Crowdsourcing as a tool for creating effective nudges: An example for financial oversubscription

Creating effective nudges, or interventions that encourage people to make choices that increase their welfare, is difficult to execute well. Recent work on megastudies, massive field experiments that test many interventions simultaneously, reveals that nudge effectiveness both varies widely and is difficult for experts to predict. We propose an Iterative Crowdsourcing Procedure, which uses insights from members of the target population to generate and preselect nudges prior to testing them in a field experiment. This technique can supplement existing methods or stand alone as a way to generate conditions for testing in a high- quality field experiment. We test the effectiveness of this method in addressing a challenge to effective financial management: consumer oversubscription. We first document that people have more subscriptions than they think they have and that enhancing subscription awareness makes people want to cancel some subscriptions. We then use our crowdsourcing procedure to motivate people toward subscription awareness in a field experiment (N = 4,412,113) with a large bank. We find that the crowdsourced nudges outperform those generated by the bank, demonstrating that the Iterative Crowdsourcing Procedure is a useful way to generate effective nudges.