Mindy Hernandez, Innovator in Residence, CFED Senior Researcher, ideas42

1. Behavioral Economics201:Applying Behavioral Research to Asset Building Initiatives: Lessons From a Year of Experimentation Mindy Hernandez, Innovator in Residence, CFED Senior Researcher, ideas42 CFED Assests Learning Conference September 23, 2010

2. Embarrassment $ Cost Hassle Demand

3. Demand for New Savings Product, SuperSave Hassle From a behavioral perspective Lots of hassle “psychological subsidy” Pretty easy Demand 50 500

4. The CFED Innovation Year • Connect with great partners • Target the highest value challenges • Understand the context • Design and implement an intervention • Evaluate and learn

5. Process: Understanding the Context

6. A Note on Methodology Rigor Experimental Quasi- experimental Outcome Evaluation Confidence

7. 2009-2010 Innovation Projects • 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

8. 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

9. Emerging Lessons: What Seems to Make a Difference • Simplification is key • Well designed reminders help • Behaviorally-informed incentives can make a difference

10. Simplify CCCSDV

11. CCCSDV - Debt Counseling Simplify Form Increased financial stability 60% Clients receive financial counseling Complex form Recruit clients Clients come for debt counseling

12. CCCSDV Original debt Counseling Letter Plus 5 pages Of financial worksheets

13. CCCSDV Revised debt Counseling Letter Zero worksheets

14. Results QE Design 38% 43% 37% 24% 20% n= 584

15. Well Designed Reminders Help CWF Preparedness & Foundation Communities

16. CWF: Preparedness at Tax Time Make a plan Send reminders Increased tax refunds Clients have paperwork needed for tax day Hassle, stressful, time-intensive Encourage/educate clients to prepare Clients prepare

17. Does Tax Preparedness Matter? n= 259

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

19. Results Experimental Design Tax refunds Without EITC for SETI Clients at CWF - 2010 +$1,596 $1,837 $241 n = 41

20. 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.

21. 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

22. Foundation CommunitiesBusiness Class Enrollment Send reminders Increased business capacity & income Clients attend class Depletion, Overload Advertise Class Clients enroll in class

23. Do Reminders Matter?

24. Impact Discussion Experimental Design • 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.

25. Behaviorally Wise Incentives CCCSDV

26. CCCSDV- Survey Response Send pre-incentives Improved DMP Program CCCSDV able to learn from clients 88% Hassle, time-intensive Send surveys- incentives People complete surveys

28. Why Pre-incentives Work Survey completion

29. Results Experimental Design Survey Response Rates at CCCSDV n =968

30. Implementation Lessons Learned

31. 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.

32. From Theory to Application Administration for Children & Families BIAS Project 2010 Breakthrough behavioral research (Kahneman and Tversky Prospect Theory, 1979) Today: Testing in the field Large-scale applied Behavioral pilots Applied in the field with great success (Save More Tomorrow; 2001) Early challenges to traditional economic Model (Early 1900s)

33. Case Study: Foundation CommunitiesLinda Paulson, Tax Services Coordinator

34. 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)

35. Next Steps for Foundation Communities • Look into cost effective ways to send reminders (email and text) • Use preparedness data to target unprepared clients and offer one-on-one coaching for preparedness

36. Case Study Campaign for Working FamiliesA program partner of the Urban Affairs Coalition in Philadelphia, PAMegan Kiesel, Director of Impact and Outreach

37. 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.

38. 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

39. 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?

40. Learn more on the the blog: Cfed.org & Watch out for the white paper