California Senate President pro tempore Kevin de León recently announced the state’s Digital Nudge Initiative, a collaboration with UCLA Anderson professor Shlomo Benartzi.
The initiative follows the lead of the United Kingdom, which has used behavioral insights to nudge people to pay their taxes. It is intended to employ behavioral insights and new technology to help improve government efficiency, shape policy and solve societal problems through digital technology.
Benartzi was a guest speaker last week in the Golden State’s capitol, discussing with Senate staff how changes to the choices and information available on digital displays can lead to solutions for problems impacting communities and potentially transform how we think about and develop new policy initiatives. De León met Benartzi, co-chair of the Behavioral Decision-Making Group at UCLA’s Anderson School of Management, in 2012 while working on SB 1234, the California Secure Choice Retirement Saving Trust Act. Benartzi’s lecture at the capitol is the first event in a guest speaker series de León is hosting during the legislative interim.
In unveiling his participation, Benartzi said, “I believe digital nudging has the potential to make a huge difference on a number of critical societal issues, ranging from retirement savings to voter turnout and water conservation. California is perfectly positioned to lead the way, and I’m honored to have the opportunity to collaborate with [President] pro tem de León and the California Senate.”
Benartzi has been working with de León on the state’s auto-IRA initiative mandating that all employers of a certain size offer a payroll deducted retirement plan. Though the recently announced Digital Nudge Initiative does not focus on retirement, it is likely to be the first subject of the initiative and could be a model for other states. Just like auto-enrollment, which can do more harm than good if poorly implemented, it’s critical that state-mandated retirement plans are properly designed. The partnership between de León and Benartzi could help set the right example.
Benartzi and University of Chicago professor Richard Thaler pioneered the concept of save more tomorrow which was the inspiration for many of the auto plan provisions in the 2006 Pension Protection Act.
