OPINION26 September 2011

Starting to pay off


Crawford Hollingworth reviews some of the recent work of the UK government’s Behavioural Insights Team – which includes figuring out ways to get people to pay more tax.

The power of early behavioural commitment
We are all familiar with filling in official forms – and that feeling of uncertainty you get when you are asked to sign the truth declaration at the end. You might ask yourself: have I declared everything to the best of my knowledge? Is there anything I’ve forgotten to divulge? BIT plans to experiment to see whether one simple change can make a difference to honesty on tax returns and benefit claims.

A field experiment in the US found that asking people to sign a declaration of truth at the beginning of their car insurance application led them to declare 10% higher mileage. This may be because people feel more committed to telling the truth when answering subsequent questions. It’s possibly also down to laziness and a reluctance to admit that we may have been dishonest in the first place.

Peter John, the Hallsworth professor of governance at Manchester University and author of Nudge Nudge Think Think, who advises BIT, said: “It’s about working out which buttons to press. People generally like to conform. People also seem to associate signing a form at the top with signing a legal declaration, which is more serious than signing it after you have filled everything out.”

Running with the herd
Despite what some might say, most of us don’t like to stand out from the crowd and we have seen a few examples recently of how the government is capitalising on this fear. Letters sent chasing late census returns told households they were “one of the last” in their area to fill in the form – hinting at both their failure to be good citizens and highlighting the fact that they were in the minority.

Meanwhile, a trial run this year by BIT and Her Majesty’s Revenue & Customs (HMRC) to encourage tax debtors to pay up used a social norm statement to hit the message home. Their assessment of the results looks promising:

“The trial was on a large scale, comprising around 140,000 debts worth £290m. The results were that letters which informed people that the majority of people in their area had already paid their tax, and which reminded people about the importance of paying tax for their local services, outperformed the control group letters by around 15 percentage points.

Letters sent chasing late census returns told households they were “one of the last” in their area to fill in the form – hinting at both their failure to be good citizens and highlighting the fact that they were in the minority

“That is a significant result, which we will be looking to apply in other areas of debt, fraud and error. We estimate that if the most successful letters were sent to all self-assessment customers, and the tax collector resource freed up were used to bring in other uncollected Exchequer debts, it would generate £30m of extra revenue to the Exchequer annually – as well as advancing over £160m of cashflow by approximately six weeks each year.

“HMRC’s wider self-assessment debt campaign increased cash-to-bank by more than £350m in the first six weeks of the campaign, nearly treble the amount collected during the same period last year.”

The government is also playing with the idea of using the incentive of a lottery entry and the chance of a cash prize for those who pay their tax by the due date – a lovely example of reframing a loss as a potential gain. This is similar to the www.funtheory.com initiative for a speed camera lottery in which those driving within the speed limit have the chance to win a prize.

Change the default setting
In the last few years we have seen substantial evidence for the effectiveness of opt-out compared to opt-in organ donation programmes. The UK has responded with a new scheme that keeps an opt-in requirement but forces people to make a choice. Since July the Driver Vehicle Licencing Agency (DVLA) has been asking people whether they would like to register for organ donation before they can complete their driving licence application. This is a required choice to which they must provide an answer before they can move on to the next stage of their application.

More than 10,000 people in the UK currently need an organ transplant. Of these, 1,000 will die each year waiting as there are not enough organs available. Nine out of 10 people in the UK have expressed their support for organ donation but only 29% of people in the UK have actually registered as organ donors.

BIT estimate that adopting a required-choice format for donor registration with the DVLA will add another million registrants per year, equivalent over time to more than doubling the percentage of people who voluntarily join the register – from 29% to around 70%.

The required-choice scheme has already been successfully trialled in several US states. In Illinois the percentage of donors who have registered has increased from 38% to 60% since 2008. Although a required-choice format results in a slightly lower registered rate than presumed consent or opt-outschemes, BIT believe that required choice is more ethically sound and represents a less overtly paternalistic way of raising organ donation registrations.

As Peter John said, it’s all about knowing which buttons to press.

Crawford Hollingworth is a founder of The Behavioural Architects