Applying behavioural insights – Case studies

01
Nov 18
Author:Tim Tran
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Professor Michael Hiscox of the Harvard School of Government shares some case examples that form part of his Behavioural Insights and Public Policy program. These examples demonstrate the use and evaluation of behavioural interventions and help us understand and apply similar interventions to new policy problems.

  1. Policy Issue (Welfare/Education): How to improve take up of government programs/benefits

Why do citizens in need fail to access programs and claim valuable government benefits designed to assist them? Past research has indicated that low take-up rates for benefits may be due to a lack of awareness combined with the real or perceived complexity (and cognitive costs) associated with the process of claiming benefits.

We examine behavioural interventions designed to help eligible individuals in need to overcome these obstacles and access government benefits.

In one example, a randomized trial in the US tested the impact of offering low-income individuals receiving tax preparation help immediate assistance and a streamlined process to complete the Free Application for Federal Student Aid (FAFSA) for themselves or their children.

The intervention substantially increased FAFSA submissions and ultimately the likelihood of college attendance, persistence, and aid receipt. High school seniors whose parents received the treatment were 8 percentage points more likely to have completed two years of college, going from 28% to 36%, during the first three years following the experiment.

The findings suggest many other opportunities for using personal assistance to increase participation in programs that require filling out forms to become eligible.

Studies:

  • Bettinger, E., et al. 2012. The Role of Application Assistance and Information in College Decisions Quarterly Journal of Economics 127(3): 1205-1242.
  • Bhargava, S. and D. Manoli. 2015. Psychological Frictions and the Incomplete Take-up of Social Benefits American Economic Review. 105(11): 3489–3529
  1. Policy Issue (Environment): How to reduce household energy consumption

Household energy use currently accounts for around 25% of aggregate electricity demand in Australia and for around 11% of total carbon emissions. This on a par with other developed countries: in the United States, for example, the number is about 22%. Reducing household energy consumption is a critical objective for addressing energy security and climate change concerns, reducing carbon emissions, and lowering energy costs and improving financial wellbeing, especially for low-income households. 

Past research indicates that a variety of obstacles make it difficult for people to align good intentions with actions when it comes to reducing energy consumption. In particular, people have trouble paying attention to daily (or even quarterly) energy consumption, running costs of different appliances. People also tent to avoid or delay making changes (e.g., unplugging devices, setting lights on timers, upgrading appliances, installing insulation and solar panels) due to the high cognitive effort and immediate costs involved.

We examine behavioural interventions designed to help individuals to focus attention on energy consumption by providing people with direct per-comparison information.

In one example, utility companies in the US provided customers with detailed information on their home electricity and natural gas usage with clear comparisons with usage of other households in the same neighbourhoods (zip codes).

The findings indicate that peer-comparison information produced significant reductions in energy consumption (2.1% on average) that were sustained over the subsequent 12 months. Modelling estimates suggest that such a reduction in demand (generated by an intervention with negligible costs for providers and zero costs for households) is equivalent to what would only be expected with a 20-25% increase in energy prices.

Overall, the research confirms findings from other areas indicating that peer comparison can be a powerful behavioural tool for policy makers, particularly when using individual-level feedback.

Studies:

  • Ayres, I. et al. 2013. Evidence from Two Large Field Experiments that Peer Comparison Feedback Can Reduce Residential Energy Usage. Journal of Law, Economics and Organization 29(5): 992-1022.
  • Cialdini, R. 2003. Crafting Normative Messages to Protect the Environment. Current Directions in Psychological Science. 12 (4):105-109.

 

  1. Policy Issue (Health): How to reduce unnecessary prescriptions of antibiotics

Antimicrobial resistance (AMR) is one of the biggest threats to human health today. AMR occurs when microorganisms, such as bacteria, become resistant to an antimicrobial medicine, such as antibiotics. Resistant infections are more difficult to treat and, in some cases, untreatable. It can affect anyone, of any age, and in any country. Within developed economies such as Australia, doctors who are General Practitioners (GPs) currently prescribe the greatest portion of antibiotics to individual patients. Evidence suggests that many GPs often prescribe antibiotics to patients as a “safeguard” even in clinical situations where evidence shows antibiotics to be of no proven value.

 Recent research estimates GPs in Australia are prescribing antibiotics for acute respiratory infections at rates up to nine times higher than recommended by the Therapeutic Guidelines. Doctors may be unaware of the full potential dangers of AMR, symptoms caused by viruses are often similar to those caused by bacterial infections and can be difficult distinguish especially when doctors are under time pressure to see a large number of patients (providing an antibiotic script may be a faster way to complete a consultation rather than explain why an antibiotic is unnecessary), and doctors may face significant pressure form patients demanding a prescription.

We examine applications of behavioural insights designed to alter the behaviour of GPs who are prone to overprescribing antibiotics to their patients. 

In one example, in a trial conducted by BETA in Australia, letters were sent to high-prescribing GPs by the Australian Government’s Chief Medical Officer at the beginning of the cold and flu season. The letters used peer comparison, providing these GPs with information about their prescribing rates for antibiotics and how they contrasted with those of other GPs in the same geographic region.

The results were startling. The letters to GPs markedly reduced rates of prescribing on antibiotics among the doctors receiving the letters. The letters with a simple graphical peer-comparison “treatment” reduced prescription rates by 12.3 per cent over the subsequent six-month period (and by 14.6 per cent in the “high season” cold and flu month).

The findings suggest that antibiotic stewardship programs can maximise their effects by using peer comparison feedback at the individual-level to assist doctors to reflect on their prescribing practices. The results also add to the large body of evidence that peer comparison can be a powerful behavioural tool for policy makers, particularly when using individual-level feedback.

Studies:

 

  1. Policy Issue (Law and order): How to reduce violent criminal behaviour among young men

Disparities between minority and non-minority youths in terms of in criminal justice outcomes are striking in most developed economies. In the United States, for example, for 15–24 year-olds, the male homicide rate in 2013 was 18 times higher for blacks than whites (71 versus 4 per 100,000). A large body of research emphasizes that, beyond institutional factors, choices and behaviour also contribute to these outcomes, including decisions around dropping out of high school, involvement with drugs or gangs, or responses to confrontations that could escalate to serious violence.

We examine a variety of behavioural interventions design to address these issues.

In particular, we examine three large-scale randomized controlled trials conducted in the Chicago area in recent years to test the impacts of a program called Becoming a Man (BAM), developed by the non-profit Youth Guidance. The program aims to re-define notions of masculinity, improve emotional intelligence and self-control, and help youth slow down and reflect on whether automatic thoughts and responses are actually well-suited to the situation they are in.

The evidence indicates that participation in the program reduced total arrests by 28–35%, reduced violent-crime arrests by 45–50%, improved school engagement, and also increased school graduation rates by 12–19%.

The findings indicate that targeted behavioural interventions, even when they are more intensive than the stereotypical “nudge,” can be highly cost effective. Estimated benefit-cost ratios for BAM range from 5-to-1 up to 30-to-1 or more, for example. The studies also indicate the strongest support for interventions designed to combat “automaticity” in the behaviours of youth that often lead to unfortunate outcomes in combination with certain notions of masculinity.

Studies:

  • Heller, et al. 2015. Thinking Fast and Slow? Some Experiments to Reduce Crime and Dropout in Chicago. NBER Working Paper 21178 .

 

We are pleased to be working with Professor Hiscox on the Applying Behavioural Insights to Public Policy 2-day executive education forum on 19th & 20th November in Canberra. With over 40 agencies attending, don’t miss your opportunity to examine these case studies and advance your skills in the practical implementation and application of behavioural economics.

Submitted by Tim Tran

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