Contact: Kristin Lawton, 202.408.9788
Sep 12, 2012
Behavioral Economics Technical Assistance Project Launched by CFED and ideas42, with Support from the Citi Foundation
Project will test behavioral economic theories on asset-building programs and services
WASHINGTON, D.C. – On September 4, CFED, ideas42 and the Citi Foundation announced the launch of the Behavioral Economics Technical Assistance (BETA) Project. The goal of the BETA Project is to use behavioral economics theory to improve the effectiveness and reach of products and services that help people increase their financial stability.
“Insights from behavioral economics can help us understand why people underutilize helpful programs and make financial decisions that appear counter to their own best interests,” said Anita Drever, Director of Applied Research at CFED. For example, while most people understand that they should save for retirement, in reality Americans consistently under-save and are often unprepared when it comes time to retire.
Through the BETA Project, CFED and ideas42 will work collaboratively with three to five organizations to pilot a “behavioral intervention” within an asset-building program or service. These interventions can take a range of forms, but typically are manageable, low-cost program adjustments based on well-documented findings from behavioral economic and psychology research. For example, an organization may help low-income clients save by sending them short, behaviorally-worded text message reminders. Or an organization may change default options on an emergency savings account to automate future escalation of savings rates based on raises in the future, allowing participants to “opt out” rather than “opt in” to their “future self” saving. Past research has shown that small tweaks like these can have a powerful impact.
“ideas42 is excited to work with CFED and the winning applicants to apply its proprietary behavioral mapping and design process. This approach enables diagnosis of behavioral hurdles rather than guessing and allows us to design better product and services than if we simply view people as broadly fallible,” said ideas42’s Executive Director, Josh Wright.
A competitive application process will be used to select the three to five pilot organizations for the project. These should be organizations offering asset building programs or services, such as financial counseling, individual development accounts (IDAs), children’s savings accounts and tax-time savings strategies, any of which could be improved through behavioral interventions. CFED and ideas42 will host a webinar on October 4 from 3 to 4 p.m. EST to explain the structure of the BETA Project, describe the ideal pilot program and provide tips for a successful application.
Selected organizations will receive a $15,000 grant to support a portion of the staff time and operational expenses associated with the pilot, along with a host of other benefits. Findings from the project will be promoted and shared with the field through blogs, webinars, publications and conference presentations.
“This is an opportunity for organizations to participate in ground-breaking behavioral pilots that will test strategies to increase program reach and effectiveness and may result in the organization’s work being highlighted nationally,” said Pam Flaherty, President and CEO of the Citi Foundation. “We believe that applying a behavioral economics lens will provide us with a fresh perspective on many of the challenges faced by asset building organizations today and we look forward to sharing the learnings from this work with the field.”
CFED empowers low- and moderate-income households to build and preserve assets by advancing policies and programs that help them achieve the American Dream, including buying a home, pursuing higher education, starting a business and saving for the future. As a leading source for data about household financial security and policy solutions, CFED understands what families need to succeed. We promote programs on the ground and invest in social enterprises that create pathways to financial security and opportunity for millions of people. Established in 1979 as the Corporation for Enterprise Development, CFED works nationally and internationally through its offices in Washington, DC; Durham, North Carolina; and San Francisco, California.
ideas42 is a private, 501(c)(3) non-profit organization that uses behavioral economics to do good and have social impact at scale. At the heart of the world's toughest problems are human behaviors. Our expertise in behavioral science allows us to see these problems differently. We notice the overlooked details that make the bigger picture. We invent fresh solutions because we know the power details have to nudge us in different directions. We're out to improve tens of millions of lives decision by decision.
The Citi Foundation supports the economic empowerment and financial inclusion of low- to moderate-income people in communities where Citi operates. We work collaboratively with a range of partners to design and test financial inclusion innovations with potential to achieve scale and support leadership and knowledge building activities. Through a "More than Philanthropy" approach, we put the strength of Citi's business resources and people to work to enhance our philanthropic investments and help improve communities.