? All interventions
This paper documents a widely overlooked dimension of relationship lending: the personal interaction between the borrower and the lender reduces the willingness of the borrower to engage in moral hazard and default on the loan officer. We conduct a randomized experiment with small business borrowers of the largest commercial bank in India to test the impact of three different levels of interactions between the borrower and the bank. Borrowers who are regularly called either by a single assigned relationship manager or by one manager randomly selected from a small team of managers show much better repayment behavior and greater satisfaction with the bank services than borrowers who either receive no follow up or only receive follow up calls from the bank when they are delinquent. The results are economically and statistically significant: borrowers who receive the more intensive treatment see a large reduction in the number of late payment spells and delinquencies.
| D Ortega, C Scartascini|
There is an ample literature on the determinants of tax compliance. Several field experiments have evaluated the effect and comparative relevance of sending deterrence and moral suasion messages to taxpayers. The effect of different delivery mechanisms, however, has not been evaluated so far. This study conducts a field experiment in Colombia that varies the way the National Tax Agency contacts taxpayers on payments due for income, value added, and wealth taxes. More than 20,000 taxpayers were randomly assigned to a control or one of three delivery mechanisms (letter, email, and personal visit by a tax inspector). Results indicate large and highly significant effects, as well as sizable differences across delivery methods. A personal visit by a tax inspector is more effective than a physical letter or an email, conditional on delivery, but email tends to reach its target more often. Improving the quality of taxpayer contact information can significantly improve the collection of delinquencies.
The collection of delinquent fines is a vast and ongoing public administration challenge. In the United Kingdom, unpaid fines amount to more than 500 million pounds. Managing noncompliant accounts and dispatching bailiffs to collect fines in person is costly. This paper reports the results of a large randomized controlled trial, led by the UK Cabinet Office's Behavioural Insights Team, which was designed to test the effectiveness of mobile phone text messaging as an alternative method of inducing people to pay their outstanding fines. An adaptive trial design was used, first to test the effectiveness of text messaging against no treatment and then to test the relative effectiveness of alternative messages. Text messages, which are relatively inexpensive, are found to significantly increase average payment of delinquent fines. We found text messages to be especially effective when they address the recipient by name.
hrough a nationwide randomized controlled trial, we tested whether employers who were cited for health and safety violations would be more responsive if OSHA changed the way it issues and follows up on citations. Employer responsiveness is a critical component of fulfilling OSHA’s mission; when employers do not respond to citations, the agency cannot verify that workplace hazards have been corrected, and local offices must refer unresolved citations to the national office for enforcement and debt collection, a costly and burdensome process.As part of the new process, OSHA staff: (1) gave employers a new handout as part of the preview of the citation process when they conducted their inspections, (2) used a new cover letter for citations, and (3) provided timely reminders, including a postcard and follow-up phone call, to employers about their response options and the corresponding deadlines. With the new process, OSHA staff also had access to Spanish-language versions of all materials, which had never been provided consistently on a national scale. The new process was based on insights from experienced field staff combined with findings from behavioral research, and aimed to address possible behavioral factors that may prevent employers from responding to citations.About half of the nation’s local OSHA offices began implementing the new citation process in June 2015, while the other half continued their normal process, which involves only sending a comprehensive, written citation package. (The test included 27 states in 8 of OSHA’s 10 regions, and excluded two regions in which nearly all of the states operate their own job safety and health plans.) We then used OSHA records collected at the end of November 2015 to determine whether employers had positively engaged with OSHA in response to a citation.
A randomized evaluation found that on average, borrowers who were sent redesigned monthly statements and strategically timed reminders received 23% fewer penalties for having insufficient funds in their loan repayment
| Karlan, Morten, Zinman|
Behavioral Science & Policy, Volume 2, Issue 2, 2016
A randomized evaluation found that most of the messages failed to achieve any significant result on loan repayment. The only message that increased repayment rates was a positive framing and the inclusion of the account officer's name.