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ANZSOG/PSC Western Australia series April 2015

Dr David Halpern and Dr Rory Gallagher

Transcript

Speakers: Dr David Halpern, Chief Executive, Behavioural Insights Team, UK, Dr Rory Gallagher, Managing Advisor & Director, International Programmes, Behavioural Insights Team, UKDAVID HALPERN:

What we're going to do today, I'm going to go through quite briskly a simple framework we sometimes use that I find helpful. So, you won't come out the world's leading expert but you'll actually be pretty well on the way in terms of understanding what's behind these behavioural approaches.

There's two basic stories which we'll try and get across today. One is that trying to introduce a more realistic model of human decision making turns out to be very effective in relation to better policy and so on. The other bit, too, is also we use a lot of literally experimental methods where we test them, trial them and stuff as we go along.

And even if you don't care for the behavioural side of it, it's really worth taking on that kind of relative, experimental approach to government okay, let's see how we do. I'm going to go through some UK examples. Primarily, we now have prominence in a lot of places and Rory will talk about some of the stuff happening here in Australia. So most policy concerns behaviour.

We want people to recycle, or we want people to save more. Certainly in the UK, that is really important. On the other hand, some things we want people to do less of. Like, in the UK, eating. (Laughter) And in Australia there are similar issues or committing crime, whatever.

Most things, if you think about it, are actually behavioural. You're trying to affect someone's behaviour, often through passing a law or whatever it may be, and we have some idea this will, in some way, affect people's behaviour. But often, the theories that lie behind it haven't been that sophisticated. So, our basic term, as I said, is if we can introduce a more sophisticated theory of human behaviour, we can get more effective policy.

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And we've been able to show that. Now, it's not all new. This is a picture, actually, from a place not very famous in the UK, but it ought to be more famous, called Manly Corner. The reason why it matters is because in 1910 to 1920, the number of cars on the road increased roughly tenfold and they were shooting around this corner, like many others in the UK, and kept hitting each other. Alright?

So, of course, what to do about it? You can pass a law. You can have bigger fines and sanctions and so on. Someone had a great idea. Why don't we just paint a line on the road? The UK in 1921, first line on the road we had. Local experimentation, of course. Turned out it was really effective. It spread across the UK subsequently. And actually it's worth thinking that even in the UK, the Highway code, for most of its history, was just that. It was just advisory code.

And I don't know exactly...You follow a similar profile. So when you're learning to drive, it might be a really good idea to go on this side of the road rather than the other one. And even today, if you read it in Britain, some bits say ‘You should,’ and some things ‘You must.’ The ‘should’ are, in fact, still code-based. Not in the form of the law at all, but it works really well.

The whole economy operates because we follow these rules. So, in some ways, it's a very early example. There's a bit of literature for those that want to read more about it. I'm going to go through this briskly today. David Chalmers's work summarises, he's a leading figure with David Price for his work on this. Some of the effects we were talking about earlier are from Danny's work.

Nudge popularised it and both Richard Thaler and Cass Sunstein are people we're worked with very closely in a team for what we've done today. In the UK, we did have a go at summarising some of the literature a few years ago, 2009 - 2010. The Mindspace Report. It's a mnemonic. I won't go through it today. But it's about the effects, centres, norms and so on. There is a big public document, still. We can actually use a very simple framework stage, is EAST.

So, that's when we use this framework. If you want to affect behaviour, if you can remember it, that's the whole point of a mnemonic. You make things easy, attractive, social, timely. So there's very simple principles we're using as a way of going through it. For those who don't want to go through it, I'll give you a very, very simple example of a contrast. You need two bits of paper to explain properly.

What human brains are good at and what they're not so good at. Right? It's a mode of demonstration. This is the first bit of paper and I'm going to do this to it. I'm going to crumple it up. And then I'm going to chuck it. Oh! No, let's try again. I'm very disappointed. With your cricket profile, I was relying on you. I'm going to try again. Are you ready this time? Very good. (Applause)

So, how did you do that? Can you explain how you just did that?

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SPEAKER:

I saw it. I just caught it.

DAVID HALPERN:

Right. It doesn't seem that complicated. It is actually incredibly complicated if you think about what's happening. So, is someone throws something at you, it's visually ambiguous. How fast it's going, how large it is, what it is. Your brain processes incredibly fast. Then you can coordinate, your hands go up and you catch it. It's an astonishingly complicated thing to do. And you do it generally without thinking. So, that's something that brains are really, really good at.

Solving that kind of problem. We don't think it's a big deal. But there's not a computer or robot in the world that could have sat in the front row and done what you just did. Right, so my second paper because that's an illustration of the brain thinking fast is to do something a machine will find very easy to solve. I take this piece of paper and fold it in half, fold in half again, and I keep doing that. You realise after a few times, six or seven times, I can't keep folding it. But imagine I could keep folding it. I folded it that way 100 times. Right? How thick would it be? How thick would that piece of paper be?

SPEAKER:

If you folded it so many times...

DAVID HALPERN:

It'll be incredibly narrow. The question is how high does it end up, roughly speaking? Can I get someone?

SPEAKER:

(Inaudible)

DAVID HALPERN:

No, it's going to be more than that.

SPEAKER:

'Cause it goes on and on and on.

DAVID HALPERN:

Exactly. So, roughly, distance wise?

SPEAKER:

(Inaudible)

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DAVID HALPERN:

What's that? Four metres to the moon, someone said. Let me just tell you what the answer is. Roughly speaking. So, to give you a sense, that's the entire Milky Way. Right? It would be about 10 times bigger than that. OK? Because it's an exponential function. You go home, talk to your kids, you figure it out on the calculator, you'll see it's about that sort of size. It's in some sense an incredibly simple calculation. You put in the thickness of the paper and then it's the exponential of 100.

We're rubbish at it, right. We're not very good at that kind of thing. So it's not surprising we tend to make certain kinds of errors when we make decisions about sensible things to do with our pensions or savings. Our brains are a not well suited to even a simple mathematical function that involves an exponential. So brains are incredibly good at certain kinds of very rapid things we think nothing of. Certain calculations, they're not so good. So, in the UK and now increasing across the world, in 2010 there was a coalition government, the decision was taken to essentially do something along those lines. To find intelligent ways to encourage, support and enable people to make better choices for themselves.

So, instead of just using legislation and expenditure, could we nudge? Could we use subtler approaches to affect behaviour. And that was the question and the idea, and the Behavioural Team was born. So, this is the simple framework I mentioned. And we're gonna work through these four categories. The first one is really, you would think, pretty simple. make it easy. If you want to affect behaviour, take out all the frictional factors. That's a host of things. Simplifying, and so on. Let me show you a few quick examples.

Here's our real-world example. This is the suicide rate in the UK between the '50s and '60s. You can see something very dramatic happens. The suicide rate drops about by about 30-odd percent. And I don't know if anybody knows why this occurred? It's a very interesting thing we're very fascinated by, why it was occurring.

I'll just tell you the answer. It was North Sea oil was discovered. Why does that affect the suicide rate? Because we used to have gas. You guys might appreciate this in this state. We used to get it from coal. And we had a lot of carbon monoxide. So what's that got to do with this? People used to kill themselves by putting their head in the oven. That's literally what they were doing in the '50s and so on. Along comes North Sea oil. It's got gas all the same, but it does not have carbon monoxide in, so you can't kill yourself by putting your head in the oven.

Now, you'd think this was a pretty major decision in your life, as to whether to kill yourself or not. It turns out it's very strongly affected by how much hassle it is. So you stuck your head in the oven. Not much happening. Oh well, I won’t kill myself after all.' You can see carbon monoxide poisoning suicide going down, other kinds of suicide drift up a tiny bit, but not as much to offset it. So even the most important decision in your life at all is affected by how easy or difficult something is to do. So, if it affects this, it's surely going to affect whether you pay your taxes or whether you comply with everything, speeding fines or whatever it'll be.

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So, here's the tiniest example. If you even just take out one click on a form. Because people pay tax, people get a letter, and then they're supposed to go to the website and so on. We just redesigned so that instead of it taking you to the page and then you click on the form, it just took you straight to the form. It save people literally one click. That's enough to bring you about four extra percentage points. HMRC and your business have generated and collected huge amounts of revenue, it illustrates these tiniest little functional factors are incredibly consequential.

Here's another one, very important in the UK and other countries. Using a default for pensions. It used to be, here and elsewhere you used to actively have to tell your employer, ‘Yes, I'd like to join your scheme.’ and we changed that to default in 2012, so you still had the choice, but you'd have to just tell them you don't want to join the scheme. These are the initial six-months of data. Since then, more than 5 million Britons are saving for a pension.

Especially low income groups and the young. And amongst those who were eligible, it's more than 90%. Just to ask for a second, why is this interesting? What's the traditional policy to who would use the tax subsidy? We in the UK spend about $22 billion a year, so that's about $45 billion, in order to encourage people to save more. A marginal return, how much for every dollar do you get extra saving? It's about $0.6. Certainly less than $0.10. It's incredibly ineffective spending that fortune. Changing the rules. So, it's not just (inaudible), it wipes the floor with conventional policy tool.

So that was ‘make it easy’. Next idea is, ‘make it attractive’. It's not very complicated, when you think about it. There are layers you can actually peel away. It's things like... This is so important to me. Who is saying it? Who is the messenger? Personalise it and use someone's name. Using emotion. And so on.

Even the incentive to start. So we have hyperbolic discounting, putting forward the bonus or benefit into the present. Here's some very simple examples. Here's one again from tax. In this case, you get an envelope from the government that comes. It's a brown envelope, generally speaking, and it doesn't go into top of your inbox, it turns out, generally. So we said, why don't we try a white envelope, see if it'll make any difference, and also we thought why don't we just try writing something on it. So, when we tell HMRC, who send out millions and millions of letters, we want to try writing on some letters.

On the envelope ‘Really?’ ‘I think so.’ And we said, ‘You've got interns, right?’ So they send out 5000 envelopes, just with a few lines. Did it make a difference? Well, there's the brown envelope there's the personalised white envelope. It might not seem a big deal, but when you calculate the return, it was more than 200 to one in terms of extra revenue generated. You don't literally, necessarily follow the same example, but we're trying to make a point that everything matters. Here's something to do with people who haven't paid their car tax. You know, you get picked up by cameras in the UK.

You get a letter and this is after persistent nonpayers. So they get a letter like this after they've been picked up a couple of times, saying, ‘Your vehicle is not taxed and so on.’ So one thing was to change the letter by just making it clearer. Australian style, this. ‘Pay your tax or lose your car.’

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It said the same thing before, it just said it in slightly more opaque language. The reason why we know is we've got a picture. Just include the picture and see if it makes a difference.

So there's a picture added on. Does it make a difference? In the original letter, the new letter, and the image. So nine percentage points or a 20% increase. So, it's very, very effective. In France they do something pretty similar. Actually, what happens is you send in a complaint, because you often see who's in the car. Got people's marriage (inaudible). So, apparently they now say to them they don't send a picture, they say, ‘If you don't pay, we will send a picture.’

(Laughter)

Something to think about. What we've occasionally done, and new governments rarely do them, but it's a conventional incentive, it's just something to encourage people to do voting registration. Here's the control group. Basically the same. When you register to vote, you enter a lottery. And then changing the amount of money. Doesn't make much difference. It's a few percentage points. That's the margin by which most elections are won or lost in the UK, because then you can work out which particular groups may or may not respond to your lottery and you decide how you want to apply that.

OK, so make it attractive social. We're incredibly influenced by what other people are doing. So, when you come back to your car and there's a flyer on the windshield, do you put it in a... Do you look around? Or do you drop it on the ground? A key variable is are there other bits of litter on the ground already. You are eight times more likely to drop that thing on the ground if there are already flyers on the ground. You might not feel good about it, but you're incredibly influenced all the time by what other people are doing.

Sometimes called the declarative social rule. So things like social norms, networks, reciprocity, if someone helps you, you are much more likely to respond in return. Active commitments. Eyes and faces. Even just the suggestion of other people. So the presence of eyes makes you more likely to be honest for example. Here's another simple tax example. One of the earlier ones we did. Which is an unusually short letter for our tax services. Somebody who hadn't paid their loan. 'Cause they've already done some work and weren't sure if they could make it any better. The idea is could we just add one line.

So people who haven't paid their tax who get a letter reminding them that they owe something. And the one line just told people something that was true. 9/10 people pay their tax on time. That's all it said. So, the question was would adding this line make any difference to whether people paid their tax? So as usual, what we do, is we send out a few thousand letters of the original form and then about 8000 of the variations. So does it make a difference? Now, each one was saying, ‘Do they pay in 23 days?’ Why are we using that? Because that's what our tax authority already measured.

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We didn't create a separate measurement framework. That's the point at which they start sending you even ruder letters. OK. Letters control group. About a third. Adding that one line, does it make a difference? Yes, it does. It might not seem a lot to you, but if you are in the business of collecting hundreds of billions, that's a lot of money. If you are making more specifically, and you just say ‘Most people in your area - so most people in Cambridge - pay their tax on time,’

Well, we'd checked if that was true. Even more effective, because you're especially influenced by people who you see or who like you.

So, the little messages in hotel rooms that tell you about towels, they're even more effective if they tell you previous people who generally recycled. If we figure out... And the one exception, by the way, on littering where you're even less likely to drop the flyer is a perfectly clean environment with just one piece of litter. Almost like it primes you. Like, ‘Ooh, that's awful, isn't it?’ So, you float around. You say, ‘Most people pay their tax on time. You're one of the few who are yet to do so.’ You are one of the few. If I combine the two and say most people in your area pay tax on time, you're one of the few yet to do so, now we're at 39%. So the marginal cost of that one line on the letter is pretty much nothing. So it's a surprise that our tax authority now have a larger behavioural insight team than the original Downing Street behavioural insight team. they call up everything they do in order to use the budget.

I don't have time for more detail, but it gets very refined. So here is a nice example. You are not working for... Rory was very involved in the early studies. In early studies, getting people back to work faster or just into being with those who are unemployed. One thing we noticed, and I like this one, because it's got a humour touch to it is quite often people will be booked in for a job, and then the question is will they turn up? So, the basic parameter is you get a text saying, ‘I booked you in to do this job for Saturday.’

It turns out only one in 10 people actually turn up. Which is interesting. The Job Centre was surprised. They thought what would make a difference? Perhaps if we add someone's name? So, if it says, ‘Rory, I booked you a place,’ blah blah blah, that takes it to 15%. If I added my name as well, so, ‘Rory, booked you a placement, David.’ 18%. ‘Rory, I've booked you a place, blah blah blah. Good luck.’ That's nearly 30% turning up. It's not just more effective, imagine how you feel.

Imagine how you feel, even when you walk in, for that job interview. Someone's done this for you. So this illustrates how we work. Last one was social visits. I don't have a lot of time to go into it, but using reciprocity in public services, we think, is a very powerful idea. And one thing about public services is they don't often make the ask back. So, you've gone through the healthcare system or whatever it is, you feel quite often a genuine sense of 'thank you very much'. But what we don't do is we don't ask anything back. So, we've done various schemes.

Some of the big hospitals in London now have lots of volunteers, many of whom were involved in the hospital in some way. There are literally thousands. Here's an example, actually, from a slightly further variant, which is from a patient hotel in Sweden where you can see the hospital

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room has basically been rebuilt so they always have a spare bed. So, there's always somewhere else to stay. People really like it. What do you achieve?

You achieve better clinical outcomes. Private patient satisfaction at lower cost. And why wouldn't we design public services to make that (inaudible) they would like to respond if you ask at the right time. So, the last one is timely. Then we can have audience participation. I can show you the result and see if you've been paying attention. And then I'll ask what you think.

So, the key point is there are certain interventions which generally won't be affected, but they will be at certain moments. So, if for example, any of you guys get a car share or public transport. A lot of intervention is about something being developed in Australia. Literally, one-to-one interviews. Literally, I think it was Perth, years ago. We did some early work trying to go into people's homes and saying, ‘Actually, let's plan for work and think about it.’ We've found across the world, those kind of interventions, is that they're a little bit effective, not very effective but they are very effective under one circumstance if you’ve just moved house. If you do the intervention and think about how you'll get into work, it's extremely effective and double it to another form of transport. Once you settle into your pattern, you won't be affected.

So, here's a couple of examples of timely intervention. One is the PM was trying to encourage giving. They did a lot of work on giving. Financial and volunteering. One of the ideas that came up, apart from a media campaign, was to encourage people to give more in their wills to charity. You could literally feel the wheels of the Treasury grinding, having a tax subsidy would be required in order to reach the PM's target, which was that people would give 10% of their wills or legacies to charities.

We know from the stuff on pensions from before, such tax subsidies are incredibly effective generally. So we thought, well, why not just ask them? How would you do it? What would be the right time? When they're writing their will. So, we've worked with a big group of lawyers and we just said, ‘You do write wills’ And he said, ‘We do.’ Do you mind adding into the script an explicit question asking people do they wanna give to charity? So, these are the results. The control group, before having the question explicit, 5% of people gave to charity.

When added the question and prompted, ‘Are there any causes you want to give to?’ Well, that doubles it. If we had a nicely worded question, which was, ‘Many people ‘like to give to charities and good causes in their will. ‘Are there any charities that you feel passionate about?’ When asked, there was a threefold increase, but also the size of the bequests has doubled as well. It is actually a sixfold increase by just giving people... Asking lawyers if they wouldn't mind asking the question. The government doesn't write, generally speaking, wills, but it wasn't a big deal for us to make that intervention. Here's one from the UK. It's not published in the UK, but there's so many... We just get these new results all the time. I thought I'd just show you.

We had an issue with police recruitment, particularly across ethnic groups. It turns out white candidates are much more likely to get through and join the police in the UK. And because it was such a big issue, the Home Office actually centralised the exam, so the exam would all be done online, so it would be ethnic blind. And we still had these very big differences. So, I'll show you in a second. You'll see the pass rate for the white population was about 60%, for the BME

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population, it was about 40%. And this was an online test where people literally get an email saying, ‘It's time for you to do the test now.’

They just click through. So there are all kinds of questions about why, you know, (inaudible). But it must be to do with English. It's proficiency in English, that's what's happening. Maybe we should change the test, or whatever. Or maybe it’s to do with cognitive ability. So it could be all those things. ‘Can we just try something out, do you mind, if we just change that cue?’ When you receive an email, you get the email to remind you and in it, it's just, got ‘It's time to do the test,’ and in there is, ‘Just click through on this link to do it.’ So, we're going to add one line and see if it makes a difference. So what do we ask?

We say, ‘Just before you do this test, ‘have a think about why you wanted to join the police for a few moments. And also think about why it is important to your community.’ That's what we do. We have this one line. It's all we do. So what difference does it make? So, there, you can see the success rate before and you can see the right over here. Sorry, to your right. And then... Let's have a quick look. The animation is the wrong way round. But this is what happened with the success rate.

This is our email before, this is with one line added. What you can see is it eliminates the differences by adding this one line before they take the test. It is just amazing if you think about that. Our final example. Getting back to work. This is kind of partly a Rory tribute. He was involved in this and was very influential. So, we had a big problem with our economy, as lots of countries did, back in 2010.

Could we do anything in terms of job centres and unemployed? So the thing is, we're not going to do an intervention. We don't change people skills. Other people have to try and work on that. We are changing structural characteristics in the loan market, can we take that happens in a job centre?

Literally, this one. So we go and look at the process. There's lots and lots of paperwork. So, we stripped down the paperwork, we reduced it to say on the first contact, you spend less time filling in the forms and you start to talk about how you'll get back to work. One of the key changes we made, 'cause we noticed for 20, 30 years, we've done active welfare. People have to show they're looking for work. So they come to the job centre and you have to show you've looked for at least three jobs in the previous two weeks or so.

It's similar here, yeah? The only problem with that is, psychologically, there's a few problems. First of all, three. We anchor very strongly to three. Its effects are very powerful. Only looking for three jobs in two weeks is not really enough. So you'll want to change that. First of all, we want to get you to think about what you're doing next week. Its implementation potential. So we're going to plan that out. So, we say, ‘Alright, what kind of work are you looking for?’, ‘OK, retail.’

‘Let's think about next week, when is going to be a good time? Because I know you are busy...’

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‘Mornings are good? Alright, OK. And how are you going to look?’ So, you try and prompt someone specifically to think about when, where, how. And then Rory would ask the staff, ‘Could you believe that this will make any difference to how fast people get back to work?’ To show you, these are the original results. This is the control group and again, we're using the ideal benefits of 13 weeks. Here's our treatment, compared to control. We then compare them, in case there's any contamination. Mainly in case there's any control flaw. We're still pretty sure we got a 5% treatment effect. We then replicate it on a region, stepped wedge design, get the same result, we then change what 25,000 centres across the UK. There is literally millions of days of benefits that are sliced off by getting people to think about what they are going to do next week instead of asking about last week.

Alright. So that was EAST. Now it's your turn. One of the points about it is quite often the info we gather is quite literally experimental. So, we try out different variations. So, even if you don't care for the behavioural thing, as public servants you ought to be thinking how often are you making a decision about lots of things where you weren't really sure? Was that the best way of doing it? Was that the best way of doing it?

And even think about your personal life. You can't do experiments in the same way, but maybe your kids or a co-worker or something. I bet there's something I could say that would be the right thing to say now, as opposed to the wrong thing, to my teenage young son. And you don't get to try that out often. But actually, in policy, you often can. You can actually say let's try some variations. Here's an example of organ donation. So, you want to boost the organ donation rate, but you don't want to change any forms, so we just added extra channels where people can join the register.

So, one of which is when you renew your car tax, which in the UK is on an annual basis, after you finish this whole thing online, you get to a final page and then you are going to ask if you click through... Say, ‘Thank you,’ and, ‘Why don't you join the organ donor register?’ Just an extra channel. Now, 20 million people do this a year, so even if 1 or 2% come on, it's a lot of people coming through the register. So, the question would be, ‘Hmm. What would be a good message to analyse?’ So we tried some variations. So, I'll quickly run through some. And then I'll ask you which one you think is the right one. And Rory is going to look out for who gives the answer, see if he can spot who gives the right answer.

If you know already, if you've seen this, I'm gonna ask you to keep quiet. So, it says, ‘Thank you. Please join the organ donor register.’ So, there's our control group. The next one, you know now, it's social, it says ‘Every day, thousands of people who see this page decide to register’. We know that's a pretty powerful effect, it should do something. In fact, two, three, four, all have that same extra message, one's blank, but this one has got a group of smiley happy people queueing up to give their kidneys. This is the Organ Donor Register, which is quite a trusted brand. Could that be more effective? So have a think about which of those you think might be more effective.

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And I'll show you the other four quickly. So, here's some other things. ‘Three people die every day because there are not enough organ donors.’ That has to do with caring about loss. That turns out quite powerful. We can put a price percent. ‘You can save or transform nine lives as an organ donor.’ I noticed, by the way, in Australian stats it's actually 10 lives. I don't know if you guys have extra organs.

(Laughter)

‘If you needed an organ transplant, would you have one? If so, please help others.’ And finally, ‘If you support organ donation, please turn your support into action.’ We know that's the case for most people. Most people say in surveys, they're likely to do it. Let's have a quick look at what you think. What do you think would be the most effective? There is the early ones to remind you. Any quick answers? What do you think?

AUDIENCE:

Three.

DAVID HALPERN:

Three? Very good.

AUDIENCE:

Four. DAVID HALPERN: Four?

AUDIENCE MEMBER:

Six?

AUDIENCE MEMBER: Seven.

AUDIENCE MEMBER: Seven?

AUDIENCE MEMBER: Five?

DAVID HALPERN:

Any other guesses? The point is, it's not obvious. It really isn't obvious. Even for behavioural experts, it's really difficult to work out the most effective but the beauty is, you don't have to know the answer. We just run these eight versions for a month. That's more than a million people trying the different versions. We can figure out which is more effective. OK. Did you spot? Did you spot?

RORY GALLAGHER:

I did. OK.

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DAVID HALPERN:

There's the control group. It's a couple percent. There's a lot of people going through. A couple of percent is quite a few people. ‘Take action.’ That's the last one. It's more effective. ‘Thousands of people join every day.’ Social norms. That's adding a heart. About the same. Nine lives, ‘Save the nine lives.’ About the same again. ‘Three die.’ If you put in negative terms. Loss is more effective than positive. That is generally true, by the way. You often find that effect. ‘Would you?’ That's the reciprocity one. Someone here said reciprocity. Who was that? And then how many of you said the picture? Quite a few of you. Well, it's very good, but you were wrong.

(Laughter)

So, someone here said the answer was seven, so the actual right one. All right, OK. That difference is an extra hundred thousand a year joining the Register. All right. So, Rory. If we quickly see examples from here in Australia, and then we'll see how we do.

RORY GALLAGHER:

Thanks, David. OK, as I said, I'm going to run through a very few quick examples which reiterate the framework that David has just talked through. In Behavioural Intervention, as David mentioned, I came out 2.5 years ago to see if these types of approaches could work in the Australian context. So, seeing if it was just a peculiar political, organisational, cultural context in the UK, or could this work anywhere? The good news is we have seen that it does work and with very similar types of effects.

The bad news is it's worked so well that you can't get rid of me, and I'm like a bad smell living over in Bondi. So, we've been here for 2.5 years, mainly working for New South Wales government, we have recently set up an Australian branch and we do work with the Commonwealth, with agencies in Victoria, etc. And we're really starting to see some great results. I thought I'd talk to you very quickly in a New South Wales context, and then I will reiterate the framework that David’s just talked through. I'll try and drop that in very quickly. So very quickly. Making it easy. This was a project... I should say at the beginning, as well, usually these interventions will involve a combination that you've probably already picked up when David was talking through those for the job centres thing, they involve a combination of these.

We sit down and say, ‘Right, we're just going to make it easy.’ But usually one factor in that will dominate. This was a piece of work we did with the health system in New South Wales about encouraging people who have private health insurance to use it when they go to the emergency department. What we found from extensive fieldwork is that actually, it is quite difficult to use your private health insurance. If you want to use Medicare, you have to sign one form. If you want to use your private health insurance and benefit the hospital, you can sign up to five or six forms, the benefits are not clear. We've heard horrible stories about how people are in extreme pain and we've talked about cognitive load bearing, having to fill out pages and pages of forms which cannot be the right way to set up your services.

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So we redesigned that system, auto-populated forms, reduced the number of forms, made it very clear what the benefits are, and made it really clear to the staff, which is a really key point. We ran it at one hospital, significantly increased and then replicated it in two other very low performing hospitals. So we see this is the latest, only 2% of people using their private health insurance when we started. We've tripled that over last six months. We brought in an additional seven million to those hospitals. We're working now to scale it up. It's estimated to about an extra hundred million, just in our lowest performing (inaudible). So, a significant amount of money, primarily by making this easier. And the important point here is this was not just bring in revenue, but it was popular with staff and patients. This is Jenny Hart who won a Premier's Award for driving this work, highlighting that this made the emergency department easier for everyone involved.

And this is really important as well, because once we, from a methodological point of view, often work with teams in the field. It's often those operations staff that have to drive this forward. So this was largely thanks to Jenny, who was a clerical manager who's been driving these reforms through, and to do that in a life and death of environment. Jenny was just a fantastic example of someone who's used these types of programs to drive change through a system. Second one, Attractive. David talked about salience. This is a piece of work we did with the tax office. Replicating and adapting some of the work we have done in the UK. This is an enforcement order. Basically, when you have ignored a couple of reminders to pay a fine, we send you this form. It was already pretty good. A lot better than a lot of the stuff that we were dealing with in the UK, but there are still some problems.

So, when we spoke to staff, the first thing we said when we spoke to the evening call centre was, ‘What takes up most of your time and what you get most calls about?’ They said, ‘Lots of people call us and ask, 'what the bloody hell is an enforcement order?’ What is an enforcement order? And they said, ‘It's an unpaid fine.’ And we said fine. Let's call it an unpaid fine. And the lawyers said, ‘But the legislation says ‘we must let citizens know that this is an enforcement order.’ We said, ‘Yeah, but show us where in the legislation it says, 'in the top right corner, you have to call it an enforcement order?’ You don't. So we call it an unpaid fine and somewhere on the back we write 'this is an enforcement order.' You can see there's a very clear interaction of paying that, which, again, was something we came up with the field centre staff and the call centre staff who said, ‘How do we make this as clear as possible what you need people to do in this situation?’ We said, ‘Let's think about using this sign.’ And you can see that was actually the most effective part. As an aside, we just made our more efficient paper collection method more prominent, so Online, Phone, Bpay.

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Put things like Australia Post in the background, and that led to a few percentage points increase in people paying with those methods, which means just in processing costs alone, we save a hundred thousand dollars. So again, you can see this was replicated across the penalty notice providers, bringing in millions of additional revenue, saving costs in processing, but also, really importantly, most people were having their licences taken away which, again, had all sorts of effects on social behaviours. Very quickly, in the social status bills on the work David was talking about in job centres, getting people to make a plan and come in. This time, how they were going to get back to work after being injured, rather than trying to find work. Talking... Rather than going out and saying you're going to look for work, say, for example, when you are going to walk the dog to build up your muscles, etc.

This was done in the education sector, primarily injured teachers. And you can see people return to work 27% faster. And again, we're now rolling that out across the scheme, which is estimated to reduce payments by about two percentage points, saving around six to 10 million. Again, just by changing the way that we are having those conversations and structures, and really importantly, again, we write some surveys. People prefer this on the receiving end, the injured workers and our staffers.

It's a great program which just talks about, ‘Actually, we were having these conversations before, ‘but it was all around compliance. Actually, if we stop and listen ‘and asked people how they want help to get back to work and when, it's actually much, much more effective.’ So, not only is it good from a revenue perspective, but as David highlighted, it's much more pleasant for people on the frontline and people receiving these services as well. Finally, in terms of timely reminders, we're doing some work to try and encourage rescreening for breast and cervical cancer, in particular. This was when people have missed their tests.

The most effective arm in this particular RCT was to have some form of implementation and retention, just to get people to write down, when they've called up, where their appointment is. So you can see a few percentage points, a 10% increase in people turning up for that cervical screening. Which again, is an extra 5000 women being screened per year. You can see these relatively small changes can actually have pretty significant impacts when scaled up.

We spent the first year, two years focusing on a series of areas where we can improve, monetise and measure the results very easily in order to prove that sort of return. We have now moved into something that is potentially more interesting but also much more complex areas. We are doing lots of work around childhood obesity, a large-scale trial with a series of global health districts looking at how we can get obese and overweight kids to lose and maintain that weight using a series of incentives, but also giving them, similarly, to commit to what they're going to do. So this time, we know these ten-week programs are pretty effective, but then the effect wears off. So, we're sending text messages for the following six months and then a year, just to keep reminding themselves and keep motivating them all the way. We're doing a series of work around domestic violence, we don't have time to go into it now.

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First phase will just be rewriting our court orders, which many of you are involved in the system will probably know, it's not particularly legible to people outside the system. And the second phase, we'll look at how we engage offenders, in particular, to engage in the sort of support and services and think about the effect of their behaviour. We're doing a series of work around social housing, starting off with the payment of rent arrears, now moving onto things like antisocial behaviour, how we can help them exit the social housing system, and finally, building on that work that we do, the early-stage maternity work with teachers, and looking at more acute end.

So, helping police officers who have been medically discharged, often for post-traumatic stress and thinking about how can we help them to find new careers and new work. We have been going for a couple of years and we have seen, very encouragingly, I think, very similar effects, and I think now we're really starting to get into this sort of complex social policy issues and I think this area has huge potential. We should be clear: not everything will work. Dave's just highlighted that great example. We actually don't know in advance, sometimes, what is going to work. It's easier to run multiple arms online, than it is sometimes in a difficult social policy setting. Some of this won't work, but that's OK. What we've found is a more sophisticated understanding of human behaviour invariably does prove that we can design and deliver. So, I'll just hand back to David, who'll wrap up, and then we'll be happy to take any questions.

DAVID HALPERN:

OK, thank you. Right. When we started this in the UK, people genuinely thought this is mad. By viewing some of the early headlines we had, certainly, our civil servants were pretty sceptical. But, as the results started to come through, it's actually quite funny, because they realised that an extra line on a tax letter, it's not difficult to work out how much extra revenue tax avoidance costs. As the results came through, both the public attitude changed, and so did Whitehall, and the attitudes of civil servants internally.

Consider it in the context of quite tough budget cuts and generally trying to reduce the volume legislation. So, in summary, you can use this is really quite nuts and bolts areas and it turns out some of these tiny processes, the way in which a form is presented, the way in which a teacher gives feedback to a child, all of these things are incredibly consequential, much much more than we probably realised before. One of the nicest things about... Having spent a long time doing a lot of strategy work, it's incredibly empowering to our staff and people to realise that they have in their hands, through a few little details, they have enormous power to make a big difference.

So, the job centres, for example, really were transformed in terms of morale and attitude as these results were coming through. We haven't had time today, but you can also use it fundamentally to take different kinds of policy solutions, so how you regulate markets, how you design and correspond in more fundamental ways, and sometimes taking us to some rather different solutions than some of our other colleagues in Whitehall and Number 10 and elsewhere. We haven't had time for it today, but it's really about the well-being. One of the fascinating things about this area, I touched on right at the beginning with the sad example of suicide, it's not just small issues, whether they work like the UK or not. But really big decisions we make in life are also affected by the same amount of shortcuts that we make.

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Some people and some governments are quite interested in what does that mean? If you want to increase people's well-being, and that's our objective as a government, what else can we do in that space, too? And finally, over it all, even if you don't really care about behaviour yourself, hopefully we have intrigued you enough to have a little prod at it. This idea that you can use experiments and experimentation for a lot of these issues around government is something which almost everybody can do at some point. It is much easier than you think. It doesn't have to take 20 years to get the answer. Very often, you can see results using your management information. You can get those results back quite fast. So, hopefully that's been new stuff.

Sorry we had to rattle through a little bit. Hopefully, next time we'll have a bit more time. I want to leave you with this sense that government (inaudible),for lots of things, people are like, ‘Oh, did that big reform make a difference or did it not?’ It's been really exciting these last few years to be involved in work where we can very tangibly see the effects and have a sense that sometimes they are small effects, sometimes they are really quite big.

I showed a couple of those examples. But the idea, imagine everything we could do.

We just get a few percent there, a few percent here, there, actually, it's absolutely transformative once you start to pile up those effects. So, I'll leave you with those few thoughts.

Try and introduce a more realistic account of how humans make decisions and what drives our behaviour. You will get better policies and so on, and at the very least, at least use experimental methods.

SPEAKER:

I just wanted to ask, at these these type of events, with the public sector employees coming, and they don't have to pay to come. I won't say it's a free event, because it's never free. How do they reduce the attrition rate? With that sort of...

DAVID HALPERN:

So, the attrition rate in terms of attendance, or...

Yeah, yeah. Well, you might try commitment devices, of course. It's an interesting question.

Maybe we should come back to it in more detail, about what kind of commitment we need to encourage in people. What we've done for medical appointments by the way, we have been able to reduce missed appointments for example. Valuable appointments telling people their tax, but it doesn't say how much it costs. We're trying a few variations where it's important to let us know, because it's fair to others, it's a really nice idea. We didn't do that. But in general terms, to say it's expensive to miss an appointment. It makes a small difference. What we actually said is this is how much it costs.

You are not paying for it, but this will reduce the missed appointments by 25 - 30%. So there are lots of approaches you're gonna use in relation to your business. A lot of our focus is experimental and using curiosity. So, you're asking a question, which is a really interesting question, and you'll find the answer when you get there.

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RORY GALLAGHER:

To make this clear as well, it may not be just financial cost, it may be social cost, as well, a similar thing in New South Wales. Just trying an email before an event, saying, ‘Please let us know if you can't attend. There is a waiting list. ‘Others are trying to book it.’ More people turn up but also more people let us know if they can't come.

SPEAKER:

Sue Owen from District Court WA. Thank you. Congratulations on your success. You have obviously delivered huge amounts to the government. It leads me to my question ‘How important was political will to your success?’

DAVID HALPERN:

Good question, and we can talk also about the Australian context. For us, it was very important in the early days. There have been various attempts. As a side story, which is more than a decade ago, when I worked for six years for Tony Blair. We had the idea of doing this and it blew up horribly with a bad press headline. And it was threatening in the context of a Labour government in the UK at that time, which was already expanding the state and doing all these other things and now you want to do this at well? Actually, the political environment was much more difficult, whereas, interestingly, with a centre-right administration, it's much easier, because they were generally saying,’We want government to do less.’

I think it's a lot easier now. Quite a few governments across the world are starting to use these approaches. So we have the Germans, in Berlin. I think Washington is now using our approach rather than their original one. The politics is clearly part of the story, I think we were blessed early on by having both administrative support in terms of the Cabinet Secretary being very supportive, as well as on the political side. But what I think we do have a big advantage five years on, is when we were doing it, it was like really North American, Kind of kooky and loud experiment, could you take it across. We've run more than a hundred experiments in the last year or two, in our trials and policy work, you can go to almost any area and have some examples ready. And that makes it... I think, de-risks it in the greater context.

RORY GALLAGHER:

We've seen pretty much the same thing in New South Wales. There's that combination of political and administrative support, So you had Barry O’Farrell, Chris Eccles on the administrative side. Interestingly now they have both moved on, and their successors have also taken up that mantel and it is through a combination of those results, I think, and practical examples of what that feels like.

Politicians want to make our services more citizen-centric. We could actually show them, this is what a form looked like, and now it's working. This whole process, in fact, they've really, really engaged with it. The other important thing is just early on political support is definitely important.

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So early on, definitely Number 10, they got us into departments. But quite often, you come with that political stick. We often say they're the sort of departments that will let you in the front door but they won't ask you in for dinner. They'll let you in so far. We actually you need that administrative support working with the frontline workers, develop some interventions, and those staff drive it through the system.

Because from the centre it’s a small group. Change it so the department and the agencies drive it through.

DAVID HALPERN:

I think if you want big change, there's an interesting question, which is, some of these very subtle approaches, nudges, you guys are the ones to set that. If these are so important. My view is if you want to start moving out of the 'let's change the tax' stuff, you actually need to have quite strong mechanisms in the public to give you permission. So, it might be that we were able to sustain changing the form for pensions, because we have a very, unusually good Chancellor of the Exchequer. But it's a kind of consultation.

In some way, the public gave us permission and we're showing the evidence on the forms. They said if we change it the other way around wouldn’t it be better. It's such a pain in the arse, we've got to spell it out...

SPEAKER:

Any questions?

SPEAKER:

Anne (inaudible). Sorry, this is an obvious question, I'm almost embarrassed to ask it. But back when you were doing the example of the organ donors, why did you not just tick the box for them and leave it up to them to untick it?

DAVID HALPERN:

That was discussed, so there were very big cross-national differences on how the default is set. So, some countries, it's a presumed consent system, and then they have, on the face of it, far more people on the organ donor register. We found with the UK, it was discussed that the public did not want to do it. It mattered. There was also an issue which is that some people felt ,who were actually really involved in the detail of this, it was a personal matter when it comes to your relatives and someone who has just died, that it mattered that it was an active consent that occurred.

As important was when the relatives honoured that, the fact it was active in the UK, that was important. So, these issues are important and they are certainly important in an online world where you can change a click on and off.

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And it is partly about judgement. It's almost a bit like... I think these things, they work best because they are going with the grain of human nature, but also the underlying intent. And if you get too far away from that, you will start to get some kind of political push back. It works on changing the defaults on pensions, because basically most people feel like it's cash on the table, ‘I can see this is a sensible thing to do’. Is that true for organ donation? The UK is slightly different from over here, what you've done.

RORY GALLAGHER:

A quick aside on that, as well as (inaudible) recent work, seems to be suggesting that defaults on and offline might work differently and actually a lot of us have become aware of the pre-tick boxes online and we don't take the time to look at it and automatically click off.

So, we might find going forward that some of those defaults are so powerful in the offline world they're actually less effective on the online world. So it's something we have to keep an eye on in the next few years.

SPEAKER:

Another question, here?

SPEAKER:

Emma Forest, Department of Housing. Just with people becoming desensitised to things. We found that with the forms, people are saying, ‘Now the government always has my name on a form and my photo and I don't care, I'm not going to pay.’

DAVID HALPERN:

Very good question. We were very interested ourselves, because we didn't really know.

There are some examples where there is a real novelty to them. There was an example given where we used 20 investment bankers, could we encourage them to give a day of their salary? So, we did some intervention. One of the options was when they get a form asking, ‘Will you give a day of your salary?’ They got a little tiny tub of sweets. Because that is dynamic and reciprocal. And that increased it hugely, a threefold increase in the number of giving. When it was re-run the next year, the effect-size drops to about half. Whereas it works just the same on new people. Whereas we found other kinds of interventions which used a social network, If someone else asks, they multiply their own mind.

So, it depends a bit. Often, for many things, you don't need to do it lots of time. You can get someone to sign up to a pension. It sticks. Or to insulate their home, you only need to do it once or twice. Particularly, it establishes what we call a new behavioural equilibrium. Everyday, simple examples, a lot of it depends on does a person ultimately really want to do it.

For those of you who still wear watches, how many people are wearing one right now? How many people have their watch set fast in the room? Come on. Don't be shy. I do.

Do you not know your watch is set fast? How fast is your watch, sir? Four minutes.

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(Inaudible)

See, mine is 3 minutes, for the same reason. Occasionally, I think, 'I can do maths!'

So why does it work? Occasionally, I change it to summertime, and then I miss my train by two weeks!

(Laughter)

DAVID HALPERN:

Because the reason it works is because, if you're not in a hurry, you can work out the time difference, but if you really are in a hurry, you don't bother to make the mental adjustment. It's a very simple example. You know it works, for years, it continues in its effectiveness because fast brains tend to work in a fairly automated way. I think that's the art to it. If it's going with the grain of something people already think is acceptable, you'll generally find it's effective. and in some cases they even multiply.

SPEAKER:

One more question.

Yes.

SPEAKER:

Thanks very much.

CLAIRE:

Hello, I'm Claire, I work in the Department of Health.

I was interested to know, if you could tell us very briefly, anything that you've done

to build capacity in public sector environments, because I work in the Health Department, we're massive across the whole health system and it would be great to get people to work with very small groups, but if you want to see change on that scale, I'd be interested to know in terms of great ideas of today, that would be great in terms of building capacity.

DAVID HALPERN:

It depends what you mean by capacity, but let me just answer the question as I understand it. Quite often we try build in to our desire an intervention which we can see in scale.

So, for example, in healthcare I gave the example of missed appointments. On the outside, tax letters seem simple, but it's very easy. If they work in one context...

Well, I say easy, it's never easy in a private health context, generally. But in principle, it's relatively straightforward. So, there are interesting interventions in our workforces, for example, designing incentives. So, one of the fascinating things in general is people have a running naiveté.

When you think about your own behaviour as a public servant, all the reasons you do it.

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Because you want to make the world a better place and so on and so on. And then as managers, people are like, ‘What we'll do is we'll use a financial incentive. ‘You know? Wait a minute.

Actually, other people's motivations are often similar to yours. Financial incentives are often not very effective, whereas other kinds of incentives are much more effective. Other ones, reducing medical error by changing forms. There's a huge issue with doctors who can't read their own writing.

If you reword their forms to encourage clearer vocabulary, you reduce clinical errors enormously.

For me, one of the great things in healthcare and capacity, and I mentioned briefly this issue about using volunteers which might be very controversial and unthinkable, but people often have a very strong desire to reciprocate and help others. Particularly with chronic conditions and so on.

If you're going to harness the capacity of people's desire to help others, it's a really big issue.

So in some of the London hospitals, we start off with a survey, where we say to staff, ‘What are the things you would like to do, but you haven't got the time to do?’

And hey presto, they came up with a long list of things. It turns out there's all these people who want to come and help you, and there are people who you're helping all the time.

So, particularly, one hospital could have up to 2000 volunteers involved, and we can also see the impact on patient satisfaction.

It's quite dramatic to unlock this sort of capacity. Other thing is clear discharges. Patients often aren't listening, it turns out, when you are discharging them, which is the basic structure of a discharge done with an iPad and it reduces by about 30%, the readmission rate in 28 days. It turns out there are lots of things that we can do and, of course, more fundamental in health is to go upstream and do several public health fixes as well.

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Transcript of Transcript · Web viewYou go home, talk to your kids, you figure it out on the calculator, you'll...