The Global Innovation Fund (GIF) and the Behavioural Insights Team (BIT) are excited to announce a major new partnership to scale-up behavioural approaches to public policy in the developing world. GIF has provided a £3 million grant to support this innovative and empirical approach to development challenges in four lower middle income countries. BIT will collaborate with government partners, over the course of the next six years, to conduct hands-on training in applying behavioural insights to public policy, and measure the impact of interventions with rigorous evaluation methods.
To achieve the UN Sustainable Development Goals, governments must design cost-effective policies that address a range of social needs. A critical aspect of this challenge is human behaviour. For example, agricultural productivity depends on farmers applying fertiliser at the right time; reducing the prevalence of tuberculosis requires patients adhering to their treatment regime; and increasing the supply of safe water relies on the participation of local communities in sanitation management. At the same time, developing countries must significantly increase tax revenues to fund investments in public goods and services because foreign aid alone cannot meet projected demands. This requires more citizens and firms to register to pay tax, and to comply with their country’s tax system.
Traditionally governments have relied on information, financial incentives and legislation to promote productive and pro-social behaviour. However, the growing field of behavioural science has revealed that these levers can fall short because human behaviour is strongly influenced by small and subtle cues in the choice environment, such as the order in which information is presented, whether incentives are framed as losses or gains, and what we see other people doing. Actively incorporating these cues (‘nudges’) into the design and implementation of public policy to encourage behaviour in predictable ways, can increase the effectiveness and efficiency of government expenditure.
For GIF, testing behavioural solutions to policy challenges in developing countries presents an exciting opportunity. Behavioural solutions can easily be incorporated into existing processes which makes them cheap and reduces the administrative burden in resource-poor settings. They also have the potential to motivate civil servants by empowering them to take on big challenges with small tweaks that are within their remit. And when combined with rigorous impact evaluation – such as randomised controlled trials – they can improve the quality of government by allowing officials to see what works (and for whom) before scaling-up. This encourages a continual process of policy innovation to improve outcomes.
BIT started life in 2010 inside No. 10 Downing Street as the world’s first government institution dedicated to the application of behavioural sciences. In 2014, BIT became a social purpose company and expanded its operations to support more than 20 governments outside the UK to improve the effectiveness and efficiency of public policies. Using behaviourally informed interventions to promote tax compliance in seven countries, BIT has had more experience than any other organisation in the world at demonstrating dramatic increases in tax revenue at zero marginal cost. For example, when partnering with the World Bank in Guatemala, BIT modified reminder letters to income tax debtors and tripled tax revenue from late payers within 11 weeks – a 40:1 return on investment. The modified letter also had an impact the following year. The rate of payment was 16% higher among firms and individuals who received the behavioural reminder, without any further intervention. This provides evidence of the letters causing habitual payment for some taxpayers.
Alongside specific projects, BIT has also partnered with administrations in Australia and Singapore to establish local behavioural insights units. In parallel, many other developed countries have set up units based on BIT’s model, including the US White House. However, there have been few initiatives of this kind in developing countries – arguably settings where the approach could achieve the greatest social impact.
With each of the partner countries, the initial focus of this programme of work will be on increasing tax compliance, building revenue for essential public services at the same time as building capability in the use of behavioural and experimental approaches within the administration. BIT will then expand into other policy areas – according to each government’s priorities – to improve the lives of those living on less than $5 a day. We anticipate that as our partners build skills and confidence in the approach, they will be able to apply it to more complex poverty and sustainability problems.
Together, BIT and GIF will use this long-term partnership to build an evidence base to better understand how behaviourally-informed policies can improve the lives and opportunities of people in the developing world.