English

While young adults in many contexts struggle to develop a positive identity or skills such as self-control, those who grow up in low-income or violent settings may have more at stake and receive less support. Cognitive behavioral therapy, an intervention traditionally used to treat mental health disorders like depression, is a promising option for policymakers seeking low-cost solutions to crime and violence.

Program area:
Type:
Brief
Date:
June 22, 2017
English

Helping clients stick to their goals and increase their savings balances with commitments

Despite good intentions, people often make less-than-optimal financial choices. In this series, we match insights from our global research in behavioral economics with specific financial product and service opportunities for U.S. providers. Providers can use these evidence-based insights to expand financial inclusion, improve client offerings, and continue to promote financial health.

Commitment devices are voluntary, binding arrangements that people make to reach specific goals that may otherwise be difficult to achieve. When built into savings products, commitment devices can help address behavioral and social obstacles to saving by providing a mechanism that forces people to save according to their self-set plans. These devices vary in terms of commitment activity, consequence for failing to fulfill the commitment, and control over how savings are spent. “Hard” commitments feature financial penalties for failure, whereas with “soft” commitments, the penalty is primarily psychological, as in letting down oneself or one’s community.

This brief is part of IPA’s Nudges for Financial Health series, which is available as a combined booklet here. The other briefs in the series can be downloaded individually: The Power of Doing Nothing, Top of Mind.

Program area:
Type:
Brief
Date:
February 13, 2017
English

Despite good intentions, people often make less-than-optimal financial choices. In this series, we match insights from our global research in behavioral economics with specific financial service and product design opportunities both for providers in the U.S. and in other countries. Providers can use these evidence-based insights to expand financial inclusion, improve client offerings, and continue to promote financial health.

This booklet combines a series of briefs, which are also available to download as individual briefs: Count on Commitment, The Power of Doing Nothing, Top of Mind.

Count on Commitment
Commitment devices are voluntary, binding arrangements that people make to reach specific goals that may otherwise be difficult to achieve. When built into savings products, commitment devices can help address behavioral and social obstacles to saving by providing a mechanism that forces people to save according to their self-set plans. These devices vary in terms of commitment activity, consequence for failing to fulfill the commitment, and control over how savings are spent. “Hard” commitments feature financial penalties for failure, whereas with “soft” commitments, the penalty is primarily psychological, as in letting down oneself or one’s community.

The Power of Doing Nothing
Automatic (“opt-out”) enrollment is a simple product design modification in which consumers are informed they will be automatically enrolled in a product or service unless they choose to opt out. Setting the default to “opt-out” instead of “opt-in” has been shown to significantly increase uptake of certain savings products and lead to behavior change through automation, for example by increasing participation in retirement and savings plans. It is important that financial services providers use these tools with care, fully and conspicuously inform their customers about the product or service into which they will be enrolled, and give customers full freedom to make a different choice or opt out at any time.

Top of Mind
Providing access to savings accounts is an important step in bringing financial services to the poor, but access alone does not guarantee people will save. Many people struggle to develop good savings habits because they put off saving until a future time, or face so many seemingly urgent needs today that it is difficult to save for tomorrow, or they simply forget to save. Reminders that bring savings goals to the “top of mind” are a low-cost way to address these barriers and help clients reach their savings goals.

 

Program area:
Type:
Brief
Date:
February 13, 2017
English

Reminders can increase savings deposits at almost no cost to providers

Despite good intentions, people often make less-than-optimal financial choices. In this series, we match insights from our global research in behavioral economics with specific financial product and service opportunities for U.S. providers. Providers can use these evidence-based insights to expand financial inclusion, improve client offerings, and continue to promote financial health.

Providing access to savings accounts is an important step in bringing financial services to the poor, but access alone does not guarantee people will save. Many people struggle to develop good savings habits because they put off saving until a future time, or face so many seemingly urgent needs today that it is difficult to save for tomorrow, or they simply forget to save. Reminders that bring savings goals to the “top of mind” are a low-cost way to address these barriers and help clients reach their savings goals.

This brief is part of IPA’s Nudges for Financial Health series, which is available as a combined booklet here. The other briefs in the series can be downloaded individually: The Power of Doing Nothing, Count on Commitment.

Program area:
Type:
Brief
Date:
February 13, 2017
English

How defaults can improve customer savings behavior

Despite good intentions, people often make less-than-optimal financial choices. In this series, we match insights from our global research in behavioral economics with specific financial product and service opportunities for U.S. providers. Providers can use these evidence-based insights to expand financial inclusion, improve client offerings, and continue to promote financial health.

Automatic (“opt-out”) enrollment is a simple product design modification in which consumers are informed they will be automatically enrolled in a product or service unless they choose to opt out. Setting the default to “opt-out” instead of “opt-in” has been shown to significantly increase uptake of certain savings products and lead to behavior change through automation, for example by increasing participation in retirement and savings plans. It is important that financial services providers use these tools with care, fully and conspicuously inform their customers about the product or service into which they will be enrolled, and give customers full freedom to make a different choice or opt out at any time.

This brief is part of IPA’s Nudges for Financial Health series, which is available as a combined booklet here. The other briefs in the series can be downloaded individually: Top of Mind, Count on Commitment.

Program area:
Type:
Brief
Date:
February 13, 2017
Download

In recent years, the influx of available consumer data has presented corporate firms, non-profit organizations, and governments alike with an opportunity to increase the efficacy and targeting of their products and services. The key to identifying what works is to build experimentation through randomized controlled trials (RCTs) into the process of designing new products and services. Running RCTs, however, is not always straightforward: there are a multitude of technical, analytical, and logistical hurdles that arise during the course of designing and implementing an RCT. 

To this end, the US Finance Initiative at Innovations for Poverty Action has compiled best practices gleaned from years of experience running RCTs in the finance sector into a toolkit. The toolkit assumes a certain amount of technical knowledge and is intended for researchers, but details the often-neglected “softer” skills of managing an RCT, including the logistics of implementation and the interaction between the researcher and the partner institution, that are equally central to the success of the experiment. This guide focuses specifically on using RCTs to develop and test new financial products and services for consumers in the United States, but is applicable to RCTs in other disciplines.

Please send any feedback, questions, or comments to usfi@poverty-action.org.

Country:
Date:
November 10, 2015

Pages