in - control Opted in - treatment

*Passed all exams

Students were 27% more likely to pass – It cost less than £10 per student over the year

How can we encourage high achieving pupils from disadvantaged backgrounds to apply to competitive universities?

Letter from a ‘similar’ pupil currently studying at Bristol University

“Back in 2009, I was in exactly the same position as you… I came to realise that

people with grades like you and me are in high demand from very prestigious

universities.”Ben Cole, University of Bristol

Russell Group applications increased 17%

Russell Group acceptances increased 34%

Character capital

• Parental engagement

• Police recruitment

How can we encourage parents to engage in child development activities?

“Parent” “Science”

You can have fun and

play games with your

child while doing

everyday things. You

can play even while

getting dressed! Click

here to watch: bit.ly/123

Your child is learning

constantly from what’s

around him, which helps

him to grow smarter. He

can learn even while

here to watch:

bit.ly/1234

“Parent” “Science”

You can have fun and

play games with your

child while doing

everyday things. You

can play even while

here to watch: bit.ly/123

Your child is learning

constantly from what’s

around him, which helps

him to grow smarter. He

can learn even while

here to watch:

bit.ly/1234

Click-through engagement rate by text

YouTube views engagement rate by text

How can we improve the diversity of police recruitment?

We asked candidates to think about their values to overcome ‘stereotype threat’

Arm Email content

Treatment “Before you start the test, I’d like you to take some time to think about why you want to be a police constable. For example, what is it about being a police constable that means the most to you and your community?”

Control Standard email

Our email closed the gap in the percentage of white and BME candidates that passed the test

Recommendations

1. Policy-makers should aim to minimise time and mental costs of engaging in government services.

2. There is potential for behavioural science to improve the effectiveness of anti-poverty interventions with a combination of small tweaks to the user-interface of programs and larger policy interventions.

3. Anti-poverty interventions that account for positive and negative feedback loops between the different forms of capital, over different time horizons, will be most effective and efficient.

• e.g., supportive social networks improve responsive parenting, which supports brain development, with long term effects on learning.

TARGET SOLUTION

EXPLORE

5. Introduction to BIT’s project methodology:

T.E.S.T.

A Behavioural Insights Team project is built around four main components – T.E.S.T.

Target

Explore

Solution

Reduce unemployment

Get jobseekers back to work faster

Target: Define the outcome

1 JobCentre

Loughton

Explore: Understand the context

• Spent 2 months in Loughton

• Learnt from JobCentreAdvisors and jobseekers

Explore: Ask, listen, experience, analyse

Customer journey:

1. Time until first job focused meeting >2 weeks

2. Initial contact with Job Advisors too focused on conditionality

3. Duplication of effort (9 forms to be signed at first meeting)

4. Jobseekers focused on doing the minimum to qualify for benefits(3 job searches in between meetings)

5. Job search logs rarely filled in properly

6. Jobseekers are not motivated or lose motivation easily

Explore: What we learnt

Solution: Job focused meeting on first daywith planning assistance

Solution: Positive psychology writing exercise

We took advantage of an unusual set up:

• Jobseekers are arbitrarily assigned between two floors (allocation by off-site contact centre)

• Staff experience and performance is matched between the two floors

We changed 2nd floor processes and left the 1st floor unchanged

Control: 1st floor

Treatment: 2nd floor

Trial: Test, learn, adapt to find out if the new process works

51% 56%

Control Treatment

Percentage of jobseekers finding work within 13 weeks

Trial: New process got jobseekers into work more quickly…

Trial: Adapt and scale

• We kept: new start-up process & implementation intentions

• We dropped: positive psychology training

12 JobCentres

Results for Essex Stepped Wedge trial

56,8% 58,5%

Control Treatment

Percentage of jobseekers finding work within 13 weeks

750 jobcentresin Englandand Wales

Successfully replicated and implemented in Singapore and

Australia

Rolled-out to nationally: equates to savings of £50-100 million per year of welfare costs

Questions?

Dr. Kizzy Gandy, Senior Advisorkizzy.gandy@bi.team

Thank you

BIT’s EAST framework

Make it easy• Use the power of defaults

• Reduce the barriers to taking up a service

• Simplify messages

Make it attractive• Attract attention

• Design rewards and sanctions for maximum effect

• Personalise

Make it social• Show that most people perform the desired behaviour

• Use the right messenger

• Ask people to give something in return

Make it timely• Prompt people when they are likely to pay attention

• Consider the immediate costs and benefits

• Help people plan their response to events

EAST: summary

How can we get low income residents to schedule a free doctor’s appointment?

Three message variants to low income New Orleans residents who hadn’t seen a doctor in two years

Control: Simplicity Ego Prosocial

Which text worked best in getting low income residents to schedule a doctor’s appointment?

Simple Ego Prosocial

*** p<.001, ** p<.01, * p<.05

Percent responding "yes" to schedule appointment (n = 21,442)

How can we increase the number and diversity of individuals who apply to the police?

Challenge and Career messages tripled the number of applicants to the police

Challenge and Career messages were particularly motivating for people of colour

How can we improve adult numeracy and literacy?

Arm Example text message

Treatment “James, we hope you sometimes find Maths hard. We learn by studying and practising the tricky stuff, so keep it up! Leicester College”.

Control No text

Our weekly texts increased attendance by 21% and exam performance by 12%

Behavioural Insights & Poverty · Your account number: Dear Toby You are in arrears, and being...

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