How Government's Using Behavioral Economics to Get People to Make Better Decisions

Governing

In Texas, most parents who go to prison still owe child support even though they might not have a job. That’s a problem for inmates because the typical inmate responsible for chlld support payments in the United States leaves state prison about $20,000 in debt, making it harder to pay for housing, transportation and food. It can also be a problem for state child welfare agencies because if states record too many cases of late and unpaid child support payments, they are at risk of losing some federal funding....

....The policy in Texas, which considers imprisonment to be a form of voluntary unemployment, is how most states deal with noncustodial parents owing child support when they become incarcerated. In fact, more than a dozen states are less accomodating than Texas: They don't even consider imprisonment as a factor in modifying the amoung of child support owed. None lower the amount owed automatically.

But about a year ago, the federal Administration of Children and Families (ACF) agreed to help Texas increase the percentage of inmates taking advantage of the modification option. In a demonstration project where federal contractors introduced a few low-cost tweaks (about $2 extra per inmate), the participation rate for the treatment group was 39 percent; for the control group, it was 28 percent. The results, otherwise unpublished so far, were reported in a presentation at the Welfare Research and Evaluation Conference in Washington, D.C., in late May.

While federal officials were excited about making an impact, they were even more enthused about how they did it: by "nudging" to induce a change in the inmates' behavior. The Texas experiment is part of a larger movement within the federal government to field test the nudge theory -- a concept rooted in behavioral science and economics....

.....The idea of using the nudge approach in human services in the United States is picking up momentum, as is the adoption of that approach in a state or local context. About two years ago, ACF held a conference in Washington, D.C., with state and local partners to discuss the potential uses of behavioral economics in human services, according to Schmitt. From those and other discussions, the agency identified a handful of places that could serve as pilot projects to see if the nudge approach could improve social outcomes.

ACF contracted with a third-party evaluation firm, MDRC, to design scientific studies with treatment and control groups for a handful of pilot projects. (In a preliminary report released in April, MDRC details three nudge experiments that were designed with the help of ideas42, a nonprofit partner that specializes in the application of behavioral economics.)

In Texas, the treatment group benefited from a series of interventions that targeted potential “drop-off points” where inmates were likely to abandon the process of applying for a modified child support payment status....

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