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Primeron“Nudge:”BehavioralEconomics,DesignThinking,andDataandAnalytics Page1

CITIZEN-DRIVENBYDESIGN:

APRIMERON“NUDGE:”BEHAVIORALECONOMICS,DESIGNTHINKING,ANDDATA&ANALYTICS

Introduction–TheChallengeandOpportunityofCitizen-DrivenDesign

“Organizationsareperfectlydesignedtogettheresultstheyget,”notedBobMcDonald,thepastchief

executiveofficerofProctor&GambleandsecretaryoftheUnitedStatesDepartmentofVeterans

Affairs.“Ifyoudon’tliketheresultsyouaregetting,thenyouneedtochangethedesignofthe

organization.”1

SecretaryMcDonaldwasalludingtoanimportantlesson:Everyorganization–whetherprivate,non-

profit,orpublic–producesoutcomesthataredependentonhowitsservices(andunderlyingstructures,

systems,andprocesses)aredesigned.Yetformanyorganizations,trulyunderstandingwhatwilldelight

customersandgeneratevaluedoutcomes,anddesigningproducts,services,orprogramsaroundthat

customer-centricview,continuestobeachallenge.

Asolutionforthischallengeistheuseof“nudge”2strategies.Nudgestrategiesleveragebehavioral

economics,designthinking,anddataandanalyticsinordertonotonlyimproveprogramsandservices

forcitizens,butalsogeneratebetteroutcomesandpublicvalue.

Savvyleadersarealreadyputtingnudgestrategiestowork.InitiativessuchastheU.K.Behavioral

InsightsTeam,theU.S.SocialandBehavioralSciencesTeam,theQatariNudgeUnit,andanarrayof

state,local,andregionaleffortsaroundtheglobeareusingsimpleandcost-effectivetoolstoreduce

costsandimproveresultsacrossanarrayofservices.Yetevenwiththisprogressbyearlyadopters,

manypublicsectororganizationsneedawaytodeterminewhichstrategyorstrategieswillbemost

effectivetoaccomplishtheirgoalsandprovidethebusinessvaluetheyarelookingfor,intermsof

highercitizensatisfaction,betterqualitypublicserviceandimprovedoutcomes.

1https://hbr.org/2016/12/a-transformation-is-underway-at-u-s-veterans-affairs-we-got-an-inside-look2“Nudges”aremethodsofaugmentingthedesignoftheenvironmentinwhichpeoplemakedecisionsinordertoimproveindividualandsocietaloutcomes.Nudgestrategiesshiftbehaviorsthatmaintainfreedomofchoice,buthavethepotentialtomakepeoplehealthier,wealthierandhappier.Foradditionalinformationpleasevisit:https://dash.harvard.edu/handle/1/16205305


Whilebehavioraleconomics,designthinking,anddataandanalyticsarepowerfultoolsintheirown

right,theirconvergenceenablesanewleveloftransformationingovernment.Thisfusionenables

leaderstocreatea“nudgedesignfeedbackloop”byprobingthefollowingquestions:

1. OutcomeGoal:Whatisourpublicservicegoalandobjective?Whattypesofoutcomesare

needed?Whatisthevariancebetweentheoptimaloutcomesandcurrentoutcomes?

2. BehavioralEconomics:Whataretheinfluencingfactorsonhowdecisionsandchoicesaremade

–bothbyindividualsandcollectivelybyorganizations?

3. ChoiceArchitecture:Howcanadecision-makingenvironmentbeimprovedtoproducebetter

outcomes?Whatchoicearchitectureornudgescanbeapplied?

4. DesignThinking:Howcanthedesignoffront-officeandback-officeservices,structures,

systems,andprocessesbeimprovedtoenablebetterservicedelivery?

5. OutcomeMeasures:Whatdata,analytics,andmeasurescanbeputinplacetoservicedesign

andtheeffectofnudges?Howdothosemetricsinformpolicyandoutcomegoals?

Graphically,thissequencingcanberepresentedas:


Definingthe“Tools”ofNudge–BehavioralEconomics,ChoiceArchitecture,Data&Analytics,andDesignThinking

Aswestarttobuildanactionableframework,definingthetoolsofbehavioraleconomics,choice

architecture,anddesignthinkingisourfirststep.Wecandefinethemgenerallyasfollows:

BehavioralEconomicsappliestheconsiderationof“non-rational”influencessuchaspsychological,

social,andemotionalfactors,ontheeconomicdecisionsofpeopleandorganizations.Traditional

economicspositsthatpeopleandorganizationswillalwaysmakedecisionsthatmaximizebeneficial

outcomes,butrealityshowsthatdecisionsareoftenheavilyinfluencedbysocialnorms,framingof

choices,“ease”ofdecision-making,andsimplifying(reducingcomplexityandincreasingaccess)

information.Theimplicationisthatifpolicymakersandgovernmentexecutivescanleverageprinciples

frombehavioraleconomicsintothedesignanddeliveryofgovernmentprograms,constituentswillbe

abletointeractwithgovernmentbetterimprovetheirdecisionmaking,andsocietywillachievesocially

optimaloutcomes.

ChoiceArchitectureistheapplicationofbehavioraleconomicstothedesignofadecision-making

environment.Adecision-makingenvironmentisanyproduct,service,orplacewhereacustomeris

interactingtomakeachoice(whetherconsciouslyorsubconsciously)anddeterminingtheirnextaction.

ThalerandSunsteincallthedesignoftheenvironment“choicearchitecture.”3Colloquially,wereferto

choice-architecturetacticsas“nudges”–“methodsofaugmentingthedesignoftheenvironmentin

whichpeoplemakedecisionsinordertoimproveindividualandsocietaloutcomes”.Nudges,perThaler

andSunstein,“shiftbehaviorsthatmaintainfreedomofchoice,buthavethepotentialtomakepeople

healthier,wealthierandhappier.”

Therearethreebroadstrategiesforemployingchoicearchitectureintheformofnudges:Increasing

Information,ImprovingEfficiency,andLeveragingSocialNorms4:

3ThalerRHandSunsteinCR.2008.Nudge:ImprovingDecisionsaboutHealth,Wealth,andHappiness.NewHaven,CT:YaleUniv.Press4SeeNudging:AVeryShortGuideinsupplementalreadingssection.


Data&Analyticsarecriticalbuildingblocksindesigningandimplementingnudges.Generally,dataand

analyticsistheuseoftechnologicalplatforms,socialnetworks,environmentalsensors,inexpensivedata

storage,anddataanalysismethods(bothpeopleandsoftwareandwhat’sreferredtoas“bigdata”)that

allowbettermeasurementacrosstheentireenterpriseofinputs,outputs,outcomes,andimpact.Using

analytics,publicsectorleaderscanquicklyassesstheperformanceofasystemfromawiderperspective

(e.g.acrossdepartments,agenciesorjurisdictions),andevendrilldowntoprogramsandoperating

IncreasingInformation

Disclosure:Makingcitizensawareoftheeconomicorenvironmentalcosts

associatedwithanaction,suchaswithenergyuseor

thefullcostofaloan

Warnings:Graphicpicturesorlargefontswithbrightcolorstowarnofnegativeimpact,e.g.warningsoncigarettepackaging

Reminders:Provideremindersbyemailortextmessageforoverduebillsandotherobligations

ImprovingEfficiency

DefaultRules:Setthedefaultofprogramsto

achievetheresultyouwant:opt-in,automatic

enrollment,ordouble-sidedprinting

Simplification:Complexitycausesconfusion;designprogramssotheyareintuitiveandeasyto

navigate

IncreaseEaseandConvenience:Reducebarriersandmakethe

intendedoutcomeeasytoachieve:putthehealthy

foodfirst,highlightthelow-costoption

LeveragingSocialNorms

UseSocialNorms:Emphasize what people

normallydo,e.g.mostpeoplepaytheirtaxesontime,most

peopledon'tcheatonunemployment.Make

exampleslocalandspecific

Pre-CommitmentStrategies:Havepeoplecommittoacertainaction,suchassmokingcessationor

reportingtruthfulinformation.Thisworksbest

withaspecificitemandaction

ElicitingImplementationIntentions:Askifcitizensplantodoacerainaction,suchas"Doyouplanto

vaccinateyourchild?"or"Doyouplantovote?"

Emphasizingaspecificidentityhelps

InformingPeopleoftheConsequencesofPast

Actions:Informonthecostofmedicalbills,ornote

energyuseonelectricalbills


units.Thisanalysiscanthendriveinnovationinthedesignanddeliveryofservices.Forexample,ifa

governmentislookingtoreduceenergyconsumptionacrossagencies,leveragingsocialnormstoshow

whichagenciesarebetteratenergyusagecancreatehealthycompetitionbetweenunitstoreduce

overallenergyuse.Butthisrequiresknowingbaselinesandtrendsfor“ideal”energyusage.Another

examplewouldbeahumanservicesagencylookingtoincreasecomplianceoftimelychildsupport

payments.Theagencyinthiscasecouldanalyzedatatofindacertainpercentageofpeoplemostlikely

tobelateonpayments,andthenimprovenudge-typecommunicationtothatgroup.

Data&Analyticsalsounderpinsevidence-basedapproachestonotonlyunderstandingoutcomes,but

alsoidentifyingnudge-typeinterventionsthatmayimproveoutcomes.Evidence-basedapproachesuse

rigorousanalysisofprograminvestment,outputs,andimpactrelativetooutcomesinordertoquantify

return-on-investmentandotherfinancialmetrics.One“engine”ofevidence-basedgovernmentisthe

randomized-controltrial,whichcomparesmetricsofoneprogram(viadataonitsoutcomesandimpact)

toacontrolgrouporprogram.Animportantcomponentofthescientificprocess,theuseof

randomized-controltrialsisrapidlygainingacceptanceinsocialprogramsandinitiativesthatproducea

lotofdata.Thisformofanalysisprovidesanunequaledmeasureor“evidence”ofaprogram’sresults.

However,asaresultoftheextendedtimeandtremendousexpenseinvolvedinconductingrobust

randomized-controltrials,aswellasethicalissuesassociatedwiththeminpublicpolicy,organizations

areincreasinglyturningto“rapid-cycleevaluation”toquicklyassesswhichnudgesproducethebest

responsesandoutcomes.Forexample,theU.S.DepartmentofAgriculture’sFoodandNutritionService

testedasimple,low-costinterventionusinginsightsfrombehavioraleconomicsandchoicearchitecture.

Itfoundthatfruitplacedinacolorfulbowlinaconvenientpartoftheschoollunchlineledtoa102

percentincreaseinfruitsales.5Basedonthesefindings,policymakerscandirectfundstotheNational

SchoolLunchProgramtoscaleupthistypeofchoice-architectureinterventioninschoollunchrooms

acrossthecountry.Thisisjustoneexamplewhereapplyinganunderstandingofhumanbehavior

enablesthegovernmenttoevaluatethecost-effectivenessofaprogram’simpactbeforecommitting

resourcestowardssomethingthatmaynotprovesuccessful.

DesignThinkingputsthebroadercustomer(constituent/citizen)experienceatthecenterofthe

developmentanddeliveryofprogramsandservices.AccordingtoIDEO,aleadingglobaldesignfirmthat

worksinallsectors,“designthinkingisahuman-centeredapproachtoinnovationthatdrawsfromthe

designer'stoolkittointegratetheneedsofpeople,thepossibilitiesoftechnology,andtherequirements

5https://www.fjordnet.com/workdetail/putting-design-at-the-heart-of-social-service-delivery/


forbusinesssuccess.”6Newmethodsofdesignthinkingareimportanttogovernmentbecausethe

digitalcapabilitiesenableleaderstotakeafreshlookathowstructures,systems,andprocessesareput

togetherinthe“backoffice,”aswellashowcitizen-facingservicesandprogramscanbeimproved.

Forexample,LutheranSocialServicesofIllinois(LSSI)realizedthatoutcomesoftheirservicescouldbe

improvediftheycouldbetterintegratetheirsocialservicesusedbytheirclientswithintheir"networkof

care,”trackaclient’sjourneyastheyaccessedprograms,andvisualizetheirclients'progressionthrough

treatment.Toaddressthischallenge,LSSIpartneredwithAccentureandFjordtoimplementadesign-

thinkingapproach,whichenabledthemtobetterunderstandtheinteractionpointbetweenclientsand

servicesandhowservicescouldbebetterdesignedandalignedwithoutcomes.7

Citizen-DrivenbyDesign–CreatingaFramework

OurcentralchargeforthePublicSectorfortheFutureSummitistocreateaframeworkforcitizen-

drivendesign.Akeyaspectofthisgoalistogainanunderstandingofhowpublicsectororganizations

caninstitutionalizenudgemethodsintogovernmentoperations.Stemmingfromresearchcallswiththe

Summit’sExecutiveLeadershipGroupandtheresultsoftheIdeationRetreat,belowareselectexamples

ofhowpublicsectororganizationshaveusedtoolsfrombehavioraleconomics,choicearchitecture,

nudges,anddesignthinkingtoachievedesiredoutcomes,organizedinthefollowingway:

PublicValueChallenge

DesiredOutcomes:Whatproblemarewetryingtosolve?Whatnewoutcomesdowehopetoachieve?Whatnudgeinterventionsareweapplying?

Citizen-Facingor

Optim

izedEnterprise

NudgePrinciple(s)

DesignThinking

Data&Analytics HumanCapital

§ Whatnudgeprinciplesdoesthisapproachdrawon?

Whatprocesses,programs,orstructuresmustberedesigned?

Whatdataandanalyticsarenecessarytoimplementthesenudges?

Whatworkforceissuesneedtobeaddressed?

6https://www.ideo.com/us/7https://www.fjordnet.com/workdetail/putting-design-at-the-heart-of-social-service-delivery/



ImprovingPurchasingDecisionsinGeorgia:Together,theGeorgiaDepartmentofAdministrativeServicesandAmazondesignedanapproachtonudgepeopletopurchaseitemsoffofstatewidecontracts.Whenemployeesselectanitemthatisavailableonastatewidecontract,awarningsignpopsupthroughAmazonalertingthemthattheitemmightbeonastatewidecontractandthattheyshouldfollowstateprocurementpolicy.

Optim

izedEnterprise

NudgePrinciple(s)

DesignThinking


§ Warnings§ Reminders

Implementingthisnudgerequiredredesigningthewebportalforemployeepurchases

GDASistrackingpurchasingofstatewidecontractstomeasureimpactandusingdataonpurchasestorefinetheirapproach

Ideally,thisnudgewillminimizetheinterventionsneededbyGDASprocurementstaff,freeingupcapacitytofocusonotherareas


ManagingCashFlowandStudentEnrollmentsatUSC:TheUniversityofSouthCarolinachangedtheircentralpaymentdatetooccurbeforestudentswerephysicallyoncampus.ThisnudgehasimprovedcashflowandhashelpedtheDivisionofAdministrationandFinancedevelopamorerealisticsenseofwhichstudentswillactuallyshowuponcampus.

Optim

izedEnterprise

NudgePrinciple(s)

DesignThinking


§ Pre-commitments

Implementingthisnudgerequiredredesigningthestudentpaymenttimelines

USCusesdataandanalyticstounderstandpaymentandenrollmenttrendsandmeasureimpact

Changingthepaymenttimelinesforstudentsimpactedthetimelinesforfinancestaffaswell



IncreasingUptakeofTaxAmnestyProgramsinPennsylvania:Pennsylvania’sDepartmentofRevenuereviewspartially-completedamnestyapplicationsandsendstargetedreminderstopeopleatoraboveacertaindollaramountwithanofferofassistancetohelpthosepeoplecompletetheamnestyprogram.Theyfoundthatreviewingwherepeoplewereintheprocess,andthenemailingorcallingthemwithareminder–“Iseethatyouhaven’tyetcompletedyourapplication.Canwehelp?”–madeabigdifference.

Citizen-Centric

NudgePrinciple(s)

DesignThinking


§ Reminders Implementingthisnudgerequiredredesigningtheoutreachapproachtocitizenseligiblefortaxamnesty

PArequiresdataandanalyticstoidentifypeoplewhohaveonlypartiallycompletedtheformsandtosettargetdollaramounts

Staffhavetotakeonanewroleofsendingtargetedremindersandproactivelyofferingassistanceaspeoplecompletethetaxamnestyprocess


ImprovingPrenatalCareandReducingCostsinIndiana:Recognizingthatprovidingpregnantwomenwithprenatalcarereducesthelikelihoodofthebabygoingintoaspecialtynatalunit,theStateofIndianaissendingtaxistotakepregnantwomentotheirappointments,ratherthanexpectingthemtotakemultiplebusesorpayforataxioutofpocket.Keepingonebabyoutofaneonatalunitsavestensofthousandsofdollars.

Citizen-Centric

NudgePrinciple(s)

DesignThinking


§ IncreasingEaseandConvenience

Implementingthisnudgerequiredredesigningoutreachandassistancetopregnantwomen

INuseddataandanalyticsoninfantmortalityandneonatalunitcoststodevelopabusinesscaseandwillbetrackingtheusageandimpactofthenewapproach

Staffhavetotakeonanewrolecoordinatinglogisticswithtaxicompanies



ImprovingDataSharinginIllinois:Toimprovedatasharingacrossagenciesandorganizations,theIllinoisDepartmentofInnovationandTechnologyhaschangedthedefaultondatasharingtoassumethatallagencieswillsharedataunlesstheyexplicitlydemonstratewhydatashouldnotbeshared.Torolloutthischange,thedepartmentfirstengagedseveralagenciesandthenreliedonsocialnormstogetotherdepartmentsonboard.

Optim

izedEnterprise

NudgePrinciple(s)

DesignThinking


§ Default§ UsingSocial

Norms§ Simplification

Implementingthisnudgerequiredredesigningthestate’sapproachtodatasharing

Nonewdataandanalyticswereneededtodrivechange,howeverthiswilldramaticallychangeIL’sabilitytocapitalizeondataandanalytics

Agencieshadtoshifttheirculturesandmindsetstobecomecomfortablewithnewlevelsofsharingandtransparency


ReducingCarbonEmissionsinCalifornia:Toreducecarbonemissionsandcreateamarketforelectricvehicles,CaliforniaestablishedaZEV-firstpolicy,whichmakesthedefaultpurchaseforfleetvehiclesZEVorLEVforallsedans.TheDepartmentofGeneralservicesisalsofinancingthevehiclestoencourageagencyuseandsolicitingpre-commitmentsfromagenciestomanagerefuelingandchargingstations.

Optim

izedEnterprise

NudgePrinciple(s)

DesignThinking


§ Default§ Pre-

CommitmentStrategies

Implementingthisnudgerequireddesigningaplanforchargingandrefuelingstationsandredesigningprocessesassociatedwithvehiclepurchases

Dataonvehiclelifecyclecostsandmaintenancewerenecessarytoimplementthisnudge

Staffhadtogainnewknowledgeonelectronicvehicles



BoostingVoluntaryTaxComplianceinIdaho:Toimprovevoluntarytaxcompliance,Idahomodernizedtheirtaxcodeandsimplifiedtheirtaxforms.

Citizen-Centricand

Optim

izedEnterprise

NudgePrinciple(s)

DesignThinking


§ Simplification§ Pre-

CommitmentStrategies

Implementingthisnudgerequiredredesigningtaxforms

IDismeasuringcompliancerates,hopingtoachieve100%compliance

Toimplementthisnudgestaffhadtoeducatelegislators


LoweringHealthcareCostsinColorado:Toreducehealthcarecostsforthestate,Coloradohastakenseveralstepstomoveemployeestohigh-deductibleplans,includingsimplifyingtheprocessofchangingplans,providinginformationontheeconomicconsequencesoftheircurrenthealthinsurance,andremindingthemofthepastcostsoftheirconventionalplan.

Optim

izedEnterprise

NudgePrinciple(s)

DesignThinking


§ Simplification§ Disclosure§ Informing

PeopleoftheConsequencesofPastActions

Implementingthisnudgerequiredredesigningthewayinformationissharedaboutemployeehealthcareoptions

Totracksuccess,COismeasuringtheadoptionofhighdeductibleplans

Toimplementthisnudge,staffhadtoeducateworkersontheconsequencesassociatedwithdifferenthealthcareplans



ReducingtheCarbonFootprintinCalifornia:Toreduceandimprovethestate’scarbonfootprint,allnewbuildingsmustbezero-net-energybuildings,unlessanagencyordepartmentcanjustifytheneedforadditionalenergy.

Optim

izedEnterprise

NudgePrinciple(s)

DesignThinking


§ Default Implementingthisnudgerequiredredesigningtheprocessfordesigningnewbuildings

Toimplementthisnudge,CAiscollectingandanalyzingdataonEnergyUsageIndexbybuilding,baselinecalculations,theaverageplugloadperperson,andsoforth

Toimplementthisnudgethestateneededtotrainandhireemployeeswithexpertiseondesigningandconstructingzero-net-energybuildings


ImprovingChildSupportCollectionsinPennsylvania:Toachievethehighestcurrentcollectionsandlowestarrearspercentagesinthenation,Pennsylvaniadevelopedanautomatedtextmessagingsystemthatsendsremindersforupcomingappointments,missedpayments,andothereventsrelatedtochildsupportenforcement.Usingtexts,DHSdoubledthesuccessrateofitspreviousphonemessagingandincreasedmonthlychildsupportcollectionsbymorethan$1millionpermonth.ThetextsprovidemoreprivacythanphonemessagesandimprovetheDepartment’scustomerservice.

Citizen-Centric

NudgePrinciple(s)

DesignThinking


§ Reminders Implementingthisnudgerequireddesigninganewoutreachsystem

Toimplementthisnudge,PAiscollectingandanalyzingdataonchildsupportpaymentsandothereventsrelatedtochildsupportenforcement

Theroleofstaffinvolvedincollectingchildsupportpaymentschanged,astheyarenolongerresponsibleformanyofthereminders


SupplementalReadings

Foradditionalinsightsontheseconcepts,wewouldsuggestthefollowingmaterials:

• CassR.Sunstein,Nudging:AVeryShortGuide,37J.ConsumerPol'y583(2014).Availablefor

freedownloadat:https://dash.harvard.edu/handle/1/16205305

• CassR.Sunstein,Presentationatthe2013HumanServicesSummitatHarvardUniversity.

Videosavailableatthebottomofthepage:https://lnwprogram.org/content/report-2013-

human-services-summit

• CassR.Sunstein,Simpler:TheFutureofGovernment(2013).AvailableonAmazonat:

https://www.amazon.com/Simpler-Government-Cass-R-Sunstein-ebook/dp/B00ADMQZRC

• RichardH.ThalerandCassR.Sunstein,Nudge:ImprovingDecisionsAboutHealth,Wealthand

Happiness(2008).AvailableonAmazonat:https://www.amazon.com/Nudge-Improving-

Decisions-Health-Happiness/dp/014311526X

• JohnP.Holdren,ImplementationGuidanceforExecutiveOrder13707:UsingBehavioral

InsightstoBetterServetheAmericanPeople.MemorandumtotheHeadsofExecutive

DepartmentsandAgencies(2016).Availableforfreedownloadat:

https://www.whitehouse.gov/sites/whitehouse.gov/files/images/EO%2013707%20Implementat

ion%20Guidance.pdf

• WilliamJ.CongdonandMayaShankar,TheWhiteHouseSocialandBehavioralSciencesTeam:

LessonsLearnedfromYearOne.Availableforfreedownloadat:

https://behavioralpolicy.org/wp-content/uploads/2016/1-2/BSP_vol1no2_Shankar_final.pdf

• AntonioM.Oftelie,ChangingtheGame:ANewPlaybookforGovernmentFinancial

Management(2015).Availablefordownloadat:

https://lnwprogram.org/sites/default/files/A_New_Playbook.pdf