This document discusses behavioral design and interventions to address various problems. It describes ideas42's work in developing nudges and inventions to help people save more for retirement by defaulting them into 401k plans, combat procrastination, and address the "psychic tax of poverty" faced by low-income workers. The organization is piloting financial services to simplify finances for low-income employees through budgeting, direct deposit, automated payments, emergency savings options, and timely reminders about financial commitments. The goal is to reduce cognitive burden from financial concerns and improve productivity and retention of low-income workers.

1. Behavioral Design
Sendhil Mullainathan
Harvard
ideas42

2. ideas
42
___ Enroll in 401(k)
____ Deduction
___ Not to Enroll in 401(k)
____ Change Deduction

7. Behavioral Mapping
Behavioral Reconnaissance

8. Problem Bottleneck
Nudges
Inventions

9. Problem Bottleneck
Nudges
Inventions
Save
too
Li*le
Defaults
Forget
Procras5nate

10. Problem Bottleneck
Nudges
Inventions
TANF
Recipients
On
Welfare
to
Work
Program
Not
Searching
for
work

11. Employment
Provider
Level
IL
DHS
Level
Work
First
Referral
&
Program
Experience
Client
assigned
to
Asian
Human
Services
Wednesday:
Client
orienta5on
/
in-­‐take
Monday:
Client
reports
for
program
Client
applies
for
jobs,
goes
on
interviews,
etc.
• Meets
with
job
developer
• Prepares
resume
• Secures
transporta5on,
child
care,
etc.
• Searches/applies
for
jobs
Meet
with
job
developer
to
receive
subsidized
placement
/
work
experience
assignment
Childcare
secured
Develop
individualized
service
plan
Client
applies
for
TANF
at
the
local
DHS
Office
Assess
TANF
par5cipant
/
family
Client
secures
and
shows
up
for
full-­‐5me
employment
work
**
Not
comprehensive
process
map
Job
Developer
assesses
client
Subsidized
job
placement
“earning”
their
benefits
Sent
job
lis5ngs
Told
to
find
job
Easy
to
Place
Hard
to
Place

12. Employment
Provider
Level
IL
DHS
Level
“Job
Ready”
Not
“Job
Ready”
Work
First
Referral
&
Program
Experience
Client
assigned
to
Asian
Human
Services
Wednesday:
Client
orienta5on
/
in-­‐take
Monday:
Client
reports
for
program
Client
applies
for
jobs,
goes
on
interviews,
etc.
• Meets
with
job
developer
• Prepares
resume
• Secures
transporta5on,
child
care,
etc.
• Searches/applies
for
jobs
Meet
with
job
developer
to
receive
subsidized
placement
/
work
experience
assignment
Childcare
secured
Develop
individualized
service
plan
Client
applies
for
TANF
at
the
local
DHS
Office
Assess
TANF
par5cipant
/
family
Client
secures
and
shows
up
for
full-­‐5me
employment
work
**
Not
comprehensive
process
map
Job
Developer
assesses
client

13. Problem Bottleneck
Nudges
Inventions
TANF
Recipients
On
Welfare
to
Work
Program
Not
Searching
for
work
Iden5ty
Threat

15. Stereotype Threat
(Steele and Aronson, 1995)

16. Problem Bottleneck
Nudges
Inventions
Proba5on
S5ll
a
Gateway
To
Jail

17. Pa*erns:
Context
and
Recidivism
17
Source:
2008
Murder
Analysis
in
Chicago

18. Problem Bottleneck
Nudges
Inventions
Proba5on
S5ll
a
Gateway
To
Jail
Acute
Points
of
Tempta5on
Acute
Places
of
Tempta5on

19. CLear,
IMmediate,
&
Balanced
Proba5on
(CLIMB)
19
1. Targeted – Violent offenders
2. Observable – GPS Electronic Monitoring
3. Swift, Certain, Mild – More incentives and tools

20. Problem Bottleneck
Nudges
Inventions
Proba5on
S5ll
a
Gateway
To
Jail
Acute
Points
of
Tempta5on
Acute
Places
of
Tempta5on
CLIMB

21. Problem Bottleneck
Nudges
Inventions
Low
Income
Workers
Less
Produc5ve
High
Turnover

23. Lack
of
financial
cushion
makes
this
cogni<ve
burden
a
daily
reality
for
low
income
consumers,
with
spillover
in
the
workplace
source:
pasukaru76
?
$
The strain of a common scenario . . .
• An unexpected financial challenge (e.g. a car
problem on the way to work) places strain on a low-
income employee
• The employee immediately wonders how they are
going to pay to fix the problem, leading to general
concern about their finances.
• “Do I have enough money in the bank?”
• “How will I meet all my other commitments if I
have to pay for this now?
• All the financial strain and problem-solving depletes
employee’s cognitive resources.
.
.
.
leads
to
underperformance
at
work.
• When the employee arrives at work, they are
distracted by their personal finances.
• They do not have the brainpower to perform at
their best: they are less productive or their service
standards diminish.
• Risk of absenteeism and turnover increases
23
Background

24. Problem Bottleneck
Nudges
Inventions
Low
Income
Workers
Less
Produc5ve
High
Turnover
Psychic
Tax
of
Poverty

25. Provide
customer
service
ideas42
is
pilo<ng
a
package
of
financial
services
designed
to
simplify
and
stabilize
finances
for
low
income
employees
Provide
emergency
buffer
• Low-­‐cost
credit
access
• Emergency
savings
Give
<mely
feedback
&
automate
messaging
• Reminders
about
important
financial
deadlines
• Progress
tracking
for
financial
goals
and
commitments
Pilot
design
25
Create
budget
Direct
deposit
into
3
dedicated
accounts:
1)
Bill
payment
2)
Discre5onary
spending
3)
Emergency
savings
Set
up
session
with
financial
representa5ve
1
Automate
payments
• Bill
payment
• Emergency
savings
Ongoing
interac<on
with
employee
2

26. Problem Bottleneck
Nudges
Inventions
Low
Income
Workers
Less
Produc5ve
High
Turnover
Psychic
Tax
of
Poverty
Financial
Stabilizer