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 “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 Innovation Projects

Plus Consumer 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 clients Clients come for debt counseling Complex form Clients receive financial counseling Simplify Form 60%

CCCSDV Original debt Counseling Letter Plus 5 pages Of financial worksheets

CCCSDV Revised debt Counseling Letter Zero worksheets

Results n= %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 plan Send reminders Clients have paperwork needed for tax day

Does Tax Preparedness Matter? n= 259

Irene Skricki 1234 Maine St Baltimore, MD Irene Skricki 1234 Maine St Baltimore, MD Complete excel sheet! Find train receipts! Call Comcast for copy of internet bill Irene Skricki April1, 2010 April 5,2010

Results n = 41 Tax refunds Without EITC for SETI Clients at CWF $241 $1,837 +$1,596 Experimental Design

Impact Discussion The 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 Ideas Reminders 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 Communities Business Class Enrollment Increased business capacity & income Advertise Class Clients enroll in class Depletion, Overload Clients attend class Send reminders

Do Reminders Matter? General info Letter General info Interest in class? General info Lette r PC

Impact Discussion Letters 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 to learn from clients 88%

Why Pre-incentives Work Feeling of reciprocity Survey completion

Results Survey 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 Tversky Prospect 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 Project 2010

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

Case Study Campaign for Working Families A 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