Page 46 - FCW, August 2020

Ideas
How a gentle nudge
can impact public-sector
programs
Simple changes to the way choices are presented can increase government efficiency and boost constituent satisfaction
BY STEPHANIE KANOWITZ
F or the Pennsylvania Department of Revenue, the key to increasing voluntary taxpayer compliance was a gentle nudge. Working with MITRE’s three-year-old Nudge Lab, officials sent different notices about delinquent taxes to small-business
owners — and got different results. All the businesses that had not sent in their taxes received the department’s standard notice. After a certain amount of time had passed with no payments, the department sent the standard notice a second time to some of the companies while others received a revised letter that replaced legalese with language that business owners could easily understand and included a call to
action in the first sentence.
“What MITRE really helped us to do
was evaluate ease of understanding of the language, overall appearance of the document — making it more like what you would get from a private company trying to solicit you to do something,” said Radee Skipworth, the department’s deputy secretary for compliance and collections.
The nudge reminder resulted in a 36% response rate, compared to 26% for the standard reminder. Of those who received the nudge, 22% paid their debts, compared to only 13%
who received the standard letter a second time.
As Laura Leets, principal social scientist at MITRE, explains it: “We’re changing how the choice is presented. Interventions with the nudge should work with technology and make it easy. This isn’t supposed to be adding anything. They’re supposed to be quick, easy changes \[that have\] disproportional impact.”
Applying a private-sector tool
to public-sector challenges
Nudging is a tool the private sector has used for a long time to influence behavior. Richard H. Thaler and Cass R. Sunstein’s 2008 book “Nudge: Improving Decisions About Health, Wealth, and Happiness” showed how such behavioral insights could be used in public policy.
For their nudge experiment, Pennsylvania officials revamped the processes for notifying small businesses about delinquent tax payments, said Kevin Milligan, special adviser to the deputy secretary for taxation. “We used business analysts to customize all those processes, make sure systems were getting updated and...make sure that the agents who fielded the calls \[from business owners about taxes\] knew what the
notices looked like,” he added.
The nudge notice is now integrated into the department’s system for business tax collection. It is on hold because of the pandemic but was scheduled to resume in mid-July,
Milligan added.
Officials are considering using
nudges in other areas — for example, to encourage more companies to file their taxes electronically, which helps the department provide better services, Milligan said.
“Many taxpayers, if they were requesting a refund in their personal income tax return and they met all the analytical criteria for their filing, would have received that refund seamlessly if they filed electronically,” he said. “They would have had a significant wait if they filed in paper.” Similarly, small-business taxpayers could benefit by paying electronically rather than mailing in checks on a quarterly basis.
“It’s just easier to process and faster to process, and that’s really what taxpayers want,” Skipworth said. “Taxpayers want to send us their returns, and then they want to know whether or not we’ve accepted them. So if we can do that sooner with the electronic submission process, that would be huge.”
46 August 2020 FCW.COM