Charities Try New Ways to Test Ideas Quickly and Polish Them Later

Curated on Posted on by Stefaan Verhulst

Ben Gose in the Chronicle of Philanthropy: “A year ago, a division of TechSoup Global began working on an app to allow donors to buy a hotel room for victims of domestic violence when no other shelter is available. Now that app is a finalist in a competition run by a foundation that combats human trafficking—and a win could mean a grant worth several hundred thousand dollars. The app’s evolution—adding a focus on sex slaves to the initial emphasis on domestic violence—was hardly accidental.
Caravan Studios, the TechSoup division that created the app, has embraced a new management approach popular in Silicon Valley known as “lean start-up.”
The principles, which are increasingly popular among nonprofits, emphasize experimentation over long-term planning and urge groups to get products and services out to clients as early as possible so the organizations can learn from feedback and make changes.
When the app, known as SafeNight, was still early in the design phase, Caravan posted details about the project on its website, including applications for grants that Caravan had not yet received. In lean-start-up lingo, Caravan put out a “minimal viable product” and hoped for feedback that would lead to a better app.
Caravan soon heard from antitrafficking organizations, which were interested in the same kind of service. Caravan eventually teamed up with the Polaris Project and the State of New Jersey, which were working on a similar app, to jointly create an app for the final round of the antitrafficking contest. Humanity United, the foundation sponsoring the contest, plans to award $1.8-million to as many as three winners later this month.
Marnie Webb, CEO of Caravan, which is building an array of apps designed to curb social problems, says lean-start-up principles help Caravan work faster and meet real needs.
“The central idea is that any product that we develop will get better if it lives as much of its life as possible outside of our office,” Ms. Webb says. “If we had kept SafeNight inside and polished it and polished it, it would have been super hard to bring on a partner because we would have invested too much.”….
Nonprofits developing new tech tools are among the biggest users of lean-start-up ideas.
Upwell, an ocean-conservation organization founded in 2011, scans the web for lively ocean-related discussions and then pushes to turn them into full-fledged movements through social-media campaigns.
Lean principles urge groups to steer clear of “vanity metrics,” such as site visits, that may sound impressive but don’t reveal much. Upwell tracks only one number—“social mentions”—the much smaller group of people who actually say something about an issue online.
After identifying a hot topic, Upwell tries to assemble a social-media strategy within 24 hours—what it calls a “minimum viable campaign.”
“We do the least amount of work to get something out the door that will get results and information,” says Rachel Dearborn, Upwell’s campaign director.
Campaigns that don’t catch on are quickly scrapped. But campaigns that do catch on get more time, energy, and money from Upwell.
After Hurricane Sandy, in 2012, a prominent writer on ocean issues and others began pushing the idea that revitalizing the oyster beds near New York City could help protect the shore from future storm surges. Upwell’s “I (Oyster) New York” campaign featured a catchy logo and led to an even bigger spike in attention.

‘Build-Measure-Learn’

Some organizations that could hardly be called start-ups are also using lean principles. GuideStar, the 20-year-old aggregator of financial information about charities, is using the lean approach to develop tools more quickly that meet the needs of its users.
The lean process promotes short “build-measure-learn” cycles, in which a group frequently updates a product or service based on what it hears from its customers.
GuideStar and the Nonprofit Finance Fund have developed a tool called Financial Scan that allows charities to see how they compare with similar groups on various financial measures, such as their mix of earned revenue and grant funds.
When it analyzed who was using the tool, GuideStar found heavy interest from both foundations and accounting firms, says Evan Paul, GuideStar’s senior director of products and marketing.
In the future, he says, GuideStar may create three versions of Financial Scan to meet the distinct interests of charities, foundations, and accountants.
“We want to get more specific about how people are using our data to make decisions so that we can help make those decisions better and faster,” Mr. Paul says….

Lean Start-Up: a Glossary of Terms for a Hot New Management Approach

Build-Measure-Learn

Instead of spending considerable time developing a product or service for a big rollout, organizations should consider using a continuous feedback loop: “build” a program or service, even if it is not fully fleshed out; “measure” how clients are affected; and “learn” by improving the program or going in a new direction. Repeat the cycle.

Minimum Viable Product

An early version of a product or service that may be lacking some features. This approach allows an organization to obtain feedback from clients and quickly determine the usefulness of a product or service and how to improve it.

Get Out of the Building

To determine whether a product or service is needed, talk to clients and share your ideas with them before investing heavily.

A/B Testing

Create two versions of a product or service, show them to different groups, and see which performs best.

Failing Fast

By quickly realizing that a product or service isn’t viable, organizations save time and money and gain valuable information for their next effort.

Pivot

Making a significant change in strategy when the early testing of a minimum viable product shows that the product or service isn’t working or isn’t needed.

Vanity Metrics

Measures that seem to provide a favorable picture but don’t accurately capture the impact of a product. An example might be a tally of website page views. A more meaningful measure—or an “actionable metric,” in the lean lexicon—might be the number of active users of an online service.
Sources: The Lean Startup, by Eric Ries; The Ultimate Dictionary of Lean for Social Good, a publication by Lean Impact”

Why the wealthiest countries are also the most open with their data

Curated on Posted on by Stefaan Verhulst
Emily Badger in the Washington Post: “The Oxford Internet Institute this week posted a nice visualization of the state of open data in 70 countries around the world, reflecting the willingness of national governments to release everything from transportation timetables to election results to machine-readable national maps. The tool is based on the Open Knowledge Foundation’s Open Data Index, an admittedly incomplete but telling assessment of who willingly publishes updated, accurate national information on, say, pollutants (Sweden) and who does not (ahem, South Africa).

Oxford Internet Institute
Tally up the open data scores for these 70 countries, and the picture looks like this, per the Oxford Internet Institute (click on the picture to link through to the larger interactive version):
Oxford Internet Institute
…With apologies for the tiny, tiny type (and the fact that many countries aren’t listed here at all), a couple of broad trends are apparent. For one, there’s a prominent global “openness divide,” in the words of the Oxford Internet Institute. The high scores mostly come from Europe and North America, the low scores from Asia, Africa and Latin America. Wealth is strongly correlated with “openness” by this measure, whether we look at World Bank income groups or Gross National Income per capita. By the OII’s calculation, wealth accounts for about a third of the variation in these Open Data Index scores.
Perhaps this is an obvious correlation, but the reasons why open data looks like the luxury of rich economies are many, and they point to the reality that poor countries face a lot more obstacles to openness than do places like the United States. For one thing, openness is also closely correlated with Internet penetration. Why open your census results if people don’t have ways to access it (or means to demand it)? It’s no easy task to do this, either.”

Online tools for engaging citizens in the legislative process

Curated on Posted on by Stefaan Verhulst

Andrew Mandelbaum  from OpeningParliament.org: “Around the world, parliaments, governments, civil society organizations, and even individual parliamentarians, are taking measures to make the legislative process more participatory. Some are creating their own tools — often open source, which allows others to use these tools as well — that enable citizens to markup legislation or share ideas on targeted subjects. Others are purchasing and implementing tools developed by private companies to good effect. In several instances, these initiatives are being conducted through collaboration between public institutions and civil society, while many compliment online and offline experiences to help ensure that a broader population of citizens is reached.
The list below provides examples of some of the more prominent efforts to engage citizens in the legislative process.
Brazil
Implementer: Brazilian Chamber of Deputies…
Website: http://edemocracia.camara.gov.br/
Additional Information: OpeningParliament.org Case Study
Estonia
Implementer: Estonian President & Civil Society
Project Name: Rahvakogu (The People’s Assembly)…
Website: http://www.rahvakogu.ee/
Additional Information: Enhancing Estonia’s Democracy Through Rahvakogu
Finland
Implementer: Finnish Parliament
Project Name: Inventing Finland again! (Keksitään Suomi uudelleen!)…
Website: http://www.suomijoukkoistaa.fi/
Additional Information: Democratic Participation and Deliberation in Crowdsourced Legislative Processes: The Case of the Law on Off-Road Traffic in Finland
France
Implementer: SmartGov – Démocratie Ouverte…
Website: https://www.parlement-et-citoyens.fr/
Additional Information: OpeningParliament Case Study
Italy
Implementer: Government of Italy
Project Name: Public consultation on constitutional reform…
Website: http://www.partecipa.gov.it/
Spain
Implementer: Basque Parliament…
Website: http://www.adi.parlamentovasco.euskolegebiltzarra.org/es/
Additional Information: Participation in Parliament
United Kingdom
Implementer: Cabinet Office
Project Name: Open Standards Consultation…
Website: http://consultation.cabinetoffice.gov.uk/openstandards/
Additional Information: Open Policy Making, Open Standards Consulation; Final Consultation Documents
United States
Implementer: OpenGov Foundation
Project Name: The Madison Project
Tool: The Madison Project“

Making digital government better

Curated on Posted on by Stefaan Verhulst

An McKinsey Insight interview with Mike Bracken (UK): “When it comes to the digital world, governments have traditionally placed political, policy, and system needs ahead of the people who require services. Mike Bracken, the executive director of the United Kingdom’s Government Digital Service, is attempting to reverse that paradigm by empowering citizens—and, in the process, improve the delivery of services and save money. In this video interview, Bracken discusses the philosophy behind the digital transformation of public services in the United Kingdom, some early successes, and next steps.

Interview transcript

Putting users first

Government around the world is pretty good at thinking about its own needs. Government puts its own needs first—they often put their political needs followed by the policy needs. The actual machine of government comes second. The third need then generally becomes the system needs, so the IT or whatever system’s driving it. And then out of those four, the user comes a poor fourth, really.
And we’ve inverted that. So let me give you an example. At the moment, if you want to know about tax in the UK , you’re probably going to know that Her Majesty’s Revenue and Customs is a part of government that deals with tax. You’re probably going to know that because you pay tax, right?
But why should you have to know that? Because, really, it’s OK to know that, for that one—but we’ve got 300 agencies, more than that; we’ve got 24 parts of government. If you want to know about, say, gangs, is that a health issue or is that a local issue? Is it a police issue? Is it a social issue, an education issue? Well, actually it’s all of those issues. But you shouldn’t have to know how government is constructed to know what each bit of government is doing about an esoteric issue like gangs.
What we’ve done with gov.uk, and what we’re doing with our transactions, is to make them consistent at the point of user need. Because there’s only one real user need of government digitally, and that’s to recognize that at the point of need, users need to deal with the government. Not a department name or an agency name, they’re dealing with the government. And when they do that, they need it to be consistent, and they need it to be easy to find. Ninety-five percent of our journeys digitally start with a search.
And so our elegantly constructed and expensively constructed front doors are often completely routed around. We’ve got to recognize that and construct our digital services based on user needs….”

Putting Crowdsourcing on the Map

Curated on Posted on by Stefaan Verhulst

MIT Technology Review: “Even in San Francisco, where Google’s roving Street View cars have mapped nearly every paved surface, there are still places that have remained untouched, such as the flights of stairs that serve as pathways between streets in some of the city’s hilliest neighborhoods.
It’s these places that a startup called Mapillary is focusing on. Cofounders Jan Erik Solem and Johan Gyllenspetz are attempting to build an open, crowdsourced, photographic map that lets smartphone users log all sorts of places, creating a richer view of the world than what is offered by Street View and other street-level mapping services. If contributors provide images often, that view could be more representative of how things look right now.
Google itself is no stranger to the benefits of crowdsourced map content: it paid $966 million last year for traffic and navigation app Waze, whose users contribute data. Google also lets people augment Street View content with their own images. But Solem and Gyllenspetz think there’s still plenty of room for Mapillary, which they say can be used for everything from tracking a nature hike to offering more up-to-date images to house hunters and Airbnb users.
Solem and Gyllenspetz have only been working on the project for four months; they released an iPhone app in November, and an Android app in January. So far, there are just a few hundred users who have shared about 100,000 photos on the service. While it’s free for anyone to use, the startup plans to eventually make money by licensing the data its users generate to companies.
With the app, a user can choose to collect images by walking, biking, or driving. Once you press a virtual shutter button within the app, it takes a photo every two seconds, until you press the button again. You can then upload the images to Mapillary’s service via Wi-Fi, where each photo’s location is noted through its GPS tag. Computer-vision software compares each photo with others that are within a radius of about 100 meters, searching for matching image features so it can find the geometric relationship between the photos. It then places those images properly on the map, and stitches them all together. When new images come in of an area that has already been mapped, Mapillary will add them to its database, too.
It can take less than 30 seconds for the images to show up on the Web-based map, but several minutes for the images to be fully processed. As with Google’s Street View photos, image-recognition software blurs out faces and license plate numbers.
Users can edit Mapillary’s map by moving around the icons that correspond to images—to fix a misplaced image, for instance. Eventually, users will also be able to add comments and tags.
So far, Mapillary’s map is quite sparse. But the few hundred users trying out Mapillary include some map providers in Europe, and the 100,000 or so images to the service ranging from a bike path on Venice Beach in California to a snow-covered ski slope in Sweden.
Street-level images can be viewed on the Web or through Mapillary’s smartphone apps (though the apps just pull up the Web page within the app). Blue lines and colored tags indicate where users have added photos to the map; you can zoom in to see them at the street level.

Navigating through photos is still quite rudimentary; you can tap or click to move from one image to the next with onscreen arrows, depending on the direction you want to explore.
Beyond technical and design challenges, the biggest issue Mapillary faces is convincing a large enough number of users to build up its store of images so that others will start using it and contributing as well, and then ensuring that these users keep coming back.”

New Research Network to Study and Design Innovative Ways of Solving Public Problems

Curated on Posted on by Stefaan Verhulst

Network

MacArthur Foundation Research Network on Opening Governance formed to gather evidence and develop new designs for governing 

NEW YORK, NY, March 4, 2014 – The Governance Lab (The GovLab) at New York University today announced the formation of a Research Network on Opening Governance, which will seek to develop blueprints for more effective and legitimate democratic institutions to help improve people’s lives.
Convened and organized by the GovLab, the MacArthur Foundation Research Network on Opening Governance is made possible by a three-year grant of $5 million from the John D. and Catherine T. MacArthur Foundation as well as a gift from Google.org, which will allow the Network to tap the latest technological advances to further its work.
Combining empirical research with real-world experiments, the Research Network will study what happens when governments and institutions open themselves to diverse participation, pursue collaborative problem-solving, and seek input and expertise from a range of people. Network members include twelve experts (see below) in computer science, political science, policy informatics, social psychology and philosophy, law, and communications. This core group is supported by an advisory network of academics, technologists, and current and former government officials. Together, they will assess existing innovations in governing and experiment with new practices and how institutions make decisions at the local, national, and international levels.
Support for the Network from Google.org will be used to build technology platforms to solve problems more openly and to run agile, real-world, empirical experiments with institutional partners such as governments and NGOs to discover what can enhance collaboration and decision-making in the public interest.
The Network’s research will be complemented by theoretical writing and compelling storytelling designed to articulate and demonstrate clearly and concretely how governing agencies might work better than they do today. “We want to arm policymakers and practitioners with evidence of what works and what does not,” says Professor Beth Simone Noveck, Network Chair and author of Wiki Government: How Technology Can Make Government Better, Democracy Stronger and Citi More Powerful, “which is vital to drive innovation, re-establish legitimacy and more effectively target scarce resources to solve today’s problems.”
“From prize-backed challenges to spur creative thinking to the use of expert networks to get the smartest people focused on a problem no matter where they work, this shift from top-down, closed, and professional government to decentralized, open, and smarter governance may be the major social innovation of the 21st century,” says Noveck. “The MacArthur Research Network on Opening Governance is the ideal crucible for helping  transition from closed and centralized to open and collaborative institutions of governance in a way that is scientifically sound and yields new insights to inform future efforts, always with an eye toward real-world impacts.”
MacArthur Foundation President Robert Gallucci added, “Recognizing that we cannot solve today’s challenges with yesterday’s tools, this interdisciplinary group will bring fresh thinking to questions about how our governing institutions operate, and how they can develop better ways to help address seemingly intractable social problems for the common good.”
Members
The MacArthur Research Network on Opening Governance comprises:
Chair: Beth Simone Noveck
Network Coordinator: Andrew Young
Chief of Research: Stefaan Verhulst
Faculty Members:

  • Sir Tim Berners-Lee (Massachusetts Institute of Technology (MIT)/University of Southampton, UK)
  • Deborah Estrin (Cornell Tech/Weill Cornell Medical College)
  • Erik Johnston (Arizona State University)
  • Henry Farrell (George Washington University)
  • Sheena S. Iyengar (Columbia Business School/Jerome A. Chazen Institute of International Business)
  • Karim Lakhani (Harvard Business School)
  • Anita McGahan (University of Toronto)
  • Cosma Shalizi (Carnegie Mellon/Santa Fe Institute)

Institutional Members:

  • Christian Bason and Jesper Christiansen (MindLab, Denmark)
  • Geoff Mulgan (National Endowment for Science Technology and the Arts – NESTA, United Kingdom)
  • Lee Rainie (Pew Research Center)

The Network is eager to hear from and engage with the public as it undertakes its work. Please contact Stefaan Verhulst to share your ideas or identify opportunities to collaborate.”

Big Data, Big New Businesses

Curated on Posted on by Stefaan Verhulst

Nigel Shaboldt and Michael Chui: “Many people have long believed that if government and the private sector agreed to share their data more freely, and allow it to be processed using the right analytics, previously unimaginable solutions to countless social, economic, and commercial problems would emerge. They may have no idea how right they are.

Even the most vocal proponents of open data appear to have underestimated how many profitable ideas and businesses stand to be created. More than 40 governments worldwide have committed to opening up their electronic data – including weather records, crime statistics, transport information, and much more – to businesses, consumers, and the general public. The McKinsey Global Institute estimates that the annual value of open data in education, transportation, consumer products, electricity, oil and gas, health care, and consumer finance could reach $3 trillion.

These benefits come in the form of new and better goods and services, as well as efficiency savings for businesses, consumers, and citizens. The range is vast. For example, drawing on data from various government agencies, the Climate Corporation (recently bought for $1 billion) has taken 30 years of weather data, 60 years of data on crop yields, and 14 terabytes of information on soil types to create customized insurance products.

Similarly, real-time traffic and transit information can be accessed on smartphone apps to inform users when the next bus is coming or how to avoid traffic congestion. And, by analyzing online comments about their products, manufacturers can identify which features consumers are most willing to pay for, and develop their business and investment strategies accordingly.

Opportunities are everywhere. A raft of open-data start-ups are now being incubated at the London-based Open Data Institute (ODI), which focuses on improving our understanding of corporate ownership, health-care delivery, energy, finance, transport, and many other areas of public interest.

Consumers are the main beneficiaries, especially in the household-goods market. It is estimated that consumers making better-informed buying decisions across sectors could capture an estimated $1.1 trillion in value annually. Third-party data aggregators are already allowing customers to compare prices across online and brick-and-mortar shops. Many also permit customers to compare quality ratings, safety data (drawn, for example, from official injury reports), information about the provenance of food, and producers’ environmental and labor practices.

Consider the book industry. Bookstores once regarded their inventory as a trade secret. Customers, competitors, and even suppliers seldom knew what stock bookstores held. Nowadays, by contrast, bookstores not only report what stock they carry but also when customers’ orders will arrive. If they did not, they would be excluded from the product-aggregation sites that have come to determine so many buying decisions.

The health-care sector is a prime target for achieving new efficiencies. By sharing the treatment data of a large patient population, for example, care providers can better identify practices that could save $180 billion annually.

The Open Data Institute-backed start-up Mastodon C uses open data on doctors’ prescriptions to differentiate among expensive patent medicines and cheaper “off-patent” varieties; when applied to just one class of drug, that could save around $400 million in one year for the British National Health Service. Meanwhile, open data on acquired infections in British hospitals has led to the publication of hospital-performance tables, a major factor in the 85% drop in reported infections.

There are also opportunities to prevent lifestyle-related diseases and improve treatment by enabling patients to compare their own data with aggregated data on similar patients. This has been shown to motivate patients to improve their diet, exercise more often, and take their medicines regularly. Similarly, letting people compare their energy use with that of their peers could prompt them to save hundreds of billions of dollars in electricity costs each year, to say nothing of reducing carbon emissions.

Such benchmarking is even more valuable for businesses seeking to improve their operational efficiency. The oil and gas industry, for example, could save $450 billion annually by sharing anonymized and aggregated data on the management of upstream and downstream facilities.

Finally, the move toward open data serves a variety of socially desirable ends, ranging from the reuse of publicly funded research to support work on poverty, inclusion, or discrimination, to the disclosure by corporations such as Nike of their supply-chain data and environmental impact.

There are, of course, challenges arising from the proliferation and systematic use of open data. Companies fear for their intellectual property; ordinary citizens worry about how their private information might be used and abused. Last year, Telefónica, the world’s fifth-largest mobile-network provider, tried to allay such fears by launching a digital confidence program to reassure customers that innovations in transparency would be implemented responsibly and without compromising users’ personal information.

The sensitive handling of these issues will be essential if we are to reap the potential $3 trillion in value that usage of open data could deliver each year. Consumers, policymakers, and companies must work together, not just to agree on common standards of analysis, but also to set the ground rules for the protection of privacy and property.”

The GovLab Index: Designing for Behavior Change

Curated on Posted on by Stefaan Verhulst

Please find below the latest installment in The GovLab Index series, inspired by the Harper’s Index. “The GovLab Index: Designing for Behavior Change” explores the recent application of psychology and behavioral economics towards solving social issues and shaping public policy and programs. Previous installments include The Networked Public, Measuring Impact with Evidence, Open Data, The Data Universe, Participation and Civic Engagement and Trust in Institutions.

  • Year the Behavioural Insights or “Nudge” Team was established by David Cameron in the U.K.: 2010
  • Amount saved by the U.K. Courts Service a year by sending people owing fines personalized text messages to persuade them to pay promptly since the creation of the Nudge unit: £30m
    • Entire budget for the Behavioural Insights Team: less than £1 million
    • Estimated reduction in bailiff interventions through the use of personalized text reminders: 150,000 fewer interventions annually
  • Percentage increase among British residents who paid their taxes on time when they received a letter saying that most citizens in their neighborhood pay their taxes on time: 15%
  • Estimated increase in organ-donor registrations in the U.K. if people are asked “If you needed an organ transplant, would you take one?”: 96,000
  • Proportion of employees who now have a workplace pension since the U.K. government switched from opt-in to opt-out (illustrating the power of defaults): 83%, 63% before opt-out
  • Increase in 401(k) enrollment rates within the U.S. by changing the default from ‘opt in’ to ‘opt out’: from 13% to 80%
  • Behavioral studies have shown that consumers overestimate savings from credit cards with no annual fees. Reduction in overall borrowing costs to consumers by requiring card issuers to tell consumers how much it would cost them in fees and interest, under the 2009 CARD Act in the U.S.: 1.7% of average daily balances 
  • Many high school students and their families in the U.S. find financial aid forms for college complex and thus delay filling them out. Increase in college enrollment as a result of being helped to complete the FAFSA financial aid form by an H&R tax professional, who then provided immediate estimates of the amount of aid the student was eligible for, and the net tuition cost of four nearby public colleges: 26%
  • How much more likely people are to keep accounting records, calculate monthly revenues, and separate their home and business books if given “rules of thumb”-based training with regards to managing their finances, according to a randomized control trial conducted in a bank in the Dominican Republic: 10%
  • Elderly Americans are asked to choose from over 40 options when enrolling in Medicaid Part D private drug plans. How many switched plans to save money when they received a letter providing information about three plans that would be cheaper for them: almost double 
    • The amount saved on average per person by switching plans due to this intervention: $150 per year
  • Increase in prescriptions to manage cardiac disease when Medicaid enrollees are sent a suite of behavioral nudges such as more salient description of the consequences of remaining untreated and post-it note reminders during an experiment in the U.S.: 78%
  • Reduction in street-litter when a trail of green footprints leading to nearby garbage cans is stenciled on the ground during an experiment in Copenhagen, Denmark: 46%
  • Reduction in missed National Health Service appointments in the U.K. when patients are asked to fill out their own appointment cards: 18%
    • Reduction in missed appointments when patients are also made aware of the number of people who attend their appointments on time: 31%
    • The cost of non-attendance per year for the National Health Service: £700m 
  • How many people in a U.S. experiment chose to ‘downsize’ their meals when asked, regardless of whether they received a discount for the smaller portion: 14-33%
    • Average reduction in calories as a result of downsizing: 200
  • Number of households in the U.K. without properly insulated attics, leading to high energy consumption and bills: 40%
    • Result of offering group discounts to motivate households to insulate their attics: no effect
    • Increase in households that agreed to insulate their attics when offered loft-clearing services even though they had to pay for the service: 4.8 fold increase

Full list and sources at http://thegovlab.org/the-govlab-index-designing-for-behavior-change/
 

Index: Designing for Behavior Change

Curated on Posted on by Shruti Sannon

The Living Library Index – inspired by the Harper’s Index – provides important statistics and highlights global trends in governance innovation. This installment focuses on designing for behavior change and was originally published in 2014.

  • Year the Behavioural Insights or “Nudge” Team was established by David Cameron in the U.K.: 2010
  • Amount saved by the U.K. Courts Service a year by sending people owing fines personalized text messages to persuade them to pay promptly since the creation of the Nudge unit: £30m
    • Entire budget for the Behavioural Insights Team: less than £1 million
    • Estimated reduction in bailiff interventions through the use of personalized text reminders: 150,000 fewer interventions annually
  • Percentage increase among British residents who paid their taxes on time when they received a letter saying that most citizens in their neighborhood pay their taxes on time: 15%
  • Estimated increase in organ-donor registrations in the U.K. if people are asked “If you needed an organ transplant, would you take one?”: 96,000
  • Proportion of employees who now have a workplace pension since the U.K. government switched from opt-in to opt-out (illustrating the power of defaults): 83%, 63% before opt-out
  • Increase in 401(k) enrollment rates within the U.S. by changing the default from ‘opt in’ to ‘opt out’: from 13% to 80%
  • Behavioral studies have shown that consumers overestimate savings from credit cards with no annual fees. Reduction in overall borrowing costs to consumers by requiring card issuers to tell consumers how much it would cost them in fees and interest, under the 2009 CARD Act in the U.S.: 1.7% of average daily balances 
  • Many high school students and their families in the U.S. find financial aid forms for college complex and thus delay filling them out. Increase in college enrollment as a result of being helped to complete the FAFSA financial aid form by an H&R tax professional, who then provided immediate estimates of the amount of aid the student was eligible for, and the net tuition cost of four nearby public colleges: 26%
  • How much more likely people are to keep accounting records, calculate monthly revenues, and separate their home and business books if given “rules of thumb”-based training with regards to managing their finances, according to a randomized control trial conducted in a bank in the Dominican Republic: 10%
  • Elderly Americans are asked to choose from over 40 options when enrolling in Medicaid Part D private drug plans. How many switched plans to save money when they received a letter providing information about three plans that would be cheaper for them: almost double 
    • The amount saved on average per person by switching plans due to this intervention: $150 per year
  • Increase in prescriptions to manage cardiac disease when Medicaid enrollees are sent a suite of behavioral nudges such as more salient description of the consequences of remaining untreated and post-it note reminders during an experiment in the U.S.: 78%
  • Reduction in street-litter when a trail of green footprints leading to nearby garbage cans is stenciled on the ground during an experiment in Copenhagen, Denmark: 46%
  • Reduction in missed National Health Service appointments in the U.K. when patients are asked to fill out their own appointment cards: 18%
    • Reduction in missed appointments when patients are also made aware of the number of people who attend their appointments on time: 31%
    • The cost of non-attendance per year for the National Health Service: £700m 
  • How many people in a U.S. experiment chose to ‘downsize’ their meals when asked, regardless of whether they received a discount for the smaller portion: 14-33%
    • Average reduction in calories as a result of downsizing: 200
  • Number of households in the U.K. without properly insulated attics, leading to high energy consumption and bills: 40%
    • Result of offering group discounts to motivate households to insulate their attics: no effect
    • Increase in households that agreed to insulate their attics when offered loft-clearing services even though they had to pay for the service: 4.8 fold increase

Sources

Selected Readings on Behavioral Economics: Nudges

Curated on Posted on by Andrew Young

The Living Library’s Selected Readings series seeks to build a knowledge base on innovative approaches for improving the effectiveness and legitimacy of governance. This curated and annotated collection of recommended works on the topic of behavioral economics was originally published in 2014.

The 2008 publication of Richard Thaler and Cass Sunstein’s Nudge ushered in a new era of behavioral economics, and since then, policy makers in the United States and elsewhere have been applying behavioral economics to the field of public policy. Like Smart Disclosure, behavioral economics can be used in the public sector to improve the decisionmaking ability of citizens without relying on regulatory interventions. In the six years since Nudge was published, the United Kingdom has created the Behavioural Insights Team (also known as the Nudge Unit), a cross-ministerial organization that uses behavioral economics to inform public policy, and the White House has recently followed suit by convening a team of behavioral economists to create a behavioral insights-driven team in the United States. Policymakers have been using behavioral insights to design more effective interventions in the fields of long term unemployment; roadway safety; enrollment in retirement plans; and increasing enrollment in organ donation registries, to name some noteworthy examples. The literature of this nascent field provides a look at the growing optimism in the potential of applying behavioral insights in the public sector to improve people’s lives.

Selected Reading List (in alphabetical order)

  • John Beshears, James Choi, David Laibson and Brigitte C. Madrian – The Importance of Default Options for Retirement Savings Outcomes: Evidence from the United States – a paper examining the role default options play in encouraging intelligent retirement savings decisionmaking.
  • Cabinet Office and Behavioural Insights Team, United Kingdom – Applying Behavioural Insights to Health – a paper outlining some examples of behavioral economics being applied to the healthcare landscape using cost-efficient interventions.
  • Matthew Darling, Saugato Datta and Sendhil Mullainathan – The Nature of the BEast: What Behavioral Economics Is Not – a paper discussing why control and behavioral economics are not as closely aligned as some think, reiterating the fact that the field is politically agnostic.
  • Antoinette Schoar and Saugato Datta – The Power of Heuristics – a paper exploring the concept of “heuristics,” or rules of thumb, which can provide helpful guidelines for pushing people toward making “reasonably good” decisions without a full understanding of the complexity of a situation.
  • Richard H. Thaler and Cass R. Sunstein – Nudge: Improving Decisions About Health, Wealth, and Happiness – an influential book describing the many ways in which the principles of behavioral economics can be and have been used to influence choices and behavior through the development of new “choice architectures.” 
  • U.K. Parliament Science and Technology Committee – Behaviour Change – an exploration of the government’s attempts to influence the behaviour of its citizens through nudges, with a focus on comparing the effectiveness of nudges to that of regulatory interventions.

Annotated Selected Reading List (in alphabetical order)

Beshears, John, James Choi, David Laibson and Brigitte C. Madrian. “The Importance of Default Options for Retirement Savings Outcomes: Evidence from the United States.” In Jeffrey R. Brown, Jeffrey B. Liebman and David A. Wise, editors, Social Security Policy in a Changing Environment, Cambridge: National Bureau of Economic Research, 2009. http://bit.ly/LFmC5s.

  • This paper examines the role default options play in pushing people toward making intelligent decisions regarding long-term savings and retirement planning.
  • Importantly, the authors provide evidence that a strategically oriented default setting from the outset is likely not enough to fully nudge people toward the best possible decisions in retirement savings. They find that the default settings in every major dimension of the savings process (from deciding whether to participate in a 401(k) to how to withdraw money at retirement) have real and distinct effects on behavior.

Cabinet Office and Behavioural Insights Team, United Kingdom. “Applying Behavioural Insights to Health.” December 2010. http://bit.ly/1eFP16J.

  • In this report, the United Kingdom’s Behavioural Insights Team does not attempt to “suggest that behaviour change techniques are the silver bullet that can solve every problem.” Rather, they explore a variety of examples where local authorities, charities, government and the private-sector are using behavioural interventions to encourage healthier behaviors.  
  • The report features case studies regarding behavioral insights ability to affect the following public health issues:
    • Smoking
    • Organ donation
    • Teenage pregnancy
    • Alcohol
    • Diet and weight
    • Diabetes
    • Food hygiene
    • Physical activity
    • Social care
  • The report concludes with a call for more experimentation and knowledge gathering to determine when, where and how behavioural interventions can be most effective in helping the public become healthier.

Darling, Matthew, Saugato Datta and Sendhil Mullainathan. “The Nature of the BEast: What Behavioral Economics Is Not.” The Center for Global Development. October 2013. https://bit.ly/2QytRmf.

  • In this paper, Darling, Datta and Mullainathan outline the three most pervasive myths that abound within the literature about behavioral economics:
    • First, they dispel the relationship between control and behavioral economics.  Although tools used within behavioral economics can convince people to make certain choices, the goal is to nudge people to make the choices they want to make. For example, studies find that when retirement savings plans change the default to opt-in rather than opt-out, more workers set up 401K plans. This is an example of a nudge that guides people to make a choice that they already intend to make.
    • Second, they reiterate that the field is politically agnostic. Both liberals and conservatives have adopted behavioral economics and its approach is neither liberal nor conservative. President Obama embraces behavioral economics but the United Kingdom’s conservative party does, too.
    • And thirdly, the article highlights that irrationality actually has little to do with behavioral economics. Context is an important consideration when one considers what behavior is rational and what behavior is not. Rather than use the term “irrational” to describe human beings, the authors assert that humans are “infinitely complex” and behavior that is often considered irrational is entirely situational.

Schoar, Antoinette and Saugato Datta. “The Power of Heuristics.” Ideas42. January 2014. https://bit.ly/2UDC5YK.

  • This paper explores the notion that being presented with a bevy of options can be desirable in many situations, but when making an intelligent decision requires a high-level understanding of the nuances of vastly different financial aid packages, for example, options can overwhelm. Heuristics (rules of thumb) provide helpful guidelines that “enable people to make ‘reasonably good’ decisions without needing to understand all the complex nuances of the situation.”
  • The underlying goal heuristics in the policy space involves giving people the type of “rules of thumb” that enable make good decisionmaking regarding complex topics such as finance, healthcare and education. The authors point to the benefit of asking individuals to remember smaller pieces of knowledge by referencing a series of studies conducted by psychologists Beatty and Kahneman that showed people were better able to remember long strings of numbers when they were broken into smaller segments.
  • Schoar and Datta recommend these four rules when implementing heuristics:
    • Use heuristics where possible, particularly in complex situation;
    • Leverage new technology (such as text messages and Internet-based tools) to implement heuristics.
    • Determine where heuristics can be used in adult training programs and replace in-depth training programs with heuristics where possible; and
    • Consider how to apply heuristics in situations where the exception is the rule. The authors point to the example of savings and credit card debt. In most instances, saving a portion of one’s income is a good rule of thumb. However, when one has high credit card debt, paying off debt could be preferable to building one’s savings.

Thaler, Richard H. and Cass R. Sunstein. Nudge: Improving Decisions About Health, Wealth, and Happiness. Yale University Press, 2008. https://bit.ly/2kNXroe.

  • This book, likely the single piece of scholarship most responsible for bringing the concept of nudges into the public consciousness, explores how a strategic “choice architecture” can help people make the best decisions.
  • Thaler and Sunstein, while advocating for the wider and more targeted use of nudges to help improve people’s lives without resorting to overly paternal regulation, look to five common nudges for lessons and inspiration:
    • The design of menus gets you to eat (and spend) more;
    • “Flies” in urinals improve, well, aim;
    • Credit card minimum payments affect repayment schedules;
    • Automatic savings programs increase savings rate; and
    • “Defaults” can improve rates of organ donation.
  • In the simplest terms, the authors propose the wider deployment of choice architectures that follow “the golden rule of libertarian paternalism: offer nudges that are most likely to help and least likely to inflict harm.”

U.K. Parliament Science and Technology Committee. “Behaviour Change.” July 2011. http://bit.ly/1cbYv5j.

  • This report from the U.K.’s Science and Technology Committee explores the government’s attempts to influence the behavior of its citizens through nudges, with a focus on comparing the effectiveness of nudges to that of regulatory interventions.
  • The author’s central conclusion is that, “non-regulatory measures used in isolation, including ‘nudges,’ are less likely to be effective. Effective policies often use a range of interventions.”
  • The report’s other major findings and recommendations are:
    • Government must invest in gathering more evidence about what measures work to influence population behaviour change;
    • They should appoint an independent Chief Social Scientist to provide them with robust and independent scientific advice;
    • The Government should take steps to implement a traffic light system of nutritional labelling on all food packaging; and
    • Current voluntary agreements with businesses in relation to public health have major failings. They are not a proportionate response to the scale of the problem of obesity and do not reflect the evidence about what will work to reduce obesity. If effective agreements cannot be reached, or if they show minimal benefit, the Government should pursue regulation.”