Doing demand management better, with behavioural insights

There may still be local authority chief execs and directors in local government who think they can steer a course through the financial challenges to come (the handy headline figure is a forecast £14.4bn shortfall in services by 2020) by reducing staff numbers and service levels, raising efficiency and changing eligibility criteria, but I don’t know them and I’m pretty sure they don’t exist. And, encouragingly, neither do the authors of Managing Demand: Building Future Public Services, Anna Randle and Henry Kippin. As they point out, these measures realise immediate savings but don’t shape services for the long-term.

This report is essential reading if you’re interested in the future of local public services. To me, it marks out the territory that should be occupied by anyone working on developing local public policy and practice. It should be, of necessity, the new black.

DMCover

Anna and Henry cover a lot of territory – perhaps too much. There are dozens of aspects worth writing about, but I’m focused here on the topic closest to my heart, as its my job: using behavioural insights.

Managing Demand and the emerging practice it reveals, is particularly interesting to me because of the coincidence of this stark challenge to public finances and the rapid growth of evidence from behavioural sciences. As I’ve explained to many people, I’d be promoting the use of behavioural insights to policy makers and practitioners right now, even if public finances were in rude health. The fact that they are not, though, provides even more of an opportunity for us to design services that reflect what people are really like: demand management done well means reframing public services and places – and we can knit into this redesign our rapidly improving understanding of just how context-dependent human behaviour is, and of how much less control we have over our actions than we like to think. If local government budgets were ticking along nicely, and the demographics were in our favour, the rationale for change simply wouldn’t exist.

If anything, Managing Demand understates the extent to which public services’ approaches are behaviourally naïve. Here are some examples I’ve come across recently:

  • Experienced Housing officers will often explain to cititzens likely to become homeless what the limitations are to what the Council can do for them, in effect anchoring the conversation at the level of service that used to be possible when supply and demand were less unevenly matched. When resources are scarce, we want them more, for good evolutionary reasons, so officers may be inadvertently encouraging demand that is costly to manage and damaging for residents’ wellbeing.
  • Waste and recycling communications are often framed around the needs of the service, describing the benefits in terms that give the citizen no emotional reward, and using terms (like ‘food waste’) that are at best ambiguous to most people.
  • Letters to a tenant in the process of reducing their arrears often don’t provide feedback in a way that acknowledges their success; they may receive an identically-worded letter to that sent to tenants with increasing arrears. So we miss the chance to embed the key behaviour: paying off the arrears.
  • Councils involved in projects to give away home efficiency measures often have limited success. One reason is endowment effect: our inclination to see something free as valueless. But it is also because they tend to introduce cognitive barriers into the conversation immediately, referring to ‘retrofitting’, not the emotional reward to the resident: a cosy, draught-free home.

There are plenty of demand management approaches to issues like these which don’t utilise the insights from behavioural economics and psychology that are needed to reframe what’s on offer in a way that works with the grain of human nature. So what are the emerging approaches that do explore these, and which look like becoming part of the toolkit of the behaviour-smart local authority?

One is behavioural auditing. This is a way of examining the way a service works to identify where demand is created, track this back to the need that the demand expresses, and use this as a starting point. For many services, apparently identical need will lead to differing levels of demand from different residents; analysing the behaviours of those who create little or no demand helps re-design in a behaviourally-smart way, as it give us insight into which behaviours to encourage.

Another important aspect (not new, of course) is ethnographic research and observation. When we focus in on the behaviours that create service demand, understanding what it is that people do and how they do it is much more important to re-design than the reasons people give to explain them – and the rationale that officers apply. There is plenty of evidence that we adjust our views to accord with what we do, much as we would like to believe the opposite to be true!

A third is co-production. Guided by a behavioural practitioner, officers, managers, service users, citizens, community representatives, etc (I’ve worked with teachers and nurses, for example) are able to understand and work with real insights from behavioural sciences and generate many of the approaches that they go on to put into practice.

A word of caution, though. We are realising how difficult a behaviourally-smart approach can be to put into practice – for good reason.

Why shouldn’t we be surprised at this? Individually and collectively, our default model for influencing people is to try to change their mind and persuade them. It’s based on the rational actor model. My experience on a wide range of demand management projects with local government and public health is that policy-makers and managers can accept the overwhelming evidence that behaviour is context-dependent and so target behaviours need to be made easier and appear more normal … but implementing this, when it challenges the mental models we have worked with since we were toddlers, is not straightforward.

My view? Let’s keep the focus on demand management; let’s make our approaches as behaviourally-smart as possible; and let’s build the capacity in local government and communities to use behavioural insights.

By me, on @RSAMatthew and whether stagnation means we can challenge #growth narrative

One of the things that has surprised me about advocates of ecological footprinting (on which basis we have been ‘eating into capital rather than living off the interest’ of the biosphere since the 1980s) and of capitals metrics (where we measure wealth by adding up social, environmental, human, physical and financial capital, and then watch the trends) is that they have not in the past used the narrative that we have been in recession for a long time.

The evidence has been there to make the case for donkey’s years.

So, while I agree that there is an opportunity here, because the economic situation is so high profile and affecting most people personally, the big question is ‘where is the leadership going to come from to make these ideas mainstream?’. There’s even a populist case to be made that we’ve been tricked by always hearing about mean, rather than median, income: the top X% have been getting wealthier at the expense of the rest of us. You don’t even need to reference capitals models or wellbeing metrics to make this case. But even this sort of argument seems beyond those in the political mainstream.

Remember when you were given an injection at school? You were told to look away and then, before you had time to panic, the nurse was telling you it was all over. Maybe the best way to get people to accept something daunting is to tell them it’s happened already.

June 28, 2011 by Matthew Taylor

This thought occurred to me following a conversation yesterday and reading an article today. The conversation was with Jonathan Porritt, the Founder Director of Forum for the Future and perhaps our most influential and distinguished environmentalist (by the way I am very impressed by the ambition and rigor of Forum’s new strategy, based as it is on fundamental system reform).

As our conversation ranged far and wide,we agreed that in these times of economic difficulty and public spending austerity, the suggestion we should question traditional ideas of economic growth seems to most people at best irrelevant and at worst barmy.  We didn’t pursue the issue much further but the implication was that it is only when growth feels reasonably secure that we can begin again to ask ‘but what kind of growth?’

Then, this morning, I read a powerful article in the Financial Times headlined ‘spectre of stagnating incomes stalks globe’. Here is a quote from the piece:

‘Median male real US earnings have not risen since 1975. Average real Japanese household income after taxation fell in the decade to mid-2000. And those in German have been falling for 10 years’.

We know from research commissioned by the TUC and the excellent work of the Resolution Foundation that the same is broadly true for the UK. The future looks no better (indeed it looks much worse in the short term for many countries including the UK). The impact is not just on those in the ‘squeezed middle’ but, arguably, on the whole liberal market model.

A second FT article on the same topic concluded thus:

‘Dick Longworth of the Chicago Council on Global Affairs is more categorical ‘this is a consumer society and they’re the consumers…if they don’t buy, we don’t survive’

It is important to understand that what we are seeing is not the result of a downward blip but the collapse of the device – excessive household and national borrowing – which disguised the reality for the decade up to 2007. This is a profound crisis of global capitalism in the developed world.

But if you put the FT piece together with the Porritt conversation a surprising possibility emerges. Instead of talking about abandoning traditional growth as some kind of outlandish and unrealistic green vision, how about recognising that for most earners in the West no growth (in their living standards) has been the reality for over a generation.

In other words, the question is not how do we create a different model of growth but how do we adapt to the long drawn out end of the traditional model of growth? Or, to put it another way, how can the quality of our lives and our society improve even if for the majority of citizens disposable incomes (including the social wage of public investment) are not?

Read more at www.matthewtaylorsblog.com