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Behavior Economics Venn Diagram

Have you ever received a bill, shoved it in a drawer, and hoped it would magically disappear? Behavioral economics studies these very real human tendencies and their impact on financial decisions. This field has surprising applications in the child support world, as I learned at a recent session at the 2024 ERICSA Conference.

The session, Behavior Economics 101, led by Mayra Ganela and Kim Bridges, focused on the emotionally charged side of financial decisions. We learned that people are in fact human and that they are influenced by psychology, social norms, and the way that information is presented to them. The presenters used 2 examples that stuck with me in particular:

  1. In the child support world, if we serve someone to come to a court proceeding and they throw the papers away, emotionally it might make that person feel better since they are “sticking it to the man,” but that does not relieve them of the consequences that may happen if they don’t appear for that court proceeding.
  2. The framing of things matters. If we are on a diet and the product says 75% fat-free, we may be all over that product to get it. If the product had been labeled as 25% fat (which is 75% fat-free), would we want that product?  It’s the same thing, but the framing (labeling) matters.

The session also explored common “Behavioral Bottlenecks” that hinder optimal choices. Feeling overwhelmed by endless options can lead to decision paralysis. The fear of missing out, or “scarcity psychology” can trigger stockpiling behavior, like the surge in toilet paper buying during the pandemic.

Beyond these, the session further discussed other biases that influence us, including:

Sticking to the status quo: We often resist change, even if a better option exists.

Putting things off (present bias): Procrastinating on unpleasant tasks like paying bills can lead to bigger problems later.

Social norms: Unspoken rules, like elevator etiquette, can influence our behavior.

Seeking approval (social confirmation): Our desire for validation can lead us to seek “likes” or positive reinforcement, even from negativity.

Mayra and Kim concluded by stating in most instances there are two types of people when it comes to decision-making: the ultra-logical Spock from Star Trek, and the ultra-impulsive Homer Simpson. Behavioral Economics helps us understand these biases and make more informed decisions. By recognizing these human factors, the child support system can develop more effective communication strategies and promote responsible decision-making. Ultimately, I think this benefits the well-being of children in the child support system. What do you think?

Gary Gamble is a senior implementation consultant for Courtland, to read more from our consultants, click here.

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