Behavioral Design

Sendhil Mullainathan Harvard ideas42

ideas42

___ Enroll in 401(k) ____ Deduction

___ Not to Enroll in 401(k) ____ Change Deduction

Behavioral Mapping Behavioral Reconnaissance

Problem Bottleneck Nudges

Inventions

Problem Bottleneck Nudges

Inventions Save  too  Li*le  

Defaults  

Forget  Procras5nate  

Problem Bottleneck Nudges

Inventions TANF  Recipients  On  Welfare  to  Work  Program  Not  Searching  for  work  

Employment  Provider  Level  IL  DHS  Level  

Work  First  Referral  &  Program  Experience  

Client  assigned  to  Asian  Human  

Services  

Wednesday:  Client  orienta5on  /  in-­‐take  

Monday:  Client  reports  for  program  

Client  applies  for  jobs,  goes  on  interviews,  etc.  

•  Meets  with  job  developer  

•  Prepares  resume  •  Secures  

transporta5on,  child  care,  etc.  

•  Searches/applies  for  jobs  

Meet  with  job  developer  to  

receive  subsidized  placement  /  

work  experience  assignment  

Childcare  secured  

Develop  individualized  service  plan  

Client  applies  for  TANF  at  the  local  DHS  

Office  

Assess  TANF  par5cipant  /  family  

Client  secures  and  shows  up  for  full-­‐5me  

employment  work  **  Not  comprehensive  process  map  

Job  Developer  assesses  client  

Subsidized  job  placement  “earning”  their  benefits  

Sent  job  lis5ngs  Told  to  find  job  

Easy  to  Place  

Hard  to  Place  

Employment  Provider  Level  IL  DHS  Level  

“Job  Ready”  

Not  “Job  Ready”  

Work  First  Referral  &  Program  Experience  

Client  assigned  to  Asian  Human  

Services  

Wednesday:  Client  orienta5on  /  in-­‐take  

Monday:  Client  reports  for  program  

Client  applies  for  jobs,  goes  on  interviews,  etc.  

•  Meets  with  job  developer  

•  Prepares  resume  •  Secures  

transporta5on,  child  care,  etc.  

•  Searches/applies  for  jobs  

Meet  with  job  developer  to  

receive  subsidized  placement  /  

work  experience  assignment  

Childcare  secured  

Develop  individualized  service  plan  

Client  applies  for  TANF  at  the  local  DHS  

Office  

Assess  TANF  par5cipant  /  family  

Client  secures  and  shows  up  for  full-­‐5me  

employment  work  **  Not  comprehensive  process  map  

Job  Developer  assesses  client  

Problem Bottleneck Nudges

Inventions TANF  Recipients  On  Welfare  to  Work  Program  Not  Searching  for  work  

Iden5ty  Threat  

Stereotype Threat (Steele and Aronson, 1995)

Problem Bottleneck Nudges

Inventions Proba5on  S5ll  a  Gateway  To  Jail  

Pa*erns:  Context  and  Recidivism  

17  

Source:  2008  Murder  Analysis  in  Chicago  

Problem Bottleneck Nudges

Inventions Proba5on  S5ll  a  Gateway  To  Jail  

Acute  Points  of  Tempta5on  

Acute  Places  of  Tempta5on  

CLear,  IMmediate,  &  Balanced  Proba5on  (CLIMB)  

19  

1.  Targeted – Violent offenders 2.  Observable – GPS Electronic Monitoring 3.  Swift, Certain, Mild – More incentives and tools

Problem Bottleneck Nudges

Inventions Proba5on  S5ll  a  Gateway  To  Jail  

Acute  Points  of  Tempta5on  

Acute  Places  of  Tempta5on  

CLIMB  

Problem Bottleneck Nudges

Inventions Low  Income  Workers  Less  Produc5ve  High  Turnover  

Lack  of  financial  cushion  makes  this  cogni<ve  burden  a  daily  reality  for  low  income  consumers,  with  spillover  in  the  workplace    

source:  pasukaru76  ?

$  

The strain of a common scenario . . .  

•  An unexpected financial challenge (e.g. a car problem on the way to work) places strain on a low-income employee

•  The employee immediately wonders how they are going to pay to fix the problem, leading to general concern about their finances.

•  “Do I have enough money in the bank?” •  “How will I meet all my other commitments if I

have to pay for this now? •  All the financial strain and problem-solving depletes

employee’s cognitive resources.

.  .  .  leads  to  underperformance  at  work.  

•  When the employee arrives at work, they are distracted by their personal finances.

•  They do not have the brainpower to perform at their best: they are less productive or their service standards diminish.

•  Risk of absenteeism and turnover increases

23  

Background  

Problem Bottleneck Nudges

Inventions Low  Income  Workers  Less  Produc5ve  High  Turnover  

Psychic  Tax  of  Poverty  

Provide  customer  service  

ideas42  is  pilo<ng  a  package  of  financial  services  designed  to  simplify  and  stabilize  finances  for  low  income  employees  

Provide  emergency  buffer  •  Low-­‐cost  credit  access  •  Emergency  savings  

Give  <mely  feedback  &  automate  messaging  

•  Reminders  about  important  financial  deadlines  

•  Progress  tracking  for  financial  goals  and  commitments  

Pilot  design  

25  

Create  budget  

Direct  deposit  into  3  dedicated  accounts:  

         1)  Bill  payment            2)  Discre5onary  spending            3)  Emergency  savings  

Set  up  session  with  financial  representa5ve  

1  

Automate  payments  

•  Bill  payment  •  Emergency  savings  

Ongoing  interac<on  with  

employee  

2  

Problem Bottleneck Nudges

Inventions Low  Income  Workers  Less  Produc5ve  High  Turnover  

Psychic  Tax  of  Poverty  

Financial  Stabilizer