Department efforts reduce tax delinquency by over $600,000 and maximize participation in senior discount program
PHILADELPHIA- The Department of Revenue’s effective use of behavioral economics has garnered widespread recognition.
A recent report by the Organisation for Economic Co-Operation and Development (OECD) highlighted the department’s efforts to increase the number of eligible senior citizens enrolling in a program that could save them 25% on their monthly water bills. Behavioral economics uses psychological insights into how people make economic decisions; anticipating how people really behave rather than assuming that the most rational choice will be made.
By using a variety of different envelopes, postcards and other mailers, the department was able to determine the most effective way to maximize enrollment in the Senior Water Discount Program, which aids senior citizens living on fixed incomes. Philadelphia was one of a small number of cities featured in the OECD report, which primarily focused on countries.
“Many of our most vulnerable individuals and families were missing out on discounts they are eligible for,” said Revenue Commissioner Frank Breslin. “By using behavioral economics we have been able to effectively breakdown barriers that were keeping low-income senior citizens from enrolling in programs that put their hard earned money back in their pockets.” First Deputy Revenue Commissioner Marisa Waxman highlighted these efforts as a guest on a recent episode of the City Accelerator Podcast.
The Department of Revenue is also using of behavioral economics to improve on revenue collections and reduce the number of tax delinquencies. A forthcoming report by researchers at the University of Pennsylvania will document how the City used behavioral economics interventions to improve collections from a pool of 19,000 tardy taxpayers documents, resulting in an additional $615,752 in collections. Waxman touched on the report at Ignite Philly 19., an event series highlighting great ideas in Philadelphia and beyond.
“I applaud the Department of Revenue’s use of innovation to make our city government more effective and efficient,” said Mayor Jim Kenney. “Enrollment in incentive programs and improving upon revenue collections ensure our residents are maximizing their earnings and the city is able to provide them with vital resources. I look forward to seeing results as the use of behavioral economics expands.”