Nudging compliance in government: A human-centered approach to public sector program design

Curated on Posted on by Stefaan Verhulst

Article by Michelle Cho, Joshua Schoop, Timothy Murphy: “What are the biggest challenges facing government? Bureaucracy? Gridlock? A shrinking pool of resources?

Chances are compliance—when people act in accordance with preset rules, policies, and/or expectations—doesn’t top the list for many. Yet maybe it should. Compliance touches nearly every aspect of public policy implementation. Over the past 10 years, US government spending on compliance reached US$7.5 billion.

Even the most sophisticated and well-planned policies often require cooperation and input from real humans to be successful. From voluntary tax filing at the Internal Revenue Service (IRS) to reducing greenhouse emissions at the Environmental Protection Agency (EPA), to achieving the public policy outcomes decision-makers intend, compliance is fundamental.

Consider these examples of noncompliance and their costs:

  • Taxes. By law, the IRS requires all income-earning, eligible constituents to file and pay their owed taxes. Tax evasion—the illegal nonpayment or underpayment of tax—cost the federal government an average of US$458 billion per year between 2008 and 2010.3 The IRS believes it will recover just 11 percent of the amount lost in that time frame.
  • The environment. The incorrect disposal of recyclable materials has cost more than US$744 million in the state of Washington since 2009.4 The city audit in San Diego found that 76 percent of materials disposed of citywide are recyclable and estimates that those recyclables could power 181,000 households for a year or conserve 3.4 million barrels of oil.5

Those who fail to comply with these rules could face direct and indirect consequences, including penalties and even jail time. Yet a significant subset of the population still behaves in a noncompliant manner. Why?

Behavioral sciences offer some clues. Through the combination of psychology, economics, and neuroscience, behavioral sciences demonstrate that people do not always do what is asked of them, even when it seems in their best interest to do so. Often, people choose a noncompliant path because of one of these reasons: They are unaware of their improper behavior, they find the “right” choice is too complex to decipher, or they simply are not intrinsically motivated to make the compliant choice.

For any of these reasons, when a cognitive hurdle emerges, some people resort to noncompliant behavior. But these hurdles can be overcome. Policymakers can use these same behavioral insights to understand why noncompliance occurs and alternatively, employ behavioral-inspired tools to encourage compliant behavior in a more agile and resource-efficient fashion.

In this spirit, leaders can take a more human-centered approach to program design by using behavioral science lessons to develop policies and programs in a manner that can make compliance easier and more appealing. In our article, we discuss three common reasons behind noncompliance and how better, more human-centered design can help policymakers achieve more positive results….(More)”.

Behavioural Insights Toolkit and Ethical Guidelines for Policy Makers

Curated on Posted on by Stefaan Verhulst

Consultation Document by the OECD: “BASIC (Behaviour, Analysis, Strategies, Intervention, and Change) is an overarching framework for applying behavioural insights to public policy from the beginning to the end of the policy cycle. It is built on five stages that guides the application of behavioural insights and is a repository of best practices, proof of concepts and methodological standards for behavioural insights practitioners and policymakers who have become interested in applying behavioural insights to public policy. Crucially, BASIC offers an approach to problem scoping that can be of relevance for any policymaker and practitioner when addressing a policy problem, be it behavioural or systemic.

The document provides an overview of the rationale, applicability and key tenets of BASIC. It walks practitioners through the five BASIC sequential stages with examples, and presents detailed ethical guidelines to be considered at each stage.

It has been developed by the OECD in partnership with Dr Pelle Guldborg Hansen of Roskilde University, Denmark. This version benefitted from feedback provided by the participants in the Western Cape Government – OECD Behavioural Insights Conference held in Cape Town on 27-28 September 2018….(More)”

A Behavioral Economics Approach to Digitalisation

Curated on Posted on by Stefaan Verhulst

Paper by Dirk Beerbaum and Julia M. Puaschunder: “A growing body of academic research in the field of behavioural economics, political science and psychology demonstrate how an invisible hand can nudge people’s decisions towards a preferred option. Contrary to the assumptions of the neoclassical economics, supporters of nudging argue that people have problems coping with a complex world, because of their limited knowledge and their restricted rationality. Technological improvement in the age of information has increased the possibilities to control the innocent social media users or penalise private investors and reap the benefits of their existence in hidden persuasion and discrimination. Nudging enables nudgers to plunder the simple uneducated and uninformed citizen and investor, who is neither aware of the nudging strategies nor able to oversee the tactics used by the nudgers (Puaschunder 2017a, b; 2018a, b).

The nudgers are thereby legally protected by democratically assigned positions they hold. The law of motion of the nudging societies holds an unequal concentration of power of those who have access to compiled data and coding rules, relevant for political power and influencing the investor’s decision usefulness (Puaschunder 2017a, b; 2018a, b). This paper takes as a case the “transparency technology XBRL (eXtensible Business Reporting Language)” (Sunstein 2013, 20), which should make data more accessible as well as usable for private investors. It is part of the choice architecture on regulation by governments (Sunstein 2013). However, XBRL is bounded to a taxonomy (Piechocki and Felden 2007).

Considering theoretical literature and field research, a representation issue (Beerbaum, Piechocki and Weber 2017) for principles-based accounting taxonomies exists, which intelligent machines applying Artificial Intelligence (AI) (Mwilu, Prat and Comyn-Wattiau 2015) nudge to facilitate decision usefulness. This paper conceptualizes ethical questions arising from the taxonomy engineering based on machine learning systems: Should the objective of the coding rule be to support or to influence human decision making or rational artificiality? This paper therefore advocates for a democratisation of information, education and transparency about nudges and coding rules (Puaschunder 2017a, b; 2018a, b)…(More)”.

After the flood, the flood map: uncovering values at risk

Curated on Posted on by Stefaan Verhulst

Rebecca Elliott at Work in Progress: “Climate change is making the planet we inhabit a more dangerous place to live. After the devastating 2017 hurricane season in the U.S. and Caribbean, it has become easier, and more frightening, to comprehend what a world of more frequent and severe storms and extreme weather might portend for our families and communities.

When policymakers, officials, and experts talk about such threats, they often do so in a language of “value at risk”: a measurement of the financial worth of assets exposed to potential losses in the face of natural hazards. This language is not only descriptive, expressing the extent of the threat, it is also in some ways prescriptive.

Information about value and risk provides a way for us to exert some control, to “tame uncertainty” and, if not precisely predict, at least to plan and prepare prudently for the future. If we know the value at risk, we can take smart steps to protect it.

This logic can, however, break down in practice.

After Hurricane Sandy in 2012, I went to New York City to find out how residents there, particularly homeowners, were responding to a new landscape of “value at risk.” In the wake of the catastrophe, they had received a new “flood insurance rate map” that expanded the boundaries of the city’s high-risk flood zones.

129 billion dollars of property was now officially “at risk” of flood, an increase of more than 120 percent over the previous map.

And yet, I found that many New Yorkers were less worried about the threat of flooding than they were about the flood map itself. As one Rockaway man put it, the map was “scarier than another storm.”

Far from producing clear strategies of action, the map produced ambivalent actors and outcomes. Even when people took steps to reduce their flood risk, they often did not feel that they were better off or more secure for having done so. How can we understand this?

By examining the social life of the flood insurance rate map, talking to its users (affected residents as well as the experts, officials, and professionals who work with them), I found that the stakes on the ground were bigger than just property values and floods. Other kinds of values were threatened here, and not just from floods, complicating the decision of what to do and when….(More)”.

The Stoplight Battling to End Poverty

Curated on Posted on by Stefaan Verhulst

Nick Dall at OZY: “Over midafternoon coffees and Fantas, Robyn-Lee Abrahams and Joyce Paulse — employees at my local supermarket in Cape Town, South Africa — tell me how their lives have changed in the past 18 months. “I never dreamed my daughter would go to college,” says Paulse. “But yesterday we went online together and started filling in the forms.”

Abrahams notes how she used to live hand to mouth. “But now I’ve got a savings account, which I haven’t ever touched.” The sacrifice? “I eat less chocolate now.”

Paulse and Abrahams are just two of thousands of beneficiaries of the Poverty Stoplight, a self-evaluation tool that’s now redefining poverty in countries as diverse as Argentina and the U.K.; Mexico and Tanzania; Chile and Papua New Guinea. By getting families to rank their own economic condition red, yellow or green based upon 50 indicators, the Poverty Stoplight gives families the agency to pull themselves out of poverty and offers organizations insight into whether their programs are working.

Social entrepreneur Martín Burt, who founded Fundación Paraguaya 33 years ago to promote entrepreneurship and economic empowerment in Paraguay, developed the first, paper-based prototype of the Poverty Stoplight in 2010 to help the organization’s microfinance clients escape the poverty cycle….Because poverty is multidimensional, “you can have a family with a proper toilet but no savings,” points out Burt. Determining questionnaires span six different aspects of people’s lives, including softer indicators such as community involvement, self-confidence and family violence. The survey, a series of 50 multiple-choice questions with visual cues, is aimed at households, not individuals, because “you cannot get a 10-year-old girl out of poverty in isolation,” says Burt. Confidentiality is another critical component….(More)”.

The rush for data risks growing the North-South divide

Curated on Posted on by Stefaan Verhulst

Laura Mann and Gianluca Lazzolino at SciDevNet: “Across the world, tech firms and software developers are embedding digital platforms into humanitarian and commercial infrastructures. There’s Jembi and Hello Doctor for the healthcare sector, for example; SASSA and Tamween for social policy; and M-farm, i-Cow, Esoko among many others for agriculture.

While such systems proliferate, it is time we asked some tough questions about who is controlling this data, and for whose benefit. There is a danger that ‘platformisation’ widens the knowledge gap between firms and scientists in poorer countries and those in more advanced economies.

Digital platforms serve three purposes. They improve interactions between service providers and users; gather transactional data about those users; and nudge them towards behaviours, activities and products considered ‘virtuous’, profitable, or valued — often because they generate more data. This data  can be extremely valuable to policy-makers interested in developing interventions, to researchers exploring socio-economic trends and to businesses seeking new markets.

But the development and use of these platforms are not always benign.

Knowledge and power

Digital technologies are knowledge technologies because they record the personal information, assets, behaviour and networks of the people that use them.

Knowledge has a somewhat gentle image of a global good shared openly and evenly across the world. But in reality, it is competitive.
Simply put, knowledge shapes economic rivalry between rich and poor countries. It influences who has power over the rules of the economic game, and it does this in three key ways.

First, firms can use knowledge and technology to become more efficient and competitive in what they do. For example, a farmer can choose to buy technologically enhanced seeds, inputs such as fertilisers, and tools to process their crop.

This technology transfer is not automatic — the farmer must first invest time to learn how to use these tools.  In this sense, economic competition between nations is partly about how well-equipped their people are in using technology effectively.

The second key way in which knowledge impacts global economic competition depends on looking at development as a shift from cut-throat commodity production towards activities that bring higher profits and wages.

In farming, for example, development means moving out of crop production alone into a position of having more control over agricultural inputs, and more involvement in distributing or marketing agricultural goods and services….(More)”.

Illuminating GDP

Curated on Posted on by Stefaan Verhulst

Money and Banking: “GDP figures are ‘man-made’ and therefore unreliable,” reported remarks of Li Keqiang (then Communist Party secretary of the northeastern Chinese province of Liaoning), March 12, 2007.

Satellites are great. It is hard to imagine living without them. GPS navigation is just the tip of the iceberg. Taking advantage of the immense amounts of information collected over decades, scientists have been using satellite imagery to study a broad array of questions, ranging from agricultural land use to the impact of climate change to the geographic constraints on cities (see here for a recent survey).

One of the most well-known economic applications of satellite imagery is to use night-time illumination to enhance the accuracy of various reported measures of economic activity. For example, national statisticians in countries with poor information collection systems can employ information from satellites to improve the quality of their nationwide economic data (see here). Even where governments have relatively high-quality statistics at a national level, it remains difficult and costly to determine local or regional levels of activity. For example, while production may occur in one jurisdiction, the income generated may be reported in another. At a sufficiently high resolution, satellite tracking of night-time light emissions can help address this question (see here).

But satellite imagery is not just an additional source of information on economic activity, it is also a neutral one that is less prone to manipulation than standard accounting data. This makes it is possible to use information on night-time light to monitor the accuracy of official statistics. And, as we suggest later, the willingness of observers to apply a “satellite correction” could nudge countries to improve their own data reporting systems in line with recognized international standards.

As Luis Martínez inquires in his recent paper, should we trust autocrats’ estimates of GDP? Even in relatively democratic countries, there are prominent examples of statistical manipulation (recall the cases of Greek sovereign debt in 2009 and Argentine inflation in 2014). In the absence of democratic checks on the authorities, Martínez finds even greater tendencies to distort the numbers….(More)”.

The Cost-Benefit Revolution

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Book by Cass Sunstein: “Why policies should be based on careful consideration of their costs and benefits rather than on intuition, popular opinion, interest groups, and anecdotes.

Opinions on government policies vary widely. Some people feel passionately about the child obesity epidemic and support government regulation of sugary drinks. Others argue that people should be able to eat and drink whatever they like. Some people are alarmed about climate change and favor aggressive government intervention. Others don’t feel the need for any sort of climate regulation. In The Cost-Benefit Revolution, Cass Sunstein argues our major disagreements really involve facts, not values. It follows that government policy should not be based on public opinion, intuitions, or pressure from interest groups, but on numbers—meaning careful consideration of costs and benefits. Will a policy save one life, or one thousand lives? Will it impose costs on consumers, and if so, will the costs be high or negligible? Will it hurt workers and small businesses, and, if so, precisely how much?

As the Obama administration’s “regulatory czar,” Sunstein knows his subject in both theory and practice. Drawing on behavioral economics and his well-known emphasis on “nudging,” he celebrates the cost-benefit revolution in policy making, tracing its defining moments in the Reagan, Clinton, and Obama administrations (and pondering its uncertain future in the Trump administration). He acknowledges that public officials often lack information about costs and benefits, and outlines state-of-the-art techniques for acquiring that information. Policies should make people’s lives better. Quantitative cost-benefit analysis, Sunstein argues, is the best available method for making this happen—even if, in the future, new measures of human well-being, also explored in this book, may be better still…(More)”.

Message and Environment: a framework for nudges and choice architecture

Curated on Posted on by Stefaan Verhulst

Paper by Luca Congiu and Ivan Moscati in Behavioural Public Policy: “We argue that the diverse components of a choice architecture can be classified into two main dimensions – Message and Environment – and that the distinction between them is useful in order to better understand how nudges work. In the first part of this paper, we define what we mean by nudge, explain what Message and Environment are, argue that the distinction between them is conceptually robust and show that it is also orthogonal to other distinctions advanced in the nudge literature. In the second part, we review some common types of nudges and show they target either Message or Environment or both dimensions of the choice architecture. We then apply the Message–Environment framework to discuss some features of Amazon’s website and, finally, we indicate how the proposed framework could help a choice architect to design a new choice architecture….(More)”.

Long Term Info-structure

Curated on Posted on by Stefaan Verhulst

Long Now Foundation Seminar by Juan Benet: “We live in a spectacular time,”…”We’re a century into our computing phase transition. The latest stages have created astonishing powers for individuals, groups, and our species as a whole. We are also faced with accumulating dangers — the capabilities to end the whole humanity experiment are growing and are ever more accessible. In light of the promethean fire that is computing, we must prevent bad outcomes and lock in good ones to build robust foundations for our knowledge, and a safe future. There is much we can do in the short-term to secure the long-term.”

“I come from the front lines of computing platform design to share a number of new super-powers at our disposal, some old challenges that are now soluble, and some new open problems. In this next decade, we’ll need to leverage peer-to-peer networks, crypto-economics, blockchains, Open Source, Open Services, decentralization, incentive-structure engineering, and so much more to ensure short-term safety and the long-term flourishing of humanity.”

Juan Benet is the inventor of the InterPlanetary File System (IPFS)—a new protocol which uses content-addressing to make the web faster, safer, and more open—and the creator of Filecoin, a cryptocurrency-incentivized storage market….(More + Video)”