I have enjoyed Dr. Lisa Gennetian's class because we take foundational economic concepts and apply them to real-world scenarios.
By Juliana Shank
Would a carbon tax be effective? Should the minimum wage increase? What is the functional difference between in-kind and cash assistance? In Public Policy 303: Microeconomic Policy Tools, we develop a rational model of human behavior to help answer these questions. Public Policy 303 is about more than pretty graphs; I have enjoyed Dr. Lisa Gennetian’s class because we take foundational economic concepts and apply them to real-world scenarios.
Yet, fancy rational economic models do not always effectively predict behavior. Humans are not purely motivated by self-interest, we make decisions without complete information, and we pay more attention to losses than gains. These are all challenges for economists to grapple with. Behavioral economics offers an exciting approach to understand these kinds of phenomena.
Emily Schmitt, Deputy Director of the Office of Planning, Research, and Evaluation Administration for Children and Families (OPRE), recently joined our class to share how she uses behavioral economics to enhance her work. Her office’s research focuses on how to improve the implementation of programs such as Head Start and Temporary Assistance for Needy Families (TANF) so that low-income families can get the support they need.
In one of the earlier projects OPRE funded, the researchers’ goal was to boost Los Angeles TANF participants’ attendance at a mandatory meeting so that they could continue to receive benefits. Researchers sent an additional reminder to some families that incorporated behavioral insights. One of their most interesting strategies was to add an implementation prompt, which was a short checklist of answers to questions about how parents would get to the meeting and what their childcare plans would be. I appreciated this simple and creative approach to help parents plan ahead of time and raise awareness for the county resources included in the checklist. These kinds of strategies proved effective–families that received an additional notice engaged in the mandatory meeting earlier than those that did not.
OPRE also funded a project to test the redesign of a postcard to encourage New York City residents in the Paycheck Plus program to attend an informational meeting. One strategy researchers used was narrowing down the choices presented to participants; instead of giving them five locations to attend the meeting, postcards were tailored to present the two locations closest to the address the postcard was being sent to. In addition, researchers took advantage of the endowed progress effect, which is the idea that people are more committed towards the achievement of a goal they feel they have already made progress towards. In this case, the postcard emphasized the steps participants had already completed. These tailored postcards, paired with reminder text messages, led to a 12% increase in meeting attendance over participants that were just sent standard postcards.
Schmitt mentioned that initially, it was hard to find programs that were willing to let her team come in and redesign their materials. However, she has demonstrated over time that small, mindful changes in program design can lead to small, but statistically significant, changes in program outcomes. In doing so, Schmitt’s office has taken the time to build trust with stakeholders that has allowed them to scale up their research. Across her office’s work, the costs of intervention were usually less than $4 per program group member. These are exciting scalable solutions that do not have a big impact on a program’s budget, and program stakeholders have warmed up to these changes.
Guest speakers like Emily Schmitt are just one part of what make Public Policy 303 a great class. I now incorporate insights from both rational economic theory and behavioral economics into my daily decision making. I appreciate that Dr. Gennetian takes the time to present these diverse perspectives and hope to one day build upon them in my own policy recommendations.
Juliana Shank is a Trinity junior studying Public Policy with minors in Biology and Chemistry. She is a committee co-chair for the American Public Health Association Student Assembly and is involved in research on direct-to-consumer drug advertising.
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