hellowallet webinar
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Behavioral Insights for Wellness Program Design Jonathan Zinman Professor of Economics, Dartmouth College Scientific Director, U.S . Household Finance Initiative. HelloWallet Webinar. June 11, 2014. Dr. Jonathan Zinman. Key high-level assumptions . Employee wellness matters - PowerPoint PPT PresentationTRANSCRIPT
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June 11, 2014 HelloWallet Webinar
Behavioral Insights for Wellness Program Design
Jonathan ZinmanProfessor of Economics, Dartmouth College
Scientific Director, U.S. Household Finance Initiative
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Dr. Jonathan Zinman
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• Employee wellness matters
• Economics of employee decisions around wellness is complex
• Countless daily decisions that cumulate• Infrequent but very high-stakes decisions
• Psychology of employee decisions around wellness is complex: http://www.dartmouth.edu/~jzinman/Papers/Behavioral_Design_101.pptx
• Outside markets for wellness solutions suspect
• Employer wellness benefit design matters
Key high-level assumptions
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• There is low-hanging fruit!
• Apply insights from behavioral economics (BE) to do better job of connecting employees with existing offerings
• Use communications, on-ramps, and menus• Few additional resources needed
• Prescription is method, not a recipe• Develop using BE insights and institutional knowledge• Test using gold-standard AB/RCT methods• Measure and learn• Tweak or re-design, and test again
Key takeaways
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Today’s Plan & Background
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• Show how this method works, using real and hypothetical examples
• Today’s talk based on experiences working on over a dozen marketing, messaging, and onboarding projects
• Companies of various sizes (mostly financial institutions)
• U.S. and abroad• Handful of completed projects• Many more underway
• More details• http://www.dartmouth.edu/~jzinman/ • http://www.poverty-action.org/ushouseholdfinance
Plan for today, background
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• Focus on financial wellness • Happy to field questions about health, etc. later
• Focus on immediate source of stress/distractions• Lack of rainy-day savings• Debt load and repayment problems• Lack of plan, or engagement with one• (401k’s part of the problem here rather than a solution?)
• Why these focii?...
Plan for today, background
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Many/most of your employees may be financially fragile:
• Lots of borrowing (overborrowing?)– Mortgage crisis– Bubbling student loan crisis? – More credit card debt than any economic model can explain – Share of consumers with subprime credit: 56.4%1
– More payday loans -> worse job performance (Carrell and Zinman)• Many without savings (undersaving?)
– Households with insufficient liquid assets to subsist for three months at the poverty line in absence of income: 43.9%2
– Households reporting no saving in the previous year: 48%3 • Many pay premia for financial services (overpaying?)4
– Assets (e.g., mutual funds)– Loans– Advice
Background: symptoms
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Messaging solutions,with two examples
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• Pain point for employees– low financial resiliency
• Pain point for employers– no direct offering. But do offer…• Crisis hotline• Financial planner• Online financial education• Payroll/prepaid card with savings bucket
• Approach: messaging, marketing, and/or process changes around these offerings
Rainy day savings solutions:smarter messaging
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1. “If you make… deposits, you will receive [small yield incentive]”
2. “If you miss a deposit, you will lose [small yield incentive]”3. “If you make… deposits, you will receive [small yield
incentive] that you can use to reach your saving goal of [client’s goal]”
4. “If you miss a deposit, you will lose [small yield incentive] that you could use to reach your saving goal of [client’s goal]”
Results:1 and 2 push3 and 4 push3 and 4 >> 1 and 2
Messaging for rainy day savings
Test 1. Which works better at encouraging regular savings deposits?
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1. Email every Friday re: the budget for that weekend2. Same as #1, but every other week3. Same as #1, but don’t start until 4 weeks after enrollment
Results:3 > 2 > 1
Messaging for financial resiliency
Test 2. Which works better at controlling discretionary spending among a sample of active HelloWallet users?
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Many design elements, thousands of possible permutations:• Content• Amount of content• Timing• Frequency• Duration• Customization
What matters, and works best, depends critically on context• And context itself is a many-splendored beast!
Project underway to do work like this with dozens of companies worldwide. You can join us! • email [email protected] now!
Messaging design, why it’s hard
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Messaging + Process Changes,
with three examples
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Example 1. Rainy day savingsMessaging + process change example
• Present installment loan borrowers with the proposition: “You’re making monthly payments now… here’s an easy way to continue making those payments, to yourself, once the loan is paid off”– Framing: borrowing as habit formation for saving– Process change: give someone a one-page auto-transfer
authorization at an opportune time
• Doing this with 10 credit unions
• You could do this by messaging to employees with:– Payroll card with savings bucket– Own bank account (could offer when someone is filling out direct deposit
authorization for payroll)
• Join in our research! [email protected]
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Pain point: student debt burdenPotential solution: messaging and on-ramps that connect employees with alternative repayment plans that reduce monthly payments
Pain point: repeat use of expensive debt productsPotential solutions: • messaging that informs and nudges before someone
reaches point-of-sale• on-ramps that connect with lower-cost, longer-term loans
(employer credit union, employer-intermediated loan, etc.)• messaging and on-ramps to PFM solutions (HelloWallet,
meeting with an adviser, etc.)
Example 2. Debt reduction
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v0.0: matchingv1.0: auto- (opt-out) enrollmentv2.0: auto-escalationThese solve enrollment and contribution rate problems
They do not solve employee wellness problems
To solve for wellness need greater focus on:• Immediate needs, and liquidity to deal with them• Holistic needs (whole person, or at least more of her
balance sheet)• Wealth accumulation
Example 3.Behavioral 401k, v3.0
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Add messaging that focuses on the whole, and the immediate
• Don’t borrow your way to 401k contributions• Do use 401k as a safety net if the alternatives even
pricier
Change menus, or add nudges, for wealth accumulation
• Eliminate or marginalize high-fee funds• Provide auto-diversification options
Change process to nudge active, informed decisions about 401k
• Enrollment (new employee on-boarding)• Open-enrollment
Behavioral 401k v3.0: for wellness
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• There is low-hanging fruit!
• Apply insights from behavioral economics (BE) to improve employee (financial) wellness
• Using communications, on-ramps, and menus• Few additional resources needed
• Prescription is method, not a recipe• Develop using BE insights and institutional knowledge• Test using gold-standard AB/RCT methods• Measure and learn• Tweak or re-design, and test again
Key takeaways