NUDGE THEORY AND RENT ARREARS

Steven Johnson // steven@collaborativechange.org.uk

WHAT IS A NUDGE?

WHAT’S IN A WORD? CHEAT VS CHEATER

THE CLASSIC NUDGE?

NUDGE IN GOVERNMENT When citizens were told that most people pay their tax on time, payment rates significantly increased.

£210m of revenue brought forward in 2012/13 alone.

NUDGE AND RENT ARREARS?

NUDGE AND RENT ARREARS? PAYMENT RATES

63%

72%*** 71%***

0%

10%

20%

30%

40%

50%

60%

70%

80%

Control Fear Norm

Proportion of tenants that made a payment: entire trial

Including 1 extra message in arrears communications resulted in 9% increase in payment rates.

Control New letter & Env 1 New Letter & Env 2

NUDGE AND RENT ARREARS? SOCIAL NORMS

Reframing Letter 1 led to a 12% increase in payments. 44%

48%

56%** 52%

0%

10%

20%

30%

40%

50%

60%

Control Existing-Yellow Invoice-Yellow Chat-Yellow

Proportion of tenants who made a payment: entire trial

Control Int 1 Int 2 Int 3

NUDGE AND RENT ARREARS? A SIMPLE THANK YOU

Thank tenants for keeping up repayment agreements resulted in 71% of them further increasing the amount they paid to reduce their debt,

52%

38%

71%*

0%

10%

20%

30%

40%

50%

60%

70%

80%

Control Card Text

Proportion of tenants who overpaid against 'amount due'

NUDGE AND RENT ARREARS? A HANDWRITTEN ENVELOPE

Changes to an envelope increased revenue by 46%

£83.00

£121.00

£85.00

£0.00

£20.00

£40.00

£60.00

£80.00

£100.00

£120.00

£140.00

Average payments per tenant within 7 days of intervention

Control New Envelope Old Envelope

NUDGE AND RENT ARREARS? GET TO THE POINT!

Simplifying the layout of a letter using basic information design resulted 24% higher tenant engagement. 38%

54%***

62%***

0%

10%

20%

30%

40%

50%

60%

70%

Control Positive Negative

Proportion of tenants that made contact following intervention

Control New letter 1 New Letter 2

NUDGE AND RENT ARREARS? BUT… CAN’T PAY / WON’T PAY?

“” Most people nowadays just don’t have enough money. For the last 6 months, I’ve been living of £140 a month. And that’s for everything. Everyone’s struggling these days. It’s a small number who are swinging it. Most of us are just struggling to make ends meet. When you’re on a very low income—on £30/40 a week whilst trying to raise two kids and trying to pay the bills [it’s tough].

“” Most people who fall behind with their rent… it’s out of their control It’s all down to circumstances Circumstances that this government have brought in. The majority of it is because of the circumstances. I don’t think it’s because people don’t want to pay their rent.

RELEVANT? ETHICAL? COUNTER PRODUCTIVE?

EVIDENCE-BASED BEHAVIOUR CHANGE TARGET AND TAILOR

EVIDENCE-BASED BEHAVIOUR CHANGE REVENUE VS COST-TO-RECOVER

59%

24%

7%1% 3% 3% 2% 0% 1%

0

2000

4000

6000

8000

10000

12000

14000

1 2 3 4 5 6 7 8  to  13 14

Number  of  arrears  events  by  terminal  levelESCALATION STAGES Only 25% of escalations triggered by tenant behaviour: •  HB payments •  Unusual

Debits •  System Errors

EVIDENCE-BASED BEHAVIOUR CHANGE REVENUE VS COST-TO-RECOVER

£11 £18£69

£111£167 £188

£327 £341

£676

£0

£200

£400

£600

£800

1 2 3 4 5 6 7 8  to  13 14Arrears  event  level

Average  cost  per  eventStage 1 alone cost the organisation a quarter of a million pounds!

EVIDENCE-BASED BEHAVIOUR CHANGE

73% 71% 72% 75%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Control Personal Post-it Stop

Proportion of tenants that made payment: entire trial

Control Intervention 1 Intervention 2 Stop

DO WHAT WORKS!

EVIDENCE-BASED BEHAVIOUR CHANGE

BEHAVIOURAL SCIENCE

PROCESS ANALYSIS

QUALITATIVE INSIGHT

INTERVENTION DESIGN

RIGOROUS EVALUATION

TENANT

PROFILING

THANKS FOR LISTENING!

DO WHAT WORKS!