Too much choice can be as detrimental as too little, if not presented in a way that can provide decision-makers with full information in as direct a manner as possible.
I recently attended a conference for companies engaged in trying to build better financial products for traditionally underserved households. Again and again, the presenters focused on the necessity of good design. Some went so far as to say the product was secondary to design itself – without the right user experience; the customer was unlikely to become a customer regardless of the quality of the service.
What I enjoyed about the conference was how it brought together groups of people who would otherwise spend their days working in entirely different silos. UX (“user-experience”) designers were mingling with non-profit types who, in turn, by sharing ideas with bankers and regulators.
Underlying the conversation were some recent reports that underscored how many Americans continue to live on the margins of financial disaster. In the previous week, the Federal Reserve had provided an update of its periodic review of consumer finances. Their analysis found that forty percent of Americans lacked enough in liquid savings to pay for a $400 emergency. It was a portrait of a country living with too much month at the end of the paycheck.
The designers were the thought leaders of the week.
I’d paraphrase their vision in this way: “the quality of the design determines the outcome of the product.” We are all designers, and we are all being designed. Whatever is in the box won’t get opened unless you have the right box in the first place.
The attention on using good design was especially vital given what we know about the decision-making of lower-income consumers.
While research generally finds that upper-income consumers are unfazed when they must evaluate the pros and cons of making a significant expenditure, the same is not right for people living under financial strain. When liquidity constraints do not exist, decisions become simpler. It’s not a question of “will the value of what I can’t pay for this month be worth the benefit of this cost,” but only “ is this a net win for my future cash flows?” Upper-income people can pay for next week’s daycare and also for new tires. However, for lower-income people, it’s one or the other. If they can’t find a place to put their children while they work, then they can’t work. However, if they can’t find a way to get to work, they also can’t work. Complicated!
More impoverished individuals, faced with a $500 expense, actually demonstrated a decline in the total cognitive power to make decisions not just about the repair but also in other parts of their lives. If that seems like it lacks credibility, consider how hard the decision would be for you if several options would prevent you from working for a week.
Financial stress equals cognitive disability. The researchers put it this way: “Put simply, evoking financial concerns has a cognitive impact comparable with losing a full night of sleep.” To test that hypothesis, the researchers posed a set of questions to the lower-income consumers. Their cognitive abilities deteriorated after they were faced with the car repair decision. It is as if their poverty puts a limit on their decision-making bandwidth.
We should be trying to make it easier for lower-income people to make the right decisions. Unfortunately, good UX is not always common.
Have you tried to fill out an application for food stamps? California’s SNAP (food stamps) application was 13 pages back in 2006. Today, it runs on for 18 pages.
The following items are needed to get CalFresh benefits:
· Government-issued ID
· Lease or current utility bill
· Social Security number (for citizens) or documents demonstrating law immigration status (for non-citizens)
· Bank statements for all people in the household
· All records of earned income from the last 30 days, or if self-employed, income and expense records
More proof must be provided to receive full benefits:
· Housing costs (rent receipts, property taxes, insurance)
· Phone/utility bills
· Medical expenses for seniors or disabled applicants
· Child and adult care costs
· Child support receipts
The FAFSA (Free Application for Free Student Aid) is similarly tricky.