"Don't Mess with Texas"

Jan 07, 2019

How Behavioral Insights Aid Government Agencies

What compels humans to make choices? Humans make choices based on the psychological and social influences they are shaped by from the world around them. The research surrounding this body of knowledge is better known as behavioral insights. A unique instance of behavioral insights comes from the Texas Department of Transportation when they achieved major reductions in littering through a public service campaign that focused on state pride rather than admonishment. The campaign’s slogan, “Don’t Mess with Texas” became a rallying cry for the demographic that was most prone to littering and achieved a 29% reduction in litter on highways during the first year and 72% within ten years. This example shows a cost-effective way that yielded massive results for a government agency that suffers from limited resources. Another agency looking to utilize behavioral insights to improve outcomes is the IRS.

According to the Government Accountability Office, between fiscal years 2011 and 2016, the IRS's tax enforcement budget has declined by more than $600 million and its enforcement staff has decreased by more than 10,000 employees, leading to significant declines in enforcement and collection activities. While the IRS has several ways to collect outstanding liabilities from taxpayers, one of the most cost-effective is sending collection notices to taxpayers. IRS collection notices are designed to both inform the taxpayer about an outstanding tax obligation and prompt the taxpayer to take action towards resolution. However, these notices can be difficult for taxpayers to interpret, leading to more inbound phone calls to IRS customer service representatives, and longer wait times. To address this challenge, the IRS is using insights from behavioral science to design more effective collection notices, which facilitate taxpayer understanding and motivation, leading to improved compliance and collection rates. Encouraging and empowering taxpayers to self-resolve also frees-up IRS enforcement resources to address other priorities.

A 2015 Executive Order encouraged government agencies to use behavioral science methods to improve program outcomes and cost effectiveness.The IRS has been a leader in this regard, particularly in the use of behavioral science techniques to increase the efficacy of notices sent to taxpayers. Several of these methods are summarized in the IRS’ Behavioral Insights Toolkit, an acclaimed compendium that provides practical guidance on how behavioral insights can be applied to serve taxpayers and support the IRS mission. ASR Analytics was a major contributor to the development of the Behavioral Insights Toolkit, and our practitioners use these insights in conjunction with advanced analytics and statistical methods to help federal and state agencies improve constituent service and program compliance.

Beyond the IRS, many government agencies at both the federal and state level have applied behavioral insights to influence constituent behavior in productive ways—achieving significant return on investment. For instance, the Center for Medicare and Medicaid Services helped Medicare Part D recipients to save an average of $100 per year by adding personalized cost information to their standard letters, simplifying the decision-making process.

Government agencies should continue to explore and test the application of behavioral insights to increase constituent engagement and compliance—building on and contributing to the expanding body of knowledge in this field. Combined with efforts to increase the use of analytics, behavioral science ventures will help government agencies do more with available resources while maintaining a high degree of customer service.