Public Sector Nudges 2017 Public Sector for the Future Summit · 2018. 2. 26. · Nudges are tools...

Public Sector Nudges2017 Public Sector for the Future Summit

Copyright © 2018 Accenture. All rights reserved.

Nudges are tools we can use to steer people towards better decisions. Nudges change the way choices are presented and the environment the decisions are made. Nudges can result in better individual and social outcomes while maintaining the individual’s freedom of choice.

Key to a successful Nudge is understanding human behavior and using evidence, not intuition, to back up decisions.

This deck provides examples of nudges that can be used in public sector to improve both citizen facing and employee facing programs. Nudges are grouped into 5 categories; Steering, Social Pressure, Ownership, Information, and Experience.

SOURCES: World Bank Development Report, Mind, Society, and Behavior. The World Bank (2015) Cass R. Sunstein, Nudging: A Very Short Guide, 37 J. Consumer Pol’y 583 (2014)

NUDGES


STEERING NUDGES

Steering nudges work by making it relatively easier to do the right or preferred thing and harder to choose otherwise. Small changes help highlight the desired outcome.

• Make the Default the Preferred Choice• Emphasize Gains to Encourage a ‘Good’ Choice• Emphasize Losses to Discourage a ‘Bad’ Choice• Focus Attention on the Preferred Option • Position the Preferred Option Between Two Extremes • Make the Preferred Option the Most Certain



SELECT STEERING NUDGES IN ACTION

The Power of Suggestion: Inertia in 401(k) participation and savings behavior, Madrian, Brigitte, Shea, Dennis. NBER Working Paper Series, Working Paper 7682.Washington post: http://www.washingtonpost.com/wp-dyn/content/article/2010/06/08/AR2010060800999.html IRS.gov

World Development Report 2015, Mind, Society, and Behavior, The World Bank

• Make the Default the Preferred Choice: Setting the default to automatic enrollment, requiring participants to opt out rather than opt in, results in a significant increase in 401(k) participation. One study showed a 20% increase in participation with automatic enrollment. Additionally setting the default contribution rate and investment allocation at a higher level can have a strong influence on savings behavior. Enrollees assume the default option is the best and enrollees tend to stick with it.

Saving accounts were offered in the Philippines that did not allow for the withdrawal of funds for six months. These accounts had a take-up rate of nearly 30 percent. After one year, individuals who had been offered and had used the accounts increased savings by 82 percent more than a control group that was not offered such accounts.

• Focus Attention on the Preferred Option: In New York, the Department of Health decided to use behavioral economics to improve student choices. In school cafeterias whole fruits were displayed in steel bins with dim lighting. By simply changing the presentations, placing the fruit in a wire basket and shining a light on the fruit, sales of fruit increased. In one school, by the end of the second week, sales of fruit went up by 54 percent.

• Make the Preferred Option the Most Certain: The IRS tells tax filers that the fastest way to receive their return is by e-filing and using direct deposit.



STEERING

MAKE THE DEFAULT THE PREFERRED CHOICE

Making the preferred choice ‘automatic’ unless the person opts out

EXTERNAL EXAMPLE: • Make signing up as an organ donor the default

when applying for a driver’s license.

INTERNAL EXAMPLE: • Make participation in the 401K the default for

all new employees.


STEERING

EMPHASIZE GAINS TO ENCOURAGE A ‘GOOD’ CHOICE

Framing choices in terms of the benefits or gains that a person will receive. Benefits are more valuable to people the larger they are, the more immediate they are, the more frequently they come, and the more unexpected.

EXTERNAL EXAMPLE: • Alert students to the reduced costs of their higher

education if they complete college prep and career prep courses.

INTERNAL EXAMPLE: • Alert employees to the increased probability of

having enough money in retirement if they increase savings now.


STEERING

EMPHASIZE GAINS TO DISCOURAGE A ‘BAD’ CHOICE

Framing choices in terms of the losses a person will experience. Losses have the a bigger impact on people’s choices the larger they are, the more immediate, and the more likely they are to be repeated.

EXTERNAL EXAMPLE: • Alert citizens of the extra time and cost of not

renewing their license on time.

INTERNAL EXAMPLE: • Alert state managers to the cost to their budget

of not purchasing off a state contract.


STEERING

FOCUS ATTENTION ON THE PREFERRED OPTION

Making the preferred option the one to which people pay the most attention.

EXTERNAL EXAMPLE: • When Medicaid patients are seeking a provider, put

those with the best value at the top of the list.

INTERNAL EXAMPLE: • When departments present employees with

retirement options they can position the option with the highest level of savings at the top of the list, and on their own page.


STEERING

POSITION THE PREFERRED OPTION BETWEEN TWO EXTREMES

Structuring choices so it possible for people to choose an option that feels like a compromise between extremes.

EXTERNAL EXAMPLE: • Position the value of attending a state college

between a very expensive private college and not attending higher education at all.

INTERNAL EXAMPLE: • Position using the motor pool between an

expensive rental car and low reimbursement for using your own vehicle.


STEERING

MAKE THE PREFERRED OPTION THE MOST CERTAIN

Making the preferred option the one that appears to have the fewest risks.

EXTERNAL EXAMPLE: • Make e-filing of taxes and direct deposit the

fastest way to get your refund.

INTERNAL EXAMPLE: • Make use of shared services the fastest and

lowest cost way to get service.


SOCIAL PRESSURE NUDGES

Social pressure or peer pressure nudges work by harnessing the human desire to ‘fit in.’ Individuals are inclined to adjust their behaviors to meet their peers’ expectations.

• Pre-Commitment Strategies• Private Peer Comparison• Public Peer comparison • Provide Immediate and Ongoing Feedback



SELECT SOCIAL PRESSURE NUDGES IN ACTION

• Pre-Commitment Strategy: When the General Services Administration buys goods and services from vendors under certain contracts, the vendors must report those sales to the government and pay a small fraction of their reported sales to the federal government as an administrative fee. This fee is called the Industrial Funding Fee (IFF).

GSA introduced a required signature at the top of the online payment form for a random sample of contractors. The signature box was simple and just asked for the contractors to confirm the truth and accuracy of the information that they are reporting. Just this simple act made a change. The self-reported sales amount was $445 higher for vendors who signed the form at the top vs. vendors who did not make that confirmation. Overall GSA collected $1.59 million more in fees from those that confirmed the accuracy.

• Private Peer Comparison: In the UK they tested the use of a social norms to increase on-time tax payments. Tax authorities sent out letters to 140,000 taxpayers as part of a randomized trial. In letters where they used a social norm, saying something along the lines of “9 out of 10 people in Exeter pay their taxes on time,” there was a 15% increase in the number of people who paid before the 6 week deadline. Tax authorities estimate that this could generate 30 million in extra revenue a year.

The White House Social & Behavioral Sciences Team: Lessons Learned from Year One, Behavioral Science and Policy, December 2015, Congdon, William J, Shankar, Maya NY Times: http://www.nytimes.com/2012/07/08/business/behavioral-science-can-help-guide-policy-economic-view.html



SOCIAL PRESSURE

PRE-COMMITMENT STRATEGIES

Having people commit to a certain choices in advance.

EXTERNAL EXAMPLE: • Have people set a goal and commit to saving a certain

amount. Individuals can sign a commitment pledge and set a timeline to meet their goals.

INTERNAL EXAMPLE: • Ask new employees to commit to their supervisor

to complete optional training (such as lean process improvement) if it is offered.


SOCIAL PRESSURE

PRIVATE PEER COMPARISON

Giving people information on how they compare to their peers.

EXTERNAL EXAMPLES: • Send college students information telling them how

their completion of credits compares with their peers and with what is required to graduate in 4 years.

• Send a letter showing how their savings compare to their peers.

INTERNAL EXAMPLES: • Post the performance of agencies in complying

with key metrics, such as the rate of ‘off contract’ purchases with other departments.

• Discuss the performance of shared services organizations on SLAs with individual customer departments.


SOCIAL PRESSURE

PUBLIC PEER COMPARISON

Making people’s choices relative to their peers public.

EXTERNAL EXAMPLE: • Publish K-12 school learning gains for all schools

in the state in a ranking table.

INTERNAL EXAMPLES: • Publish the rate of prompt payments for all units

in a ranking table.• Show percentage of transactions carried out

in a shared services organization by department


SOCIAL PRESSURE

PROVIDE IMMEDIATE AND ON-GOING FEEDBACK

Providing immediate information to people on actual impacts of their choices.

EXTERNAL EXAMPLES: • Station a monitor at the side of the road that gives

drivers immediate feedback on their speed.• Provide feedback to a user on the relative strength

of their password

INTERNAL EXAMPLE: • Provide immediate feedback on the accuracy

on all transactions as they are input.


OWNERSHIP NUDGES

Ownership nudges work by appealing to people’s desire to be in control. Giving the user a sense of control and responsibility will result in greater buy-in to the outcomes.

• Put the User in Control • Make Citizens the Owners of the Collective Outcome • Get Citizens to be Advocates • Connect the Outcome with the Citizen’s Identity



SELECT OWNERSHIP NUDGES IN ACTION

• Put the User in Control: When patients are given a choice about which physician they want to see, as opposed to being assigned to a physician, they are more likely to be satisfied with their physician and recommend him or her to others -even if they chose a poorly rated or less popular physician.

• Make Citizens the Owners of the Collective Outcome: In Montgomery County, Maryland, front-line employees work together as a team for the betterment of Montgomery County Government by developing and implementing recommendations that improve efficiency, increase productivity, reduce costs, streamline operations, and/or enhance customer satisfactions. When cost savings are realized, employees receive a portion of the cost savings in the form of a bonus.

• Connect the Outcome with the Citizen’s Identity: The UK’s NHS sought to increase the number of people signing up to the national Organ Donor Registry. Many people express interest in joining but fail to do so. 8 messages were tested, with the most successful message appealing directly to a person’s identity and sense of reciprocity. The best performing message asked; “If you needed an organ transplant would you have one? If so please help others.”

The trial ran for 5 weeks and an additional 1203 signed up under this message. If this message was used for a year it would result in 96,000 extra registrants.

Schmittdiel, J., Selby, J., Grumbach, K., Quesenberry, C. (1997). Choice of a Personal Physician and Patient Satisfaction in a Health Maintenance Organization. JAMA. 278(19), 1596-1599. https://www.montgomerycountymd.gov/HR/gainsharing/Gainsharing.html https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/267100/Applying_Behavioural_Insights_to_Organ_Donation.pdf



OWNERSHIP

PUT THE USER IN CONTROL

Giving people the ability to customize a service— to make choices that fit their circumstances—in order to encourage their continued use of the service.

EXTERNAL EXAMPLES: • Let users customize their myState portal so they

will keep coming back.• Provide a personalized “app” to citizens focused on

their retirement savings and providing transparency on how their money is being invested.

INTERNAL EXAMPLES: • Allow users to create their own reports using

queries from their data warehouse• Let users customize their ERP interface so they

will use it more effectively.


OWNERSHIP

MAKE CITIZENS THE OWNERS OF THE COLLECTIVE OUTCOME

Making the collective outcome to be achieved something of value to people individually.

EXTERNAL EXAMPLES: • Provide free fishing licenses to property owners in

a watershed that reduces lake pollution.• Adopt-a-road programs that provide signage for

local businesses, cleaning the road and providing advertising for the business.

INTERNAL EXAMPLE: • Provide gainsharing to work units in a department

that achieve performance and savings targets.


OWNERSHIP

GET CITIZENS TO BE ADVOCATES

Giving citizens the opportunity to lead or advocate for the outcome to be achieved.

EXTERNAL EXAMPLE: • Give those most successful at securing work

through a workforce center the opportunity to become a workforce coach.

INTERNAL EXAMPLE: • Allow people who have acquired the skill to

effectively use a new system to be designated as ‘system navigators’ with a badge on their personnel page.


OWNERSHIP

CONNECT THE OUTCOME WITH THE CITIZEN’S IDENTITY

Showing people how a choice is consistent with and reinforces their personal identity. When a behavior conflicts with a person’s sense of identity they can experience unhappiness and unease.

EXTERNAL EXAMPLE: • Send a personal letter thanking people who have paid

their taxes on time for 20 years for being great citizens.• Create a custom license plate for those who have been

a reading coach in an elementary school for 10 years.

INTERNAL EXAMPLE: • Provide a special recognition for successful

completion of a particularly difficult DOT engineering project by creating a ‘trophy’ made from the metal used in the new construction.


INFORMATION NUDGES

Information nudges work by giving people the facts as they consider their choices. Providing the user with right information can change their end decision.

• Educate Citizens on the Process• Disclosure and Provide Information• Make Consequences More Real• Reminders



SELECT INFORMATION NUDGES IN ACTION

• Educate Citizens on the Process: To improve economic outcomes for small-scale and specialized farmers, the Social and Behavioral Sciences Team (SBST) and the United States Depart ment of Agriculture collaborated on a campaign to increase knowledge and utilization of loan options. Farmers that were sent a personalized letter with a customized set of action steps for applying for a mi croloan were 22 percent more likely to obtain a loan.

• Disclose and Provide Information: An experiment with a low-income population in Mexico demonstrated that how information is presented impacts the ability of consumers to make the best financial decision. Low-income individuals from Mexico City were asked to choose the best one-year, 10,000 peso loan product from a randomized list of loan products similar to products locally available. Individuals could earn rewards if they properly identified the lowest-cost product. When presented with brochures designed by the banks, only 39 percent of people could identify the lowest-cost product. A much larger fraction (68 percent) of individuals could identify the lowest-cost credit product using a user-friendly summary sheet designed by the Consumer Financial Credit Bureau of Mexico. How the information was presented allowed consumers to make the best financial decision.

• Reminders: To help students enroll in college SBST and the Depart ment of Education’s office of Federal Student Aid collaborated with researchers and uAspire, a non-profit aimed at providing financial information and resources necessary to find an affordable path to a postsecondary education. They tested messages notifying high school graduates who had been accepted into college of the required pre-matriculation tasks for their respective colleges. A series of eight personalized text messages were sent, reminding low-income stu dents to complete these tasks. This led to a 5.7 percentage point increase in college enrollment, from 66.4 to 72.1 percent.

https://sbst.gov/download/2015%20SBST%20Annual%20Report.pdf World Development Report 2015, Mind, Society, and Behavior, The World Bank https://sbst.gov/download/2015%20SBST%20Annual%20Report.pdf



INFORMATION

EDUCATE CITIZENS ON THE PROCESS

Providing citizens with training and guidance so they feel knowledgeable and capable of successfully completing the process.

EXTERNAL EXAMPLE: • Provide online support for enrollment in retirement

savings, walking citizens through the process. When citizens are ready to retire, similar support can be set up to help individuals receive their benefits.

INTERNAL EXAMPLE: • Provide online support to guide public managers

through the purchasing process.


INFORMATION

DISCLOSE AND PROVIDE INFORMATION

Providing information on the likely impacts associated with alternative choices.

EXTERNAL EXAMPLE: • Launch an information campaign regarding the

impact of fertilizer on lakes and rivers.

INTERNAL EXAMPLE:• Launch an information campaign for benefits

counselors on the importance of ensuring proper benefits calculations, focusing on the risk of not giving accurate/correct advice to end user.


INFORMATION

MAKE CONSEQUENCES MORE REAL

Connecting choices to their impacts by providing information on their impact on real people or graphic warnings of negative impacts. People are more likely to recall and respond to emotional stories that highlight a specific person’s experience.

EXTERNAL-FACING EXAMPLES: • Show citizens – especially those arrested for DWI —

the carnage from drunken driving.• Show graphic warnings on cigarettes to deter smoking.

INTERNAL EXAMPLE: • Introduce those who manage reimbursements to

those who depend on getting them on time and in the right amount to support their families.


INFORMATION

REMINDERS

Providing reminders to take needed actions.

EXTERNAL EXAMPLE: • Reminder to renew your driver’s license.

INTERNAL EXAMPLE: • Reminder to submit your time sheet.


EXPERIENCE NUDGES

Experience nudges work by making the user experience of making the preferred choice rewarding in itself. Small changes can dramatically improve the user experience and in turn produce better results.

• Simplification and Convenience• Shape Expectations of the Experience • Create Positive ‘Moments of Truth’

–Including at the End



SELECT INFORMATION NUDGES IN ACTION

• Simplification and Convenience: Most people did not select the most cost-effective policy available in a model based on the current ACA exchanges. Instead people were overwhelmed with options, and consequently, their ability to make smart choices plummeted.

Participants’ selections were improved using behavioral economics. An online calculator was incorporated and a default option that preselected the optimal insurance plan for that individual was added. This helped consumers save, on average, $456 every year.

https://www.scientificamerican.com/article/should-governments-nudge-us-to-make-good-choices/



EXPERIENCE

SIMPLIFICATION AND CONVENIENCE

Reducing the number of choices and the complexity of individual choices. Designing the process so it is easy to navigate and intuitive. Minimize choices, reducing decision fatigue.

EXTERNAL EXAMPLE: • Populate a person’s tax return for them in

advance based on prior information and employer provided W-2s.

INTERNAL EXAMPLES: • Create a ‘no paper’ e-filing system for

expense reporting.


EXPERIENCE

SHAPE EXPECTATIONS OF THE EXPERIENCE

Creating a positive expectation about the process of complying or obtaining service.

EXTERNAL EXAMPLE: • Provide a video for people who are first time

applicants for assistance showing them what to expect.

INTERNAL EXAMPLE: • Provide an on-line video for people following

a major IT upgrade telling them what to expect and who to call if there is a problem.


EXPERIENCE

CREATE POSITIVE ‘MOMENTS OF TRUTH’ –INCLUDING AT THE END

Making the ‘Moments of Truth’ in an experience very positive — including making the concluding experience a positive one.

EXTERNAL EXAMPLE: • When people file their taxes send them a message

thanking them and telling them when to expect a refund. Then send a message when the processing is done telling them when to expect a refund. Finally, tell them the refund has been sent and thank them for their help in making the tax system work.

INTERNAL EXAMPLE: • When people file their expenses send them a

message thanking them and telling them when to expect a reimbursement. Then send a message when the processing is done telling them when to expect the reimbursement. Finally, tell them the reimbursement has been sent and thank them for their help in making the system work.

Public Sector Nudges 2017 Public Sector for the Future Summit · 2018. 2. 26. · Nudges are tools...

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