Reflecting back, 2013 was an exciting year for ideas42, CFED and the Citi Foundation. Through the BETA (Behavioral Economics Technical Assistance) Project, we worked with Accion Texas, the Cleveland Housing Network, and Neighborhood Trust Financial Partners to design and test new solutions for their programs using insights from behavioral economics.

We defined the problems to be tackled with our partners and diagnosed why clients may be missing payments or underutilizing credit union accounts. We created new solutions such as raffles, reminders, and planning tools. We then tested the designed solutions to assess their effectiveness—and found that small changes within a program can have a real impact on outcomes for small business loan borrowers, lease purchase program residents and financial education clients.

On December 17, the BETA Project team published the results of these experiments. We also hosted a webinar, Small Changes, Real Impact: Applying Behavioral Economics in Asset Building Programs. During the webinar, we shared insights we gained through the project.

First, our findings affirmed several principles from behavioral economics. For example, our designed solutions seemed to have a greater impact on certain clients, many of whom were considered the most vulnerable. This parallels the recent book on Scarcity by Sendhil Mullainathan and Eldar Shafir. They suggest that living in conditions of poverty imposes a heavy cognitive burden – and that interventions that relieve that burden (like reminders) may be especially powerful.

Second, our partners uncovered many lessons about how practitioners can approach program design from a behavioral perspective. More often than not, asset-building organizations come to us with ideas about what they need to do to improve their programs. However, starting with a new solution without taking the time to better understand the nature of the problem at hand can cause issues down the road (e.g., wasted money on an ineffective solution). To prevent this, we recommend putting the problem before the solution. By taking time to refine the problem and generate theories about what’s going on, you can test whether or not your theories are valid.

Find out more about what we learned with the BETA Project partner sites, plus additional tips for incorporating behavioral economics principles into your own work. Links to our webinar, related brief and full report are available here.