Four public sector uses for behavioural insights from Obama’s nudge unit

By David Donaldson

Tuesday September 20, 2016

Despite being home to many of the key academic thinkers of the movement, the United States has been a little bit slower to grab onto behavioural insights than the United Kingdom, New South Wales and Victoria.

Behavioural scientists in the research labs of White House’s own “nudge unit” — set up in 2014 and modelled on the UK one created four years earlier — have now had the chance to distill some of their findings.

“Individuals who would most benefit from a program may be among those most affected by small barriers”

In September 2015, President Obama issued an executive order, Using behavioral science insights to better serve the American people, directing federal agencies to integrate BI into the design of policies and programs.

A year on, the White House Office of Science and Technology Policy’s Social and Behavioral Sciences Team has released implementation guidance for government bodies wondering how to incorporate BI into their work, alongside its annual report.

The group offers advice on the four key areas the office believes behavioural factors can play an especially strong role in:  determining access to programs, presenting information to the public, structuring choices within programs, and designing incentives.

Using behavioural insights to improve access to programs

Small barriers to program access can have large impacts on participation and outcomes, so it can be useful to consider whether enrolment in programs may be hindered by things like the length and complexity of applications and forms, the length of wait times to speak or meet with program officials, travel or time costs associated with application processes, or overly burdensome verification requirements.

It notes that although in theory small barriers such as fees can lead to efficient screening — making enrolment more worthwhile for those with more to gain — very often in practice “those individuals who would most benefit from a program may be among those most affected by small barriers and minor costs.”

The Social and Behavioral Sciences Team recommends considering streamlining access to services. This might include simplifying forms —  research has shown that a lengthy Free Application for Federal Student Aid not only discouraged students from applying for aid, but also led some students to delay or forgo college altogether. Simplification can be aided by making use of available administrative data, such as autofilling forms with information from the Tax Office.

Automatically enrolling eligible individuals can help improve access, as can reconsidering limited application periods. Agencies might also revisit program eligibility criteria in cases where the benefits of collecting more information (targeting services more efficiently) may be outweighed by the costs (deterring access).

Providing information to the public

This is perhaps the aspect of behavioural insights most commonly utilised — presenting the same information differently can have a significant impact on how well it’s understood.

Agencies “should present information in a manner that is meaningful to the intended audience and that effectively promotes the intended use of that information”, suggests the social and behavioural sciences unit. Sometimes this may be intuitive — highlighting the amount required to be paid on a bill in red, for example — but often it’s not:

“When presenting numerical or probabilistic information, for example, research shows that two mathematically equivalent expressions can lead to different levels of understanding and different actions. In one study, the presentation of automotive fuel efficiency in gallons per mile, rather than miles per gallon, led individuals to form more accurate judgments about the relative benefits of alternative automotive purchases. Based in part on this research, the sticker required by the Environmental Protection Agency to display fuel efficiency on new cars, which traditionally described fuel efficiency in terms of miles per gallon, now also presents the same information in gallons per mile.”

Choices within programs

Complex or difficult choices in programs can lead individuals to choose inconsistently, the guide argues. People just aren’t very good at coming to conclusions based on many pieces of information:

“Behavioral-science evidence shows that how people choose among options within a program can be sensitive to even minor features of the context in which a decision is made; that is, people are materially influenced by factors such as the complexity of the choice or the number of available options. Research demonstrates that individuals can have difficulty choosing, and choosing consistently, when choices involve numerous alternatives, vary along multiple or complex dimensions, involve assessments of probability or risk, or have a substantial time dimension (i.e., choices made now that have consequences long into the future).”

Apart from having implications for individuals making decisions in their own best interest, this can impact on complex market systems such as health insurance.

Agencies should consider efforts to assist individuals with choices where they are faced with complex information, thinks the office. Setting defaults can be appropriate where a particular option is likely to be the best for most, given that people tend to stick with the default setting.

Reducing the number and dimensionality of choices where possible can also help.

Incentive design

Monetary incentives are more closely aligned to standard economic idea of the rational actor, and can be highly effective, but how individuals respond to financial incentives depends on the framing and structure of incentives.

Providing an incentive in isolation can make an individual more aware of it, which might be less likely if it’s just one factor among many, such as in an income tax return.

Individuals may be more likely to respond to an incentive that is framed as a loss rather than as a gain, even of the same monetary amount. For example, in one study a five cent tax on disposable grocery bags led to a significant decrease in plastic bag use; in contrast, a financially equivalent reward for reusable bag use had no effect.

Immediate incentives are also likely to be more effective than delayed incentives.

Government bodies should keep in mind that individuals also respond to nonfinancial incentives, such as social pressure — telling them their neighbours pay their bills on time is a common tactic.

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