Mindy Hernandez, Innovator in Residence, CFED

Senior Researcher, ideas42

CFED Assests Learning Conference September 23, 2010

Behavioral Economics 201:

Applying Behavioral Research to Asset Building Initiatives:

Lessons From a Year of Experimentation

Demand

Cost Hassle

Embarrassment$

Demand

Hassle

Lots of hassle

Pretty easy

Demand for New Savings Product, SuperSave

50 500

“psychological subsidy”

From a behavioral perspective

The CFED Innovation Year Connect with great partners

Target the highest value challenges

Understand the context

Design and implement an intervention

Evaluate and learn

Process: Understanding the Context

A Note on Methodology

Outcome

Evaluation

Quasi-

experimental

Rigor

Confidence

Experimental

Increasing preparedness at tax time for self-employed clients: Campaign for Working Families (CWF) & Foundation Communities Austin, TX (FC)

Increasing take-up of savings products and public benefits at tax time: CWF

Increasing the use of direct deposit and savings accounts: Bank On DC & the Summer Youth Employment Program

2009-2010 Innovation Projects

PlusConsumer Credit Counseling Services

of the Delaware Valley (CCCSDV)

Increasing debt counseling attendance

Increasing response rates to surveys

These projects were supported by the Annie E. Casey Foundation

Emerging Lessons: What Seems to Make a

Difference

Simplification is key

Well designed reminders help

Behaviorally-informed incentives can make a difference

Simplify

CCCSDV

CCCSDV - Debt Counseling

Increased financial stability

Recruit clientsClients come for debt counseling

Complex form

Clients receive financial counseling

Simplify Form

60%

CCCSDVOriginal debtCounseling

Letter

Plus 5 pages Of financialworksheets

CCCSDVRevised debtCounseling

Letter

Zero worksheets

Results

n= 584

38% 43% 37%

24% 20%

QE Design

Well Designed Reminders Help

CWF Preparedness & Foundation Communities

CWF: Preparedness at Tax Time

Increased tax refunds

Encourage/educate clients to prepare Clients prepare

Hassle, stressful, time-intensive

Make a planSend reminders

Clients havepaperwork needed

for tax day

Does Tax Preparedness Matter?

n= 259

Irene Skricki1234 Maine StBaltimore, MD

Irene Skricki1234 Maine StBaltimore, MD

Complete excel sheet!

Find train receipts!

Call Comcast for copy of internet bill

Irene Skricki

April1, 2010April 5,2010

Control Treatment

(mean) refund_less_eitc (mean) refund_less_eitcrefund_hi/refund_lo

Preparation of Filers

Results

n = 41

Tax refunds Without EITC for SETI Clients at CWF - 2010

$241

$1,837

+$1,596

Experimental Design

Impact DiscussionThe findings are potentially very powerful. This

was a small sample; more research needs to be done.

In statistical analyses, the two groups seem to be random and similar. There are no statistically significant differences between the two groups.

In adjusted analyses, we find the treatment seemed to have a significant effect.

Behavioral IdeasReminders can act as channel factors, nudging

us toward our desired intention.

• Consistency: We like to appear consistent to ourselves and others

• Public accountability: We are more likely to follow through when we have told others of our intentions

• Planning (Implementation intentions): Detailing the steps needed to implement our goals helps

Foundation CommunitiesBusiness Class Enrollment

Increased businesscapacity & income

Advertise ClassClients enroll in

class

Depletion, Overload

Clientsattend class

Send reminders

Do Reminders Matter?

Impact DiscussionLetters did seem to significantly increase interest and

enrollment.

Additional postcards didn’t seem to make a difference.

Letters were especially helpful for those who did not receive a a refund: tax filers who received a negative refund and a letter were significantly more to express interest or attend a class compared to similar filers who did not receive the letter.

Experimental Design

Behaviorally Wise Incentives

CCCSDV

CCCSDV- Survey Response

Improved DMP Program

Send surveys- incentives

People complete surveys

Hassle, time-intensive

Send pre-incentives

CCCSDV able tolearn from clients

88%

Why Pre-incentives Work

Survey completio

n

Survey completio

n

ResultsSurvey Response Rates at CCCSDV

n =968

Experimental Design

Implementation Lessons Learned

Expectations. Sometimes we see big, exciting effects but most interventions have modest results- even these can be valuable.

Evaluation. There can be tension between learning & impact

Staff. Program staff are the single most important element to implementing a successful intervention.

Time. Even simple interventions require significant program staff time- in both design and implementation.

Implementation. Pay attention to the right intervention point: Build on current processes. Details Matter.

From Theory to Application

Early challenges

to traditional economic

Model(Early 1900s)

Breakthrough behavioral research

(Kahneman and TverskyProspect Theory, 1979)

Large-scale applied Behavioral pilots

Applied in the field with great success(Save More

Tomorrow; 2001)

Today:Testing

in the field

Administration for Children & Families BIAS

Project2010

Case Study: Foundation Communities

Linda Paulson, Tax Services Coordinator

What I Learned as a Practitioner Research Partner

There is a new way to look at data

Allocate enough staff (not just volunteer) time. Make sure you have the staff capacity and data resources dedicated to the project.

Find easy ways to collect data that can be built into current data collection systems (tax wise or survey monkey)

Next Steps for Foundation Communities

Look into cost effective ways to send reminders (email and text)

Use preparedness data to target unprepared clients and offer one-on-one coaching for preparedness

Case Study Campaign for Working FamiliesA program partner of the Urban Affairs Coalition in

Philadelphia, PA

Megan Kiesel, Director of Impact and Outreach

What I Learned as a Practitioner Research Partner

Think about overall program design

Think about implementation (not just what services you’re offering but how are you offering those services?)

Think about how to make small changes in current processes

Find a research partner- speed dating at the ALC is a great opportunity! CFED is also collecting names for the future.

Next Steps for CWF

Continue partnering with researchers to conduct formal experiments with more intention and staff support

Continue to integrate behavioral changes into larger program design

Final Thoughts: What Now?Create you own map: What are the key goals? Put yourself in

your clients’ context- where are the chutes? Potential ladders?

Read Nudge (Cass & Sunstein) and Influence (Cialdini)

Be realistic & prepare: Do you have the staff, data and time?

Connect with great research partners (CFED can help!)

Big picture: continue the conversation: how can we continue to connect great researchers to big problems and great practitioners?

Learn more on the the blog:Cfed.org&Watch out for the white paper