Want results? Change from opt-in to opt-out.

Since December 2012, the Norwegian Tax Administration has actively sought to increase the number of online users (e-users). We have learned that small nudges and incentives are fine, but if you want real change in peoples behaviour, change the default option.

We have used incentives such as earlier access to tax returns and enabling people to see their tax settlement earlier than anyone else. We have used communication such as announcements in daily evening news programmes, social media and banner advertising in order to create awareness and trigger action. We have also actively used our own interfaces, putting information on skatteetaten.no, and when people have ordered their tax card, they have been offered the chance to become an e-user. We are quite convinced that people have realised that it is an advantage to become an e-user. Yet. In April this year over three million Norwegians still swore to paper. Old habits die hard?

Digital natives

Let’s start there. If it is an old habit, there must be a generation divide, surely? The number of e-users should be high among the youngest members of the population and low among the oldest. We took Marc Prensky’s ‘digital natives’ theory and looked at whether that could provide us with an explanatory model.

Basically, digital natives are:

  • Born or brought up in the digital age
  • Familiar with computers and the internet from an early age
  • Main divide between Generation X and Y – between 1980 and 1981.

Forty, fat and digitally finished?

Digital immigrants, who were born before the digital age, can always learn the language of the natives, yet – to some extent – they still wish to always have one foot in the past. Now it must be said that Prensky first and foremost says that the way in which digital immigrants teach the natives is wrong and is quick to claim that computer games, for example, should be used more in training. Nevertheless, we think it is interesting to see whether there is an age divide. Our working hypothesis: In relative terms, there should be more e-users among digital natives.

 When we started to look at the age distribution, we divided the generations up as follows:

  • Generation Y are Digital natives
  • People born before Generation X (before 1964) are digital immigrants
  • Generation X (born from 1964-79) is called the ‘threshold generation’

What did we find?

Image 1

Alder=Age, Andel e-brukere=Share e-users

What is this? People are not forty, fat and finished at all? Surprising? Not at all. Let’s expand the graph by including more variables. Let’s see who submits their tax return on paper, who makes use of the exemption from the obligation to submit an income statement and who submits their information digitally:

bilde2

Alder=Age, lev.fritak=prefilled tax return, andel e-brukere=share e-users, papir=paper

The picture now becomes clearer. First, you have to get yourself a salary, kids and debt. You can then get your tax affairs in order online. In other words, if you don’t make any changes to your tax return, there is also no reason to receive it online only. It is just as easy to get a paper tax return in the post, check whether you get any change for your tax and not submit it.

OK. So, we cannot expect e-users to come running to us of their own volition. There are no digital natives that we can take for granted in the digitalisation process. How then can we succeed?

Digital first choice – absolutely necessary

The government has now decided that digital communication with the public sector is the general rule. In practice, this means that people are assumed to be electronic users unless they opt out. The legislative change is a good and has proved entirely necessary initiative to ensure an efficient and digital public sector.

The government has now amended the Public Administration Act so that both the government and local authorities can use the contact database of the Agency for Public Management and eGovernment (Difi). From now on digital first choice will be introduced as a general principle. Why is this both smart and necessary? Because it is the only measure that is powerful enough to actually work. Let’s look more closely at digital first choice and two other alternatives for recruiting e-users:

1. Digital first choice
People must actively choose to become paper users, and not the other way round as was the case in Norway. This means that the Tax Administration goes from having 1 million e-users to over three million. An opt-out solution has been comprehensively reviewed by Sunstein and Thaler (Nudge).  They describe this well by looking at how many people are organ donors in the USA (28 percent) and in Belgium (98 percent). The difference? In the USA, you have to actively become a donor. In Belgium, you must actively choose not to become a donor.

People will choose the easiest path unless there is sufficient incentive for them to change their behaviour. This is a strong instrument and has been proved to work. Only 43 000 people out of 3 million have opted out.

2. Stronger incentives
The alternative to digital first choice would have been to use stronger incentives. We will have to look for such incentives if we are to get the one million people who have never logged in to Altinn to become online users. Giving people access to their tax return 14 days earlier had some effect, but was no headline grabber. However, we reduced the number of tax returns submitted on paper by over 30% when we said that those who submitted their tax return on paper would not receive their tax settlement until August.

There is therefore every reason to believe that stronger incentives could make a big difference. Such incentives could include:

  • Earlier tax settlements for e-users
  • Later tax settlements for everyone who is not an e-user
  • E-users can receive their tax settlement immediately after they have submitted their tax return
  • Only e-users can access their tax return via Altinn. The rest only receive it on paper.

3. Remind everyone who uses our digital services that they can register as an e-user
One of our most successful initiatives in the winter of 2012/2013 was to encourage everyone who changed their tax card online to become an e-user by clicking on a link in Altinn. This gave us at most a couple of thousand new users every day. Here are the lessons that were learned: Offer people the chance to become an e-user when they are in ‘online mode’. Once they have logged in to Altinn, they are in the right mood and we must offer them a simple registration process.

Both incentives and reminders increase the number of e-users, but nothing have had more  impact than digital first choice. The government’s amendment of the Public Administration Act is the right step along the road towards a digital 24-hour public sector. Only 41 000 people have opted out since the digital first choice was introduced.