Every day, governments send tens of thousands of notices, reminders and legal warnings to citizens and businesses concerning unpaid taxes and other debts. Yet much of this correspondence is having no discernable impact. Even when agencies follow up with strongly worded messages, debts remain unpaid and debtors do not reply to explain why they have not paid, nor do they respond to seek help.
Why are so many people ignoring these important messages that, logically, are in their own best interest to address? The emerging use of behavioural sciences is starting to reveal answers to this age-old question.
Standard economic theory suggests that people make logical decisions based on available information. Unfortunately, this is not always the case since people are influenced by many “unconscious” factors that do not drive rational behaviour. While people do not always make rational choices, however, their choices can be predicted by studying human behaviour. This field of study is called behavioural science.
Understanding how people are likely to react to different messages and incentives can help governments develop more effective communications for debt collection (e.g. letters, notices, SMS texts, e-mails and phone scripts). Often, very small changes to how choices are presented can have a profound impact on how people respond. Such improvements can create better outcomes for both government and citizens, at little to no additional cost. This paper reviews the kinds of insights that can be leveraged from behavioural science to improve collection results.