Leveraging Behavioral Economics to Drive Action
Only by understanding why clients make the decisions they do can the financial inclusion community encourage healthier financial behaviors and design products and services that support healthier choices.
As featured in the MetLife Foundation Annual Report 2016
These grants are leveraging the power of behavioral economics to drive change.
UNITED STATES
Common Cents Lab at Duke University
Social scientists call the gap between what people know they should do and what they actually do the “intention-action” gap. Bridging that gap is important for financial health because financially self-defeating behaviors can have serious consequences. Common Cents Lab is a three-year initiative aimed at using behavioral economic insights to test innovations that can help low-income Americans make better financial decisions. The Lab, based out of Durham, North Carolina and San Francisco, California, studies solutions that can bridge the intention-action gap by understanding the complex drivers of financial behavior.
UNITED STATES
Commonwealth (formerly D2D Fund)
Savings is the foundation of financial security and opportunity, but for many working families it can be hard to set money aside. Indeed, nearly half of Americans do not have enough savings to manage a USD 400 emergency. To inspire working Americans to save more, Commonwealth has introduced the first national “prize-linked savings” offering via a partnership with leading providers of prepaid cards, a preferred financial tool for millions of people. Commonwealth is seeing early success. In one project, a prepaid card partner’s offer of cash prizes for saving resulted in a 130 percent spike in usage, with users saving an average of 35 percent more in the first quarter of use.
MEXICO and CHILE
ideas42
With support from MetLife Foundation, ideas42 is partnering with financial institutions to analyze the behavioral factors that might increase uptake of a broad range of products and services intended to improve financial health generally, including retirement planning, across the region. Insufficient retirement savings is a global problem. In Latin America, ideas42 discovered that people can’t visualize what their lives will look like after they stop working, that they are rarely prompted to think about their retirement, and that they prioritize short-term over long-term goals. In response, ideas42 designed a range of tactics, from automatic bank account deductions to individualized goal-setting exercises and public awareness campaigns.
Learn more about leveraging behavioral economics to drive action via the MetLife Foundation Annual Report 2016
