Nudging New Mexico

In the United States, over $4 billion of unemployment benefits were paid out to people who didn’t qualify for them.  What caused this?  The New Mexico Department of Workforce Solutions (DWS) identified 3 primary sources of misinformation in the application process:  1) reason for unemployment 2) reporting weekly earnings and 3) work search requirements. 

The traditional approach to tackling this type of fraud has been increasing resources to prosecute low-level offenders, which can be quite costly and deny services to those most in need.    Instead, the DWS applied the nudge theory to change people’s behaviour in a simpler and more cost-effective manner. 

Nudge theory suggests that ‘positive reinforcement and indirect suggestion can be more powerful than direct instruction, legislation, and enforcement.’ They made subtle changes to the application process like showing the claimant a pre-completed letter to the employer verifying the reason for termination, suggesting that that majority of people reported new income, or asking the claimant to commit to a specific job search plan for the next week. These nudges led to dramatic results with claimants now twice as likely to report new earnings, half as likely to commit fraud, and up to 20% more likely to find work within the next few months. 

What nudges can you employ to change the behaviour of your customers?