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Behavioral Interventions for a Stronger Government Budget : The Slovak Republic Experience

The importance of behavioral science to public policy is by now widely acknowledged. In the last decade, hundreds of behavioral insights units have been established in governments with the mandate to form a better understanding of human decision-making, ultimately to better achieve intended policy outcomes through influencing behavior. Applications are abundant, including nudging taxpayers with targeted personal letters to enhance tax compliance (hence the name ‘nudge units’ in some countries), designing behaviorally informed communication campaigns (for example to improve patients’ awareness of the appropriate use of antibiotics), supporting greener economies (for example by inducing rationalized energy consumption); and even in the defense sector (for example to encourage healthy eating of military personnel).


In the same vein, in 2022, the Slovak Republic established a dedicated team in the Ministry of Finance (Department of Behavioral and Experimental Analyses; ‘DBEA’) to design and implement innovative behavioral interventions with broad relevance to the public budget. DBEA is also, conducting ex ante public policy assessment. DBEA’s mandate reflects the increased weight given to behavioral insights and policy evaluation in the overall public policy in the Slovak Republic.


Initial cost-effective interventions by DBEA already proved fruitful. One of the first randomized controlled experiment was nudging the self-employed with personalized letters, reminding them about their obligation to pay social insurance premiums. The intervention resulted in a higher rate of correct payments and is estimated to raise revenue by €2.6 million annually. Another early success of DBEA was the collaboration with the Financial Administration in addressing taxpayers’ compliance with the capital gains tax on real estates. Also, this intervention had a significant impact on tax collection. Targeted letters informing taxpayers about the capital gains tax raised annual collection by €700,000 through increasing the probability of filing, while deterrence letters raised annual revenue by additional €900,000 through raising the declared amounts.


Like any new team, however, DBEA creates opportunities and faces challenges too, requiring strategic guidance, collaboration with various stakeholders, and learning from diverse experiences of other countries. Recognizing this potential, DBEA is taking actions to maximize the benefits from its functions, including through teaming up with international behavioral experts, with plans to extend this network. For example, in collaboration with the IMF’s Fiscal Affairs Department (FAD), in June 2023, DBEA organized a workshop bringing together academics, policymakers and representatives of behavioral insights teams from other countries to solicit feedback on ongoing projects, foster exchange of ideas, and learn from others in this field what works and what doesn’t. Presentations and discussions during the workshop included topics such as experimental studies in public finance, increasing tax compliance in Latin America, execution challenges to behavioral interventions starting from the idea to implementation at scale, and organizational aspects of behavioral insights teams ranging from a centralized team such as in Estonia to the network model as in Netherlands.


DBEA is currently collaborating with FAD—with the support of EC DG-REFORM—in strategizing and prioritizing its work program; scoping out metrics for informing cost-effective interventions that maximize the policy impact with least resources; developing a strategy for communication and public relations; and safeguarding the integrity of their analytical results. The underlying crucial benefits from departments such as DBEA are building the capacity of policy evaluation (including models, methods, qualified personnel and databases) and fostering a culture of evidence-guided policy. Expectations should be managed, however, due to the limits and challenges facing the application of behavioral insights to public policy, for example in scaling up experiments and harnessing long-term effects from interventions. Behaviorally guided interventions can be conducive to societal welfare in so far that they complement profoundly good policies, but they are not a substitute for structural deficiencies in policymaking and administration.


Overall, DBEA has achieved very good tangible results in less than two years. Current efforts to unlock DBEA’s potential are highly welcome, including through promising interventions and collaboration avenues already lined up for its future work plan.