Understanding how debt problems change our behaviour is the key to better support

There are more citizens with unpayable debts than ever. And yet professionals in debt services often do not know how they can best, and most rapidly, get these families back on track.
The impact of financial problems is great: lengthier use of benefit payments, a higher sickness absence rate at work, worse relationships with family and friends, increasing psychological and physical complaints and a greater chance of recidivism in the event of criminality. Through paying off debts, not only is the wellbeing of the debtor promoted, but society too is spared the future costs.
Knowledge and insight into the working of the brain make it possible to develop better, more effective approaches.
My new report with Peter Wesdorp, based on research in the Netherlands, provides five ways to incorporate latest scientific insights on brain development and scarcity into practice. The findings are helping to transform debt support in the Netherlands for the better and could easily be applied in the UK.

1. Invest in prevention and early detection
Given the enormous social costs that debts cause, it is crucial to invest in debt prevention and early detection. After all, it is becoming clearer that the process of indebtedness is just like a fyke net. The deeper that people get into it, the greater the impact on their behaviour and the smaller the chance – because of their behaviour changes – that they can still get out of it independently.

2. Open up access to debt services
Scarcity and under-developed executive functions form an obstacle to people getting out of financial problems independently. Viewed in this light, the failure to bring paperwork to an appointment must not be seen as a sign of limited motivation. It is indeed quite possible that people do want to get out of the problems but their ability to act is not sufficient to comply with the strict admission requirements for debt services. An effective approach to financial problems begins with opening up support to everyone who needs it.

3. Develop a different way of coaching
Those who seek help for financial problems need to have their situation stabilised in order to create calm. In that period of calm, it becomes clear whether the dynamics of scarcity are in play, or that people are lacking in executive functions – the ability to reason, solve problems and so on. In the case of scarcity, people can – with supervision – fairly quickly start giving shape to their lives themselves again. If poverty and uncertainty have led to the executive functions being under-developed, then professionals must look at the best course of action for that individual.

4. Organise service provision differently
Professionals who work in debt services can be more effective by incorporating a focus on paralysed or limited executive functions into their work. This lowers the thresholds for access to service provision. For example, reducing the number and the complexity of decisions by giving good default choices as regards savings and insurance policies. Secondly, planning challenging tasks such as learning and complicated discussions in the morning, when people have greater cognitive capacity at their disposal. Thirdly, offering essential information in a simple manner, through several channels, frequently repeated with friendly illustrations. A fourth possibility is dividing up long-term objectives into short-term objectives and clearly elaborating the advantages and disadvantages of achieving them so that the consequences for multiple areas of life become clear. Lastly, it’s important to provide an environment that is warm and inviting and where there are few distractions. For example, by arranging children’s crèches at places where people have to make decisions.

5. Develop a broader perspective
Scarcity and limited executive functions contribute to people not properly seeing how problems and issues are connected. As a consequence, they do not develop any strategies for tackling the problems coherently. By mapping out multiple areas of life, it’s possible to help people contextualise their decisions, place them on a timeline and develop a hierarchy of importance. They are challenged to discover the connections between the different areas of their lives (for example, preventing eviction is a way of caring for my children properly).


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