Professor of Economics, Dartmouth College
Scientific Director, U.S. Household Finance Initiative
June 11, 2014 HelloWallet Webinar

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Employee wellness matters
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Economics of employee decisions around wellness is complex
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Countless daily decisions that cumulate
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Infrequent but very high-stakes decisions
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Psychology of employee decisions around wellness is complex: http://www.dartmouth.edu/~jzinman/Papers/Behavioral_Design_101
.pptx
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Outside markets for wellness solutions suspect
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Employer wellness benefit design matters

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There is low-hanging fruit!
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Apply insights from behavioral economics (BE) to do better job of connecting employees with existing offerings
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Use communications, on-ramps, and menus
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Few additional resources needed
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Prescription is method, not a recipe
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Develop using BE insights and institutional knowledge
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Test using gold-standard AB/RCT methods
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Measure and learn
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Tweak or re-design, and test again

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Show how this method works, using real and hypothetical examples
• Today’s talk based on experiences working on over a dozen marketing, messaging, and onboarding projects
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Companies of various sizes (mostly financial institutions)
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U.S. and abroad
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Handful of completed projects
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Many more underway
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More details
• http://www.dartmouth.edu/~jzinman/
• http://www.poverty-action.org/ushouseholdfinance

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Focus on financial wellness
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Happy to field questions about health, etc. later
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Focus on immediate source of stress/distractions
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Lack of rainy-day savings
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Debt load and repayment problems
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Lack of plan, or engagement with one
• (401k’s part of the problem here rather than a solution?)
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Why these focii?...

Many/most of your employees may be financially fragile :
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Lots of borrowing (overborrowing?)
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Mortgage crisis
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Bubbling student loan crisis?
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More credit card debt than any economic model can explain
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Share of consumers with subprime credit: 56.4% 1
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More payday loans -> worse job performance (Carrell and Zinman)
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Many without savings (undersaving?)
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Households with insufficient liquid assets to subsist for three months at the poverty line in absence of income: 43.9% 2
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Households reporting no saving in the previous year: 48% 3
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Many pay premia for financial services (overpaying?) 4
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Assets (e.g., mutual funds)
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Loans
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Advice

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Pain point for employees – low financial resiliency
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Pain point for employers – no direct offering. But do offer…
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Crisis hotline
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Financial planner
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Online financial education
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Payroll/prepaid card with savings bucket
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Approach: messaging, marketing, and/or process changes around these offerings

Test 1. Which works better at encouraging regular savings deposits?
1.
“If you make… deposits, you will receive [small yield incentive]”
2.
“If you miss a deposit, you will lose [small yield incentive]”
3.
“If you make… deposits, you will receive [small yield incentive] that you can use to reach your saving goal of [client’s goal]”
4.
“If you miss a deposit, you will lose [small yield incentive] that you could use to reach your saving goal of [client’s goal]”
Results:
1 and 2 push
3 and 4 push
3 and 4 >> 1 and 2

Test 2. Which works better at controlling discretionary spending among a sample of active HelloWallet users?
1.
Email every Friday re: the budget for that weekend
2.
Same as #1, but every other week
3.
Same as #1, but don’t start until 4 weeks after enrollment
Results:
3 > 2 > 1

Many design elements , thousands of possible permutations:
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Content
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Amount of content
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Timing
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Frequency
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Duration
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Customization
What matters, and works best, depends critically on context
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And context itself is a many-splendored beast!
Project underway to do work like this with dozens of companies worldwide. You can join us!
• email jzinman@dartmouth.edu
now!

• Present installment loan borrowers with the proposition: “You’re making monthly payments now… here’s an easy way to continue making those payments, to yourself, once the loan is paid off”
– Framing: borrowing as habit formation for saving
– Process change: give someone a one-page auto-transfer authorization at an opportune time
• Doing this with 10 credit unions
• You could do this by messaging to employees with:
– Payroll card with savings bucket
– Own bank account (could offer when someone is filling out direct deposit authorization for payroll)
• Join in our research! jzinman@dartmouth.edu

Pain point: student debt burden
Potential solution: messaging and on-ramps that connect employees with alternative repayment plans that reduce monthly payments
Pain point: repeat use of expensive debt products
Potential solutions:
• messaging that informs and nudges before someone reaches point-of-sale
• on-ramps that connect with lower-cost, longer-term loans
(employer credit union, employer-intermediated loan, etc.)
• messaging and on-ramps to PFM solutions (HelloWallet, meeting with an adviser, etc.)

v0.0: matching v1.0: auto- (opt-out) enrollment v2.0: auto-escalation
These solve enrollment and contribution rate problems
They do not solve employee wellness problems
To solve for wellness need greater focus on:
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Immediate needs, and liquidity to deal with them
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Holistic needs (whole person, or at least more of her balance sheet)
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Wealth accumulation

Add messaging that focuses on the whole, and the immediate
• Don’t borrow your way to 401k contributions
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Do use 401k as a safety net if the alternatives even pricier
Change menus, or add nudges, for wealth accumulation
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Eliminate or marginalize high-fee funds
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Provide auto-diversification options
Change process to nudge active, informed decisions about 401k
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Enrollment (new employee on-boarding)
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Open-enrollment

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There is low-hanging fruit!
•
Apply insights from behavioral economics (BE) to improve employee (financial) wellness
•
Using communications, on-ramps, and menus
•
Few additional resources needed
•
Prescription is method, not a recipe
•
Develop using BE insights and institutional knowledge
•
Test using gold-standard AB/RCT methods
•
Measure and learn
•
Tweak or re-design, and test again

Questions? Interested in working together? jzinman@dartmouth.edu