Monday, August 17, 2015

Treasury Consultation on Strengthening Savings Incentives

See below for an interesting request for  consultation on improving incentives to save in the UK. Clearly many of the aspects of this are relevant to people interested in research on behavioural economics of savings and related literatures.

HM Treasury. July 2015. Strengthening the incentive to save: a consultation on pensions tax relief.
The government wants to make sure that the right incentives are in place to encourage saving into pensions. 
The government is therefore consulting on whether there is a case for reforming pensions tax relief to strengthen incentives to save and offer savers greater simplicity and transparency, or whether it would be best to keep with the current system. 
Once the consultation closes on 30 September 2015 the government will consider all responses and publish a ‘summary of responses’. This will set out how the government intends to proceed. 
The government would particularly, but not exclusively, be interested to hear from:
- individuals
- consumer groups
- employers
- providers of pension products
- the wider pensions industry
From the consultation document, here are the questions they are interested in:

1 To what extent does the complexity of the current system undermine the incentive for individuals to save into a pension?

2 Do respondents believe that a simpler system is likely to result in greater engagement with pension saving? If so, how could the system be simplified to strengthen the incentive for
individuals to save into a pension?

3 Would an alternative system allow individuals to take greater personal responsibility for saving an adequate amount for retirement, particularly in the context of the shift to defined contribution pensions?

4 Would an alternative system allow individuals to plan better for how they use their savings in retirement?

5 Should the government consider differential treatment for defined benefit and defined contribution pensions? If so, how should each be treated?

6 What administrative barriers exist to reforming the system of pensions tax, particularly in the context of automatic enrolment? How could these best be overcome?

7 How should employer pension contributions be treated under any reform of pensions tax relief?

8 How can the government make sure that any reform of pensions tax relief is sustainable for
the future?

Saturday, August 15, 2015

Links 15th August 2015

1. Roberto and Kawachi edited book out in October - "Behavioural Economics and Public Health"

2. Conti, Heckman, Pinto "The Effects of Two Influential Early Childhood Interventions on Health and Healthy Behaviors".

3.  Achtziger et al 2015 JOEP "Debt out of control: The links between self-control, compulsive buying, and real debts".

4. 2nd edition of Elster's brilliant "Explaining Social Behavior: More Nuts and Bolts for Social Sciences".

5. Cass Sunstein will speak in UCD on October 19th.

6. Farre et al IZA WP "Feeling Useless: The Effect of Unemployment on Mental Health in the Great Recession".

7. Lavechhia et al IZA WP "Behavioural Economics of Education: Progress and Possibilities".

8. NBER Working Papers listed under the category "Behavioural Economics"

9. Parker NBER WP  "Why don't households smooth consumption?"
This paper evaluates theoretical explanations for the propensity of households to increase spending in response to the arrival of predictable, lump-sum payments, using households in the Nielsen Consumer Panel who received $25 million in Federal stimulus payments that were distributed randomly across weeks. The pattern of spending is inconsistent with models in which identical households cycle through high and low response states as they manage liquidity. Instead, the propensity spend is a persistent household trait. This trait is unrelated to expectation errors, almost unrelated to crude measures of procrastination and self-control, moderately related to measures of sophistication and planning, and highly related to a measure of impatience.
10. Internship for ESRC-funded PhD students working at the Behavioural Insights group at Public Health England.

Friday, August 14, 2015

Workshop on Adjusting for Non-Ignorable Missing Data using Heckman-Type Selection Models



Workshop on Adjusting for Non-Ignorable Missing Data using Heckman-Type Selection Models

Harvard University, September 8th 2015 0900 – 1800



Background
Missing data is common problem in survey data, and standard approaches for dealing with this issue rely on the strong and generally untestable assumption that data are ignorable (missing at random) once we condition on the observed characteristics of respondents. The assumption of missing at random is often implausible, including in contexts where the outcome itself may be a predictor of survey participation. For example, estimates of HIV prevalence which rely on data collected from blood tests taken from respondents in nationally representative household surveys may be affected by selection bias if those who are HIV positive are less likely to participate in testing. Then, conventional adjustments for missing data, such as using imputation or inverse-probability weighting, will result in biased estimates because of an incorrect assumption of missing at random. Standard approaches are also likely to result in confidence intervals which are too narrow because they ignore the uncertainty surrounding the unknown relationship between participation and the outcome, which needs to be estimated.    
Workshop
This workshop will introduce the use of Heckman-type Selection models for adjusting for non-ignorable missing data with the goal of making this approach easily accessible to researchers working with survey data affected by non-participation. A non-technical introduction to different approaches for dealing with missing data will be provided, and we will discuss the implications of not correctly adjusting for missing data which are not missing at random. We will provide an overview of the statistical rationale for the use of selection models, and the R package SemiParBIVProbit will be presented. This software allows researchers to implement this approach in a straightforward and transparent manner in a variety of different contexts affected by missing data. A simulation study will also be used to demonstrate the properties of the model. The final session will be interactive where participants are invited to bring their own datasets, and the audience and presenters will work together on implementing this approach in their own research. Alternatively, the organizers will provide example data. Throughout, we will illustrate the key concepts using data from HIV research.

Invitation
The workshop is free and open to all interested parties, however space is limited so if you would like to attend please register with Mark McGovern (mcgovern@hsph.harvard.edu). The workshop will take place at Harvard on September 8th, exact location to be confirmed. Unfortunately we do not have the funds to cover expenses of participants.

Organizers
Harvard University: Till Bärnighausen, Guy Harling, Mark McGovern
University College London: Giampiero Marra
University of London Birbeck: Rosalba Radice

Agenda
Time
Topic
0900-0930
Introductions and Background
0930-1015
Implications of Non-Ignorable Missing Data for Parameter Estimates
1015-1030
Break
1030-1130
Introduction to Selection Models
1130-1230
Overview of Applications of Selection Models
1230-1300
Lunch
1300-1330
Optional Session on Getting Started with R
1330-1415
Introduction to R Package SemiParBIVProbit
1415-1445
Simulation Studies
1445-1500
Break
1500-1800
Interactive session with Data from Participants or Data Provided by Organizers

Key References
Bärnighausen, T., Bor, J., Wandira-Kazibwe, S., & Canning, D. (2011). Correcting HIV Prevalence Estimates for Survey Nonparticipation using Heckman-type Selection Models. Epidemiology, 22(1), 27-35. http://www.ncbi.nlm.nih.gov/pubmed/21150352
 
Marra, G., Radice, R., Till, B., Wood, S., McGovern, M., 2015. A Unified Modeling Approach to Estimating HIV Prevalence in Sub-Saharan African Countries. Research Report 324, Department of Statistical Science, University College London. http://www.ucl.ac.uk/statistics/research/pdfs/rr324.pdf

McGovern, M., Bärnighausen, T., Marra, G., Radice, R., 2015. On the Assumption of Bivariate Normality in Selection Models: A Copula Approach Applied to Estimating HIV Prevalence. Epidemiology 26, 229–327. http://www.ncbi.nlm.nih.gov/pubmed/25643102
 
Marra, Giampiero, and Rosalba Radice, 2015. A Regression Modeling Framework for Analyzing Bivariate Binary Data: The R Package SemiParBIVProbit. http://www.homepages.ucl.ac.uk/~ucakgm0/SemiParB.pdf
 
McGovern, M. E., Bärnighausen, T., Salomon, J. A., & Canning, D. (2015). Using Interviewer Random Effects to Remove Selection Bias from HIV Prevalence Estimates. BMC Medical Research Methodology, 15(1), 8. http://www.biomedcentral.com/1471-2288/15/8/

Monday, August 10, 2015

Second Dublin BE Meet-up

New: Mailing List and Website for Irish Behavioural Science, Economics and Policy Network

Since 2008 a number of us have organised an annual conference for people working at the interface of economics, psychology and related areas. Speakers have included international thought-leaders in this area including David Laibson, David Halpern, Robert Sugden, Arie Kapteyn, Ruth Byrne and John O'Doherty as well a diverse range of speakers from across economics, psychology and policy in Ireland and they have contributed to maintaining an active discussion of the potential for this area in Ireland. The next one will take place at the ESRI in Dublin on November 27th. At the previous session we agreed to organise some more adhoc meet-ups in between the events partly to disseminate new ideas and also with a view to establishing a more structured network in this area in Ireland.

The first of these meetings took place in Dublin on July 22nd organised by myself and Sean Gill.  There were 4 presentations from myself, Pete Lunn, Michael Daly and Sean Gill and discussion about future events and the role of behavioural economics more generally. Meet-ups around this area are now taking place in several cities including London and Sydney. There are many people interested in this broad area in Dublin and Ireland more generally as was reflected in the healthy attendance from academia, policy and business. This is intended to a broad forum and we welcome attendance and contribution from academics interested in exchanging ideas with a broad audience, people across different areas including students and people with business and policy interests in this area. For now we envisage the events being structured around short talks where a speaker describes briefly an idea they are working on or thinking about and potentially some suggestions for collaboration. Though there are many other event formats that could be considered.

The next one will take place on September 30th at 6.30pm. Currently confirmed speakers are Anne-Marie Farrell from Google and Gerard O'Neill from Amarach Research. 

Friday, August 07, 2015

UK Benefit Sanctions: Ethics and Evidence

These are personal views on an ongoing policy issue. They are provided for the purpose of discussion. They are not intended to provide an institutional view.  

There has been a great deal of recent debate about the use of benefit sanctions in the context of employment activation. The Guardian recently published a piece outlining the annual number of sanctions over time. There is a debate about how to calculate these numbers but even looking at the DWP's own raw spreadsheets makes it clear that sanctions are now a normalised form of intervention in the UK benefit system rather than a "last resort for a tiny minority"  as has been unconvincingly claimed by a number of senior politicians (See David Webster from Glasgow University for detailed discussion on sanctions numbers which have prompted the UK statistics watchdog to ask DWP to provide greater clarity to their figures - see here).

The obvious narrow question is whether sanctions are effective in these contexts in terms of people gaining employment. A textbook economics model might suggest so but there is obviously a volume of evidence as to the potential perverse effects of incentives employed in a punitive manner (one of most cited reviews here). A number of literature reviews point to what is basically a very mixed literature (see JRF review here). There are some interesting studies showing positive effects on employment search and outcomes (see Blundell et al for a detailed study of an early Blair-era policy) but amidst a sea of evidence finding not very much at all. The context of the economy in terms of vacancies and matching of applicant skills and regional demographic characteristics is also clearly relevant.

One question for a sanctions policy is how it is being applied. The Oakley review pointed to a number of features of job activation services that could be improved. Many of these reforms fall squarely with a behavioural policy type framework and experimenting with design of communication, instructions etc., potentially offers a mechanism for improvement of these services. Sunstein's recent discussion of ethics in the context of soft interventions is still very relevant but it seems clear that there is some role for behavioural design in the context of job activation to attempt to make the processes clearer and more effective.

Lord Layard and colleagues have put the potential for improved access to CBT and other psychological therapies squarely on the UK agenda. There is a great deal of debate surrounding this agenda with critics arguing it simplifies the treatment of mental health. The role of psychological support services in a conditional benefits framework is ethically very complex. This has been raised in a recent paper by Friedli and Stern that I have linked to here on a number of occasions. Friedli and Stern are sceptical in general about the use of any psychological intervention in the context of employment activation. This debate is extremely important. There is certainly abundant evidence that unemployment is stressful and potentially damaging to mental health and scarring in the long-run. However, if mental health services are provided in the context of potential sanctions for non-compliance whether explicit or implicit there are clearly a host of both practical and ethical issues.

A wider question is the impact of being sanctioned on those who are sanctioned. This question was asked many times during the Select Committee's questioning of the then employment minister Esther McVey and a senior DWP official but was answered with a general reply about the improving numbers of people in employment. In general there is very little evidence on what happens. The Guardian newspaper has published several reports of suicides, food banks usage etc., Loopstra  and colleagues have come to closest to documenting causal linkages with a clear relation between sanctions and the rise in food bank usage (discussion here) but the causal connection is still difficult to test with the existing data. The Guardian reported in January 2015 that DWP has investigated 60 suicides surrounding withdrawal of benefits. Various groups have cited a correlation between sanctions and suicides e.g here. There is an obvious possibility for sanctions to hit harder on those experiencing mental health problems. All of this is worthy of discussion but far from solid evidence of effects of sanctions.

It raises a question about the role of evidence in policy and who should collect it. The DWP's response to the BMJ paper by Loopstra et al was:

 “As the authors admit themselves the data does not give a full picture. What we do know – according to independent figures from the Office for National Statistics – is that we now have a record number of people in employment in this country and there are two million more people in private sector jobs compared to 2010".

There is no doubt that both internally and externally DWP have access to people who could produce a better response than this non-sequitur. It is also clear that there is no impetus to collect the type of information that would enable serious analysis of the effects of sanctions leading to a call last month for an urgent review into the sanctions regime from the independent advisors to the government (the Social Security Advisory Committee details here). It is plausible that these policies are leading to severe psychological distress, crime, suicide and other outcomes. At present, simply no-one knows as the data is not available to test this. A precautionary principle would suggest greater phasing of such a policy in line with an evidence-strategy. There are several bodies in the UK who could do this research with requisite support from the DWP themselves. (See Prof Martin McKee's comments on this).

As several others have pointed out, sanctions are not just used in unemployment and work disability contexts and are becoming an increasingly used form of intervention in other areas such as housing. In that sense it is even more important to understand both their effectiveness from a narrow outcome point of view and wider spillover effects they might engender. Such an exercise requires interdisciplinary knowledge combined with detailed understanding of the mechanics and implementation of benefits and sanctions.

It also is worth thinking about these policies through the lense of political communication. The popularity of these policies with centre voters is a very interesting aspect of this debate and the extent to which sanctions will be used a way of signalling toughness to winnable voters will be interesting to observe over the next election cycles in different countries. It also raises the question as to how this will influence attitudes to unemployment. What do people interpret from the communication of these policies about the extent of social welfare cheating? Furthermore there is the question as to the welfare function a government maximises. It may be the case that the welfare of the unemployed is not a priority for government for political and related reasons which further heightens the degree of ethical tensions faced by people tasked with designing a system like this subject to political constraints.

Some Further Reading: 

Beatty et al (2015). Benefit sanctions and homelessness:a scoping report. Crisis (the national charity for single homeless people).

Etherington & Daguerre (2015). Welfare reform, work first policies and benefit conditionality: reinforcing poverty and social exclusion? Centre for Enterprise and Economic Development Research, Middlesex University in London.

Fitzpatrick et al (2015). Destitution in the UK: an interim report. York: Joseph Rowntree Foundation.

House of Commons Work and Pensions Committee (March 2015). Benefit sanctions policy beyond the Oakley Review.

Martin (2015). Activation and active labour market policies in OECD countries: stylised facts and evidence on their effectiveness. IZA Journal of Labor Policy mFebruary 2015, 4:4.

Norman & Uba (2015). Austerity measures across Europe. In Defence of Welfare 2.

Perry et al (2015). Emergency Use Only: Understanding and reducing the
use of food banks in the UK. The Child Poverty Action Group, Church of England,
Oxfam GB and The Trussell Trust.

Spencer, A., Ogden, C. & Battarbee, L. (March 2015). #cheshirehunger Understanding Emergency Food Provision in West Cheshire. Research Report by West Cheshire Foodbank, The University of Chester, The Trussell Trust, Cheshire West Citizens Advice Bureau, DIAL West Cheshire (DIAL House), Chester Aid to the Homeless, The Debt Advice Network and The Salvation Army

Thursday, August 06, 2015

Links 6th August

1. Very interesting paper on social class, personality and economic outcomes. The results accord with many projects I have read or being involved with. Personality can predict many economic outcomes but it does not explain the differences in these outcomes between people born to different social circumstances though some interactions may be operant. It is really important that the literature comes to grips with this to avoid a crude individualisation of the factors that drive economic outcomes.

2. House of Lords Select Committee call for evidence on "How can young people be best prepared for the world of work?"

3. New centre papers:- Daly, Delaney & Baumeister on self-control, future orientation & differential effects of smoking laws Delaney and Lades "Present-bias & everyday self-control failures"

4. Very interesting paper in Health Economics on effect of lottery wins on physical and mental health

5. NHS Scotland paper on reducing health inequalities 

6. Philosophy, Politics, and Economics: An Anthology

7. Cornaglia et al "Mental Health & Education Decisions". The predictive power of very short mental health screens among adolescents for outcomes such as education completion and education is striking.

8. Cass Sunstein Nudging and choice architecture: ethical considerations

9. FCA & UK govt responses to recent WP committee report on auto-enrolment & pension reforms.

10. The debate about the use of sanctions in welfare policy is very active in the UK. Guardian piece here charting the rise in the use of sanctions over the last 5 years.

11. Positive affect as coercive strategy: conditionality, activation & the role of psychology in UK government workfare - this is a thought-provoking piece that should be read by anyone interested in the area of well-being interventions in unemployment settings.

Monday, August 03, 2015

Workshop at the Scottish Parliament on "Future Directions for Well-Being Policy: Measurement, Implementation, and Engagement" (September 18, 2015)

On September 18th 2015, we will host a workshop in the Scottish Parliament on “Future Directions for Well-Being Policy: Measurement, Implementation, and Engagement”. The workshop is funded by the Scottish Institute for Research in Economics (SIRE) and organised by Christopher Boyce, David Bell and Liam Delaney.

Although we now have a good understanding of critical factors that cause societies, and the individuals that reside there, to rate life as being either satisfying versus dissatisfying, happy versus unhappy, there are many challenges ahead with regard to implementing findings from this body of research.

First, we need reliable national indicators of well-being that link to policy outcomes and complement economic measures like GDP; second, we need to understand more precisely how policy will affect well-being and how such findings can be implemented into policy choices; and third, we need meaningful public dialogue as to the purpose and relevance of well-being policy to people’s everyday lives. Our workshop to be held in the Scottish Parliament will focus on these three aspects and bring together a diverse range of speakers and participants to establish ways to progress.

Scotland is uniquely positioned to develop the international debate around well-being based policy. Not only has the Scottish Government developed and implemented the world renowned National Performance Framework but there is also a critical mass of researchers within academia and policy think tanks willing to take this debate forward.

The workshop will build on the successful well-being policy workshop we held last year at the University of Stirling and aims to facilitate greater collaboration that will lead to published work, further develop well-being networks both nationally and internationally, develop Scotland’s reputation in the global well-being movement, and ultimately create debate that will lead to policies that will improve the lives of individuals living and working in Scotland. 

The event is nearing capacity and spaces are now extremely limited. If you would like to come then please email christopher.boyce@stir.ac.uk

Schedule of the day

9:00-9:30: Registration 
9:30-10:00: Introduction to the day

The Science of Well-Being

10:00-10:25: Conal Smith (OECD)
10:25-10:50: Liam Delaney (Stirling Behavioural Science Centre)
10:50-11:15: Open discussion on the science of well-being

11:15-11:35: Tea and coffee

Keynote talk: 
11:35-12:35: Bryan Smale (University of Waterloo, Canada, and Director of the Canadian Index of Well-Being)

12:35-13:35: Lunch

Implementation

13:35-14:00: Wendy Loretto (University of Edinburgh)
14:00-14:25: Saamah Abdallah (The new economics foundation and Community Wellbeing for What Works Centre for Wellbeing)
14:25-14:50: Open discussion on implementation

14:50-15:10: Tea and coffee

Engagement

15:10-15:35: Karen Scott (University of Newcastle)
15:35-16:00: Christina Victor (Brunel University, Culture, Sport and Wellbeing for What Works Centre for Wellbeing)
16:00-16:25: Open discussion on engagement

16:25-16:45 – Closing remarks and summary