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Chilean mortgage loan market is characterized by debtors' limited understanding of financial information an low level of loans' renegotiation. As a result, there is a high risk that consumers are missing benefits from economic opportunities. That's why Chilean financial institutions must, by law, send to their customers every three months, a Mortgage Statement designed by the regulator.
This policy paper is an executive summary of a study that shows qualitative and quantitative evidence about the impact of Mortgage Statements on consumers' refinancing decisions. This research also delivers an option for its redesign, based on an exhaustive review of literature on financial consumer decisions, best international practices about the design of financial information booklets and, a qualitative evaluation of the current mortgage statement.

Through a random experiment, the investigation tested the impact of the prototype and the current mortgage statement on consumers' decisions to scan loan alternatives in the Chilean mortgage market. The results suggested an increase of 23.3 percentage points (between 18.3-28.4% considering the marginal error) in the probability of quoting new loan offers in comparison to those exposed to the current statement.

Considering the amount mortgage market in Chile, the redesigned mortgage statement may increase the likelihood of quoting loans for approximately 200,000-300,000 people every three months –assuming the external validity of the experiment-. Based on these findings, the study proposes a regulatory reform to redesign the mortgage statement in force.
This policy paper summarises the main findings of a more extended Report. The report is only available in Spanish, and it can be requested to the Behavioural Economics Unit of SERNAC.

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BETA partnered with AFSA on two projects to determine how to best communicate about the consequences of bankruptcy.

In the first project, over 6,500 Australians completed one of six educational tools online that explain the consequences of bankruptcy and then assessed their levels of understanding. A pop-quiz and video were most effective, improving people’s understanding by 27 percentage points above the group that saw no educational tool.

In the second project, we introduced five additional prompts into the online bankruptcy application form. For the most part, including the prompts did not influence applicants’ reporting. We also found the best time to inform people about the consequences of bankruptcy is likely to be before they attempt the application form.

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Chilean regulation establishes the format and content that financial providers must communicate to cardholders about their transactions throughout a monthly billing statement. Although this information is relevant for making decisions, comparative evidence indicates that people have difficulty understanding and making informed decisions.

This study shows qualitative and experimental evidence about the impact of Credit Cards Statements on consumers' repaying decisions. The study considers the current credit card statement and provides redesign options based on a review of the literature in the areas of economics and behavioral science. Four alternative prototypes to the current account statement were designed, considering (i) the simplification and restructuring of the account statement information, (ii) the incorporation of warnings about the consequences of making different payment amounts that generate interests, (iii) and greater relevance to the total amount invoiced over the minimum payment.

The results indicate that the prototypes increase the general understanding of the credit card billing statement: 35% of people consider that the current statement is generally understood, while with the new designs this value increases, on average, to 53%. Furthermore, the four treatments improve the clarity of each section of the statement. In addition, the redesigned billing statements increase the number of people who are willing to quote another card to 40% (vs. 29% of the current statement). Regarding the consequences of payments, 50% of the people answered correctly that by paying the total amount invoiced they avoid paying additional or revolving interest (vs. 26% in the case of the current statement), while 55% manages to identify the minimum payment as the lowest possible payment to avoid default interest and possible collection costs (vs. 49% in the case of the current statement). Finally, regarding the willingness to pay, the statement that contains messages about the consequences of paying less than the total and the minimum, accompanied by warning symbols, and giving greater visual prevalence to the total amount invoiced in relation to the minimum payment, managed to increase by 12 percentage points the probability of the willingness to pay the total invoiced with respect to the current statement.

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This study examined how people respond to a new income plan for retirement, known as a Comprehensive Income Product for Retirement (CIPR). A CIPR is a composite retirement income product which is intended to provide a balance of income, risk management (for example, longevity risk management) and flexibility to retirees. In response to a Financial System Inquiry1 recommendation, the Government has agreed to facilitate superannuation trustees pre-selecting a CIPR for their members at retirement. This study is a first step in building an evidence base to inform decisions about how best to present CIPRs to superannuation members in order to maximize comprehension, assist informed decision-making and alleviate cognitive load. Using insights from behavioural economics, we designed and tested a series of alternative presentations of information using a survey experiment based on a hypothetical CIPR.

Over 3,600 pre-retirement members across five industry and retail superannuation funds participated in the study. Members were asked to review information which compared a CIPR and an Account-Based Pension (ABP) (which is how most retirees currently manage their superannuation in retirement). Members were randomly assigned to view information about the two plans in one of eight conditions – minimal text descriptions (control); graphs showing estimates of income and assets over time; number tables showing numerical estimates of income and assets; text tables with text-based comparisons of income and assets; text tables with star ratings assigned to the plans and text-based comparisons of income and assets; and alternative versions of the text and number tables in which comparisons of income under each plan were highlighted in bold.

PRE-REGISTRATION INFORMATION
Australia has an ageing population. With more and more people moving into retirement, a growing number of Australians are facing the decision of what to do with their superannuation savings.

A recent inquiry into Australia’s financial system (the Murray Inquiry) recommended the development of a new retirement income product to better meet the needs of different retirees. This new product is known as a Comprehensive Income Product for Retirement (CIPR).

Whether Australians choose to take up the new product will be an important decision in planning for their retirements.

In this study, BETA partnered with the Treasury and five superannuation funds to find out superannuation fund members’ views on the new product.

STUDY
The study involved an experimental survey with over 3,700 members aged 45 and over. Members were recruited from five superannuation funds; BT, UniSuper, Mine Wealth+Wellbeing, AustralianSuper and QSuper.

Using insights from behavioural economics, we designed and tested alternative ways of presenting information about a hypothetical new retirement income product. The aim was to make it easy for people to understand the new product, and to help them make an informed decision.

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In Germany there are significant gaps in measles vaccination which lead to repeated outbreaks of the disease. Vaccinations do more than just protect the recipient against infection. They also protect people who cannot be vaccinated, for example infants or people with certain chronic illnesses. However, many adults do not know that they are not completely vaccinated against measles. In order to close this information and vaccination gap, wirksam regieren compared various possible ways to provide patients with information amongst which postal letters from health insurance company and direct discussion with GPs. Brief, direct, target-group-specific information in the form of a letter from the health insurance company proved to be the most effective way to get the information across. It led to 2.5 times as many vaccinations being carried out. (Source: Federal Chancellery)

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