BETA Podcast: Interview with Filippo Cavassini

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Elaine Ung:

Hello, and welcome to another episode in BETA's podcast series. BETA is the Behavioural Economics Team of the Australian government. And the team sits in the Federal Department of the Prime Minister and Cabinet. BETA's mission is to advance the wellbeing of Australians by applying behavioural insights to public policy and administration. Hi, my name's Elaine, and I'm part of the team.

In this podcast series, we interview a whole range of behavioural economics and behavioural insights, academics, practitioners and policy makers. This episode is actually part of our mini BX series, where we interviewed some of the speakers at the 2018 Behavioural Exchange Conference, or BX 2018. There speakers travelled from all around the world to share the work they've been doing in the behavioural economics and insights field.

In this episode I interview Filippo Cavassini who is an economic adviser at the OECD: the Organisation for Economic Cooperation and Development. Filippo has had over 15 years of experience working in government and international organisations. At the OECD, Filippo co-leads the work the organisation has been developing on the application of behavioural insights to public policy. Prior to joining the OECD Filippo worked for a number of years at the World Bank advising governments in Central Asia, Europe and Latin America, and he also worked in the French National Assembly. It was great talking to Filippo and hearing what the OECD is doing in this field. Hope you enjoy!

Hello, welcome. I'm at the Behavioural Exchange Conference in Sydney today and I'm so pleased to be joined by Filippo Cavassini from the OECD. Welcome.

Filippo Cavassini:

Well, thank you very much Elaine. It's a great pleasure to be here in Australia, and particular at BX2018.

Elaine Ung:

It's great to have you. Could you please give us a big of background? Who you are and where you've come from.

Filippo Cavassini:

With pleasure. I'm now an economic Adviser at the Organisation for Economic Cooperation and Development. This is a multi-lateral organisation bringing together over 30 countries from across the world, including Australia, in collecting and sharing experiences, sharing that with member states and also providing more and more strategic advice to governments on how to improve the impact, the effectiveness, the efficiency of public policy for the benefit of everybody.

I came to the OECD from a, I would say, quite diverse career in the public service. I started working in the French Parliament, then went to work for a multi-lateral development bank, the World Bank, where I was working both on projects, in terms of implementation of this project, but also on making aid development systems more effective. So I particularly worked on a change management agenda, both in terms of delivering aid but also in terms of changing some of the processes within the World Bank. And from there I'm now working at the OECD in a directorate which is called the Public Governance Directorate in a division which deals in particular with improving laws and regulation. There what we do, we, collect experiences, lessons, but again sharing them then back with our member governments in terms of providing strategic advice on particular applications of this good practices, tools and processes to improve the impact of policies.

Elaine Ung:

As you say a very diverse background. So where along the way did you become interested in behavioural economics?

Filippo Cavassini:

It was almost a natural step. As we work on improving and helping government improve the impact of the interventions, behavioural insights and behavioural economics was almost inevitable. It's really about bringing to the centre of the intervention, the individual, the users, and thinking about the real behaviour of the users when developing policies and regulation.

We started around 2014 with a colleague of mine, Faisal Naru, who has very much been behind the work of the OECD on behavioural insights and public policies. First, with the mapping of the application of behavioural insights to regulatory policy, also by Dr Pete Lunn of the Economic and Social Research Institute in Ireland. And then in 2017, we conducted probably what is the first comprehensive world mapping of the applications of behavioural insight to public policy, collecting over 100 cases of applying behavioural insights to many different domains of public policy. I think one of the key insights was that behavioural insights is definitely taking root across the world.

And through that work we have also been working directly with some governments. For example the communication regulator in Colombia, in terms of applying behavioural insights to improve the effectiveness of a specific piece of regulation, mainly aimed at improving consumer protection in telecommunication sector.

Elaine Ung:

Wow. The report you mentioned is definitely one that we use and we've come across and it's a very comprehensive summary of everything that is happening. It's excellent to see. Could you give us an example of some work you've done either in your current role or in one of your previous roles that demonstrates the potential impact of behavioural economics?

Filippo Cavassini:

Well yes, probably I can—well, I mention the work in Colombia. I think that we provide the advice on what behavioural insights teaches in terms of the capacity of consumers to understand and absorb information provided to them when making decisions. For example on choosing a mobile phone or mobile phone subscription, et cetera. And the advice we provided, collecting the experience from many different experts across the world, the behavioural insights is then used by the regulator to test some of these solutions. And then revised the overall consumer protection regime, which came into force in September 2017. This is if you like looking backward.

Looking almost right now and forward, we are currently working with a regulator in Scotland. The Water Industry Commission of Scotland, which is right now in the middle of a process of setting tariffs for water. This is a regulated market. There is a one company, one operator which is being regulated, Scottish Water, and every six years the regulator set the tariffs for water.

Now the regulator is actually working with the body established in Scotland called the Customer Forum to actually bring users right at the centre of the regulatory process. How? By understanding what are their preferences, for example, in terms of choices for investment, for risks, so that these elements can be actually taken into consideration when setting charges for water. The process is still ongoing so we'll have probably more results in the next few months but we are quite excited about this project because we’re really bringing behavioural insights to the centre of a key decision-making process from the beginning in the design phase.

Elaine Ung:

Thank you for sharing. Could you please share with us a bit more about some other work that you're doing in the OECD?

Filippo Cavassini:

I think the other work is actually related and builds on the work we are doing specifically with some of the agency. Again, the OECD is not an implementing agency. We collect experience and we sometimes work as strategic adviser but then the idea is to distil this experience in order to provide guidance, tools for them, also other countries, to develop and apply these tools. One of the areas we are working on now is really developing a behavioural insight policy toolkit and ethical framework, which can actually help governments, policy makers, but also civil servants on the frontline who are not necessarily behavioural scientists to use behavioural sciences, behavioural insights into their daily work.

And we are actually partnering with a respected, very well respected academic and actually a very good friend of ours, Pelle Hansen from Roskilde University and also leading work in Denmark through iNudgeyou in developing this toolkit for practitioners by practitioners.

Elaine Ung:

I think that's going to be very useful, especially because, at least in government policy, it's quite new. So having something to go off and to be able to use as a guide will be very important and very useful. In the work that you've done, have you found a behavioural economics concept that you would consider your favourite??

Filippo Cavassini:

I don't know whether it's my favourite, or my personal favourite one but it's certainly, it seems to me that it's one which is quite recurrent in the work of government. And Cass Sunstein here at BX 2018 this morning was talking about big biases and among the big biases one was called the ‘present bias’. So we tend to consider to pay more attention to the present and forget the future, and probably a related one is ‘optimism bias’. So we tend to actually be too optimistic, sometimes on ourselves but also when we plan.

And I think this is quite evident very often in the business of government. Very often, well—let's think together about infrastructure project, if you look, and there has been work on this, looking at planning for infrastructure investment, for building infrastructure, these are almost regularly underestimated in terms of cost and timing. I think this is a very interesting insight. And it also shows that behavioural insights and behavioural biases not only affect individuals, but also institutional organisations, like governments. And how to overcome this sort of institutional organisational biases, I think this is probably the next challenge for the behavioural insight community.

Elaine Ung:

So from all your work and your understandings of behavioural economics and behavioural biases, how do you then apply that in your everyday life? Do you BE yourself?

Filippo Cavassini:

Well, I try, sometimes. I think I try and we tried also together at the regulatory policy division. At the team Faisal Naru was leading and now I'm acting in his—representing in his capacity, what we try, was to distil this very big report we released in 2017, Behavioural Insights and Public Policies: Lessons Around the World, which was over 150 pages long, in four very easy to handle, very easy to see postcards, which are now available on the website of the OECD. It's sufficient to search for OECD behavioural insights and the four postcards are almost a resume of—a summary of this very thick report. Again thinking in terms of nudging, salience, making things salient, making things easy to read and reach out. These are probably some of the lessons we have tried to learn from also the work of behavioural insights.

Elaine Ung:

So from all the work that you've done, could you share some reflections that you've seen through the evolution of behavioural economics and behavioural insights in broader public policy?

Filippo Cavassini:

Well I think probably one of the key insight is that behavioural insights probably started as—and today there's been a lot of discussion, and of course Cass Sunstein who, with Richard Thaler, have been behind this book which was published in 2008, Nudge—has been very often applied to nudge individuals. And nudging individuals very often in the implementation phase of policies, so we'll know about changing or tweaking a letter so that you get greater tax compliance or compliance with your filling or better filling of tax forms. That has been I think a key phase in the application of behavioural insights, still very relevant.

In the next step is probably apply also behavioural insights, not only to implementation, but also to policy design. The example of Scotland I gave you, how behavioural insights are being applied in the design of the regulation, of regulatory policy intervention, tariffs from the beginning. And I think the potential can be huge. In terms of reducing then the need to fix implementation through nudging. So nudging already in the policy design phase. And also thinking about behavioural insights, very much in conjunction with other tools government have, which is regulation, which is sometimes even banning certain procedures. I think part of behavioural insights can be part of the policy toolkits that civil servants can have and can use.

Elaine Ung:

So where do you think this field is headed? What's next for behavioural insights?

Filippo Cavassini:

Well probably what's next is really about mainstreaming behavioural insights into the daily work of government and to decision making, from the beginning, from the design phase. When you are thinking—when civil servants are thinking about the problem, what is really the problem there? And some problems might be behavioural, some problems might not, but thinking about the possible behavioural aspects can be extremely useful, and again, improve decision making process overall. And our thinking on this through this behavioural insight policy toolkit and ethical framework is exactly in that direction: embedding, mainstreaming behavioural insights into the daily business of government is probably the next big challenge. And I think today at BX 2018 we were actually quite encouraged also to think in those terms because I think some of this intervention, including from Australian governments, here, seem to go into that direction.

Elaine Ung:

That's right. We don't want BI and BE to be considered novel or new as a phase, but really it's ongoing and it can be applied across the board in all types of policy, so I think that's exactly right.

Filippo Cavassini:

Absolutely. I would say maybe two things on this. Mainstreaming and demystifying behavioural insights. Probably when BI will be mainstream and demystified, I think that will be really the victory of behavioural insights. It will become almost normal to think about these concept when developing policies.

Elaine Ung:

Yes and you've talked about some of your ongoing work. What is next for you?

Filippo Cavassini:

Well, what is next for us and for the entire team working on this, which is not just behavioural insights but really also working with, for example, regulators in terms of developing better regulatory policy, is this behavioural insight toolkit and ethical framework we are developing with Dr Pelle Hansen, and applying it to regulators and regulatory approaches. The work in Scotland and there we are again partnering with Dr Pete Lunn from the Economic and Social Research Institute in Ireland. So the OECD is definitely partnering with your knowledge, which is out there, and I think this is also lessons for government, not all the knowledge need to be inside government. I think one of the key insights from behavioural insights is to build partnership with research institution.

Elaine Ung:

Thank you for sharing. And I think that toolkit will actually be a really important contribution to how this progresses for policy makers. So thank you and thank you so much for your time today. I hope you enjoy the rest of your time at Behavioural Exchange!

Filippo Cavassini:

Well, thank you very much, Elaine. Thank you for having me here and thank you very much for having me here, at BX2018, that was great!

Elaine Ung:

Thank you.

Hi again. Thanks for listening. If you want to learn more about the work Filippo's been doing, head online to the OECD's website where you can read some of the reports they've written, including the Behavioural Insights and Public Policy: Lessons from Around the World document. If you haven't heard our previous episodes listen to them at www.pmc.gov.au/beta. Until next time!