How to Save $32 Million in One Hour

How to Save $32 Million in One Hour (Ep. 397) - Freakonomics Freakonomics

"[On nudging] HALPERN: So, one of the key points is, most things don’t work. And that’s actually quite a difficult truth for people to come to terms with. There’s probably half a dozen which are sort of billion-dollar-impact plus. And then you’ve got quite a lot of things which are quite small impacts, and lots that don’t work...

Top ones would be things like pensions. It’s a famous one. Getting people to pay their tax on time, now very widely used and replicated across the world. Less well-known, interventions on e-cigarettes, we think, is definitely a billion dollar-plus in terms of its impact... adding that one line — “9 out of 10 people pay that tax on time” — would that lead to people then just paying up without further prompt? With no further action? And the answer is yes, it did, and indeed we tried multiple variations. Back then, that was unbelievably controversial... it was felt — lots of reasons why — “What, you want to start experimenting on people?” And “the system wasn’t built to do it.” There were even questions about how would you analyze it?...

HALPERN: There is some evidence that giving people some say in — “What would you want to pay your tax on” — “I’ll say no to the nuclear warheads but I’ll say okay to the, you know” — “If there was a marginal extra pound or dollar, what would you prioritize?” — that actually people do feel better about it. And one of the quite deep questions even buried in there is that people do feel quite good when they give money to charities, right? In fact, as you’ll know from the behavioral literature, better than they think that they’ll feel. Why not when they pay their taxes? Why wouldn’t you feel good that you’re supporting schools and hospitals and so on? So one of the objectives of a tax authority, in my view, should not only be to collect the revenue, but actually help people feel okay about it. Why not?...

Images of homes showing — infrared images showing how much heat they’re losing. Putting them on a request to get your home insulated turns out to make people significantly less likely to get their home insulated. There was good lab work suggesting it was a good idea, but it looks like people were like, “Oh, that looks warm. That’s cozy. I’ll keep it.” Getting people who go to major airports to switch to public transport — really big effort — did absolutely diddly-squat.

Grit — a grit-based intervention, we’ve done a number of interventions with 16-, 17-year-olds. Some worked incredibly, but we found that grit-based intervention, at least in the U.K.— it did increase attendance rates, but it didn’t increase the pass rates. One was getting managers to be more sympathetic towards, basically, senior female staff. We spent a long time with a lot of academics designing this perfect intervention. It had the exact reverse effect. Getting male managers to be attentive in this particular way — they actually were less, ultimately, sympathetic...

MURRAY: If you are subject to a burglary, sadly, you’re at increased risk of being subject to a burglary again. And in the very near future. But not only that. Your neighbors are, and your neighbors’ neighbors, up to 400 yards either side of the house... in the treatment area, if you were one of those houses that was at a high risk of burglary, or near repeat burglary, i.e., you were a neighbor, within 24 hours we sent an officer around who had a big sticker of an Alsatian and they stuck it on the door...

There was less repeat victimization in the test area compared to the control area. In, actually the lower-crime areas, we did see statistically significant reductions in repeat offending, repeat victimization...

This is my favorite experiment of all times. So if you go into a police cell in the U.K. — I don’t know, you probably both experienced it — where you sit and you look a blank wall for anything up to 24 hours, there might be a stencil on the wall that says, “If you want to get off drugs, phone this number.” But pretty much nothing happens. So we thought — well, captive audience. And we put a load of graffiti on loads of cell walls, and this was growth-mindset graffiti. Positive messaging purporting to be from an offender who’d previously been in there and graffitied on the walls...

“People think that what they do makes them who they are. It doesn’t. We all do stuff because we got angry, because we felt good, or we didn’t think. I was pretty good at blaming others. But when I was here, I realized that this time it’s on me. What I do is my choice and I chose something else. When I left, I did things differently and it took effort. I won’t lie. But it paid off. Think, what’s the one thing you can do to make sure you don’t end up back here? Remember, and when a door opens, do it. It’s never too late.”... it had no effect whatsoever... It might be that growth mindset in a cell wall just doesn’t work...

PATEL: Changing generic prescribing rates. And we were able to move the needle significantly, from 75 percent to 98 percent, almost overnight... a rogue IT person was implementing something else around prescribing. And actually noticed this and said, “I’m just going to put a checkbox here, and if they don’t check that box, the prescription is going to go to the pharmacy as generic.” And the next week or so, the health system got a phone call from our largest insurer and said, “You just went from last place to first place in generic prescribing. Instead of penalizing you, we’re going to give you a bonus.” And the first thing everyone said is, “This is not possible. We’ve been last for years.” And then we realized what had happened: one hour of work resulted in $32 million of savings in the course of two years...

HALPERN: If we take that simple trust question, “Do you think other people can be trusted?” It’s a better predictor of national economic growth rates than levels of human capital."