Sunday, November 17, 2013

Nudging down under

I was aware that the Behavioural Insights Team had done some business with local government in Australia last year and it seems that the collaboration is starting to pay dividends. The BIT's work on tax letters has centered around simplification and the use of social normative messages ("9 out of 10 people pay their tax..") and this intervention seems centered around those two themes also. Since the media generally inconsistently report percentages I'm not sure if the stated 5-6% and 12% improvements are really in percentage terms or if they mean percentage points. If it's the latter, those would be very large effect sizes.

"Next week the Tax Office will go public with details of an extraordinary behind-the-scenes re-engineering of the way it interacts with the public...
The ATO has been quietly trialling different ways of asking for money. It has set up a ''simulation centre'' in Brisbane to present pretend letters to real people and see how they react. It presents pretend web interfaces as well. Then, just as Google tests new search algorithms by randomly dishing up them up to some customers and not others, it posts new letters to 1000 of its randomly selected customers and old ones to the rest.

The results, to be detailed in the Public Service Commission's state of the services report this month, are astoundingMerely by removing some opening words and highlighting an ''amount due'' box, it has pushed up the response rate to one letter by 5 to 6 per cent. The phrase it removed was: ''Please disregard this letter if you have paid this debt in full in the last seven days.''

By including an extra phrase in a letter to small businesses it lifted their response rate 12 per cent. The phrase said most ''lodge on time''. It's also test marketing the phrase: ''Paying tax is a fair way for everyone to contribute to the Australian community.' [Mark's note: I'd be surprised if that latter phrase worked. All the literature suggests that moral suasive and rational argument messages in tax communications are ineffective]'

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