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[UPDATED 2/20] Reframing the question: maximize "endorphin-per-dollar" as a core "job to be done" of financial firms

Not more money: more happiness per dollar. People are happy to pay for AI-powered financial advice that makes their life good.

Photo of Gianni Giacomelli
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Who is your idea designed for and how does it support the dreams and obligations of those 50 and older?

While the idea could work for anyone who uses financial resources, people above 50 will benefit more from it as their financial resources will become constrained at some point. The ability to help them direct their spend to what makes their life better will reduce "financial waste" i.e. Money that is spent on things that don't make their life happier.

The inspiration for this idea is simple. Financial institution's core "job to be done" should be reframed away from "fee per transaction" (which made sense in a low-data, transaction-is-hard world) to "fee per life outcome". Financial firms have or can get access to data (both existing and new) that shows inferences between lifestyle choices, saving/expenditure, and happiness of households. Maximize "life is good" (LIG). Mining that information can power an artificial intelligence powered "virtual assistant" that provides tips to reduce the financial expenditure while preserving quality of life. Financial institutions can monetize that service, and make it increase the "stickiness" of their service. 

Consider the following story.

Two 50+ year old people have 100K $ per year disposable household income each. Each of them has the same financial commitments - kid's school, mortgage, healthcare. One is much happier than the other - not because who she is, but how she spends her money. An analysis of her saving and spending patterns (obtained from credit card transactions etc), as well as other key indicators such as social relatedness (social media friend behavior, sentiment), may reveal that she makes financial decisions that cut "financial waste". The more data the virtual assistant - call it "Happy Penny" - will gather (from bigger communities of subscribers, or from new data sets eg through continuous polling of individuals asking specific questions e.g. "Life is Good" (LIG) levels, satisfaction with specific family outcomes, "the best purchase I have made in a long time..." etc), the more the tips will be accurate and actionable. Apart from the tips, Happy Penny's power also comes from the value of "nudging" people into action, reminding them of things that will make them happy. Artificial intelligence (likely machine learning that tests outcomes of "natural experiments") can be used for both identification of the right tips as well as pacing of the "nudges". 

THE CLIENT JOURNEY

Imagine this conversation between Frank, a retired, married empty nester, with Penny, his bank's "happiness coach" bot. Frank whispers to Amazon echo dot:

"Alexa, get me Penny"

"Hey Frank, good news - this month you seem to have spent 15% money for the things that make you happy. Do you want to know more?"

"Yes Penny go ahead"

"This month your money-well-spent score was at 73%, up from 65% last month"
"You have spent more money on restaurants - you seem to have invited people there, and you like restaurants and friends" "you also seem to have gone with some friends to the local cinema a couple of time" "and you have donated to the local pet shelter" "these are all things that show you're spending on things that matter to you"

"you've also saved a little bit of money on energy consumption compared to last year, which gives you a little to put aside" "Would you want me to suggest ways to use your resources that may make you feel good?"

"Yes please Penny, tell me"

"Frank, have you considered inviting a few more friends home for dinner or brunch a couple of times in the coming month? You can even have someone help you with the preparation, as you and your spouse may be busy. Alexa can help you with searching for one" "or you could go to the upcoming jazz festival in town, since you like jazz". "Actually, you don't seem to have spent much on music recently, and you may like some live concerts?" "Also, have you considered going to get some massage? You haven't in a while".

"Frank, do you want to know what I have also learnt this month from people similar to you, whose money-well-spent index is higher than yours?"

"Of course"

"People who have a similar wealth and commitments and have similar interests to yours, tend to be very happy when they spend one-third more money on their family and friends activities. They also seem to spend more money on short vacations that build memories, especially shared memories with others. Their investment profile is also slightly different than yours - they have a little more in fixed income at this point in time"

"And to wrap this up, I have listed these three things that made people like you really happy last month - some of them may be new. Here you go. One is the florist. The second one was the skating rink in Bryant Park. The third was the subscription to streaming music on the internet"

How did this conversation happen?

1. Frank had compiled a comprehensive "what makes me happy" questionnaire (whose results stay between Frank and his bank, and are never sold to anyone)
2. He had started using the Happy Penny app, helping it cataloging the expenditures with 15 minutes of time a month (i.e. Disambiguating the classification of expenditures that Happy Penny's AI wasn't able to firmly classify e.g. Dinners that could have been business related etc). To make Penny even smarter, Frank flags expenditures that made him (and/or spouse) really happy. All of this must be done through a gamified UI
3. Happy Penny's algorithm compares his spending patterns to people similar to him who are happier, and continuously suggests changes to the expenditures. We can complement that corpus of knowledge with research from behavioral psychologists, and offer those tips as part of Penny's input
4. Over time, and as the client trusts the bot more, we could consider introducing additional behavioral questions (e.g. How many good friends did you meet this month? And family members you like?)

WHAT IS THE ROLE OF LOCAL COMMUNITY BANKS

Local communities can likely act as a force multiplier - it is likely that in-person connections quality are comparatively powerful contributor to satisfaction. Imagine the role of the Community banks and credit unions as a driver (and possibly a contributor of funds) for action for community level organizations, such as church, sport, schools, and other groups (art, culture, environment, etc). They can inform action, and encourage individuals to get involved in the very activities that may generate the maximum happiness return on money. 

It is possible that the virtual assistant will benefit from the partnership with other organizations e.g. Healthcare that own significant data (e.g. Depression outcomes and their drivers). 

HOW TO BUILD HAPPY PENNY

See the attached pdf for more detail.

In summary: we need to create an algorithm that infers what specific financial outlays (the gym subscription, the florist, a dinner with good friends, an outing with the grandchildren, watching the favorite baseball game, paying for piano lessons for them, taking some courses, donating and volunteering to a community service, or spending on some acupuncture for that rheumatic ache...) makes people feel that "life is good". Each person feels differently about the value of that money, and the suggestions should be based on (a) what typically has made them happy (but they aren't doing all that much) and (b) what makes "people like them" feel great (there are likely a bunch of good ideas that can be crowdsourced by the assistant). The objective is to build a virtual assistant, a coach, that nudges people in action. 

What's important to recognize is that there is sometime a difference between what people STATE that makes them happy, and what really DOES. In the algorithm, we should treat differently the items that fall in one of the two categories but not in both (see page 2 and 4). 

What early, lightweight experiment might you try out in your own community to find out if the idea will meet your expectations?

Review of literature around life outcome satisfaction and expenditures. Review of ethnographic studies of communities with strong self reported happiness levels, and understanding what expenditures they make. Do a small sample, low tech survey of people in similar financial conditions and identify drivers of differential life satisfaction level - and test the acceptance of "people like you seem to benefit from XYz"

What skills, input or guidance from the OpenIDEO community would be most helpful in building out or refining your idea?

Thorough understanding of elderly well-being drivers and their interplay with financial choices. Machine learning experts. Gamification experts.

Tell us about your work experience:

I am the chief innovation officer of a digitally enabled professional services firm that spun out of GE.

This idea emerged from

  • An Individual

How would you describe this idea while in an elevator with someone?

What is a community bank to someone aged 50+? What is should and could be, is a provider of ideas on how to spend and make those dollars feel your life is good. By understanding personal profiles based on spending patterns, and correlating them with life satisfaction levels across large samples, a community bank can have a powerful tool to advise clients, and increase loyalty. This is Happy Penny.

How might your idea be transferable to a large number of people?

Happy Penny benefits from large data sets. Its operating model is exponential - more data, better prediction, more engagement, more data. At low scale is the most critical aspect - even in the initial phase, when algo doesn't have much data, the recommendations should feel great, so that users engage frequently and share with their friends, relatives etc. That can be achieved by using conventional questionnaire analysis, supplemented by basic social media analysis, and psychologists advice.

How do you plan to measure the impact of your idea?

At scale, the metrics are pretty obvious (engagement, retention, movement of the Life is Good scores). At smaller scale, some of the metrics for start up apps could be applied. We should also consider the impact on brand image for the bank, as the halo effect can be significant.

What are your immediate next steps after the challenge?

A MVP could be built pretty easily.

27 comments

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Photo of Dave Krimm
Team

The psychographic segment to which this app might appeal would seem to me to be quite small: are there really that many individuals who are uncertain regarding which marginal expenditure would make them happiest? And it's not clear how a financial institution might "monetize" utilization of this app: it's not an investment product, or a cash management product. So the ROI on an investment in this app would appear to be quite uncertain.

Spam
Photo of Kate Rushton
Team

Hi Gianni!

I hope you had a nice vacation.

Is there a way to create a very low tech version to test the theory out in practice without the use of algorithms and a virtual assistant i.e. what light weight experiments could be done?

I wonder if the New York OpenIDEO Chapter might be able to help in the prototyping/feedback stage or offer suggestions - https://beta.openideo.com/chapters/29
Anne-Laure Fayard 

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Photo of Kate Rushton
Team

I am struggling to find really much data on the link between your spending habits and your happiness levels, with the exception of spending on others boosts your happiness more than spending on yourself.

There is this supplemental data - http://journals.sagepub.com/doi/suppl/10.1177/0956797616635200/suppl_file/DS_10.1177_0956797616635200.pdf from this research paper - Money Buys Happiness When Spending
Fits Our Personality - http://foxfellowship.yale.edu/sites/default/files/files/Money%20Buys%20Happiness%20When%20Spending%20Fits%20Our%20Personality%20(1).pdf ? Unfortunately, it is not the raw data.

https://scholar.harvard.edu/files/danielgilbert/files/if-money-doesnt-make-you-happy.nov-12-20101.pdf

It might be worth considering:

Emerging research demonstrates that in the United States, money does buy happiness, but it’s only up to $75,000 per year. Any earnings beyond $75,000 results in diminishing, insignificant returns in relationship to happiness.
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2944762/

Spam
Photo of Kate Rushton
Team

It would be great to get the perspective of Wingee Sin Jaskeerat Bedi Dave Krimm AngelaW Ryan Mader Bob Eng Lateef Joost 

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Photo of Geoffrey Lew
Team

Good job Kate - I think that study on "Money buys happiness when spending fits our personality" very closely matches what Gianni is suggesting. Although from my read of the study, there is some correlation but I am unclear of how much of a boost it gives you.

Here is a link to a version of the study with the supplemental data included at the end that I've uploaded:
https://drive.google.com/open?id=0B_Hc2Z0dSHQJZFJuVmU0dExDN1k

Spam
Photo of Gianni Giacomelli
Team

One thought is to run experiments, by asking individuals (say 20) to play a game - and IMAGINE how they would feel if an assistant gave them tips. This wouldn't help simulate the actual effect of the choices, but can help detecting any hangups with the rapport with the virtual assistant. See also my answer to your other comment below.

Spam
Photo of Gianni Giacomelli
Team

Thanks Kate Rushton . The Kahneman study is a classic, and actually you made me think of the following. If 75K USD is the threshold beyond which extra money doesn't affect happiness levels in general, and below which life's hardship becomes more acute then...
The algorithm could initially be built with the following heuristics. for those above the threshold, improved life experiences will likely depend on directing the money towards what dampens the effect of more money (e.g. Stress, negative expectations, morbidity, and especially loneliness); for those below, the optimal nudge strategy would be to try and reduce the "wasted" Money (income that is spent on things that don't bring happiness), so that they can inch upwards towards the discretionary income of the 75K+ cohort.
But also - 75K per year is the general median - where are the folks aged 50+? what is that threshold in retired vs non-retired people (who likely still have commitments to children etc) - possibly, the freer from commitments you are, the less money you really need to feel happy (also remember studies that show happiness goes up later in life, despite actual income shrinks). Also, to borrow from the spirit of class Modigliani-Miller long term horizon choices, some people will not exhibit happiness levels of their CURRENT income level, but they will experience some of the "future" (I.e. If they know that they will become, or may become, significantly poorer), or perhaps some of their children's etc. In other words, the segmentation of the audience will need to be finer for the recommendations to be accurate. That's why AI and mass personalization can add value - because cookie-cut if-then rules won't work well.

Spam
Photo of Joost Schouten
Team

Hi, i had heard of the money buys happiness till 75000 USD before as well. It is still an interesting question which Gianni raises, whether it matters how you spend money or not. Perhaps it is hard to find the link because the data has not been gathered before. Approach Visa and Mastercard and facebook would give you the starting point of a dataset which could answer this if fb users can be identifed by the credit card companies. I believe Gianni's Happy Penny is touching upon the visualization question of your financial state vs your aspired financial needs which i raised in my posting. In some ways if you would start with bucketing your spending and try to relate this to an aspired lifestyle, then the virtual assistant could also advise where you are over spending. Using machine learning/ big data with other co-op members could be really powerful as you could be compared to others in your community. I believe there is merit asking at regular intervals about happiness as it could teach the assistant also what on average makes people happier (travel vs eating out? etc...) getting guidance on what others in your peer group are actually spending and aspiring to may take some pressure away. We may typically imagine that others have more can do more, as they are overspending. There is definitely some interesting idea here about having a virtual assistant learn across a large group of users.

my suggestion would be to bucket the spending, gauge the aspired lifestyle spend, and use the machine learning of Penny to either nudge the spending in the right direction, or alternatively to suggest that the aspired lifestyle is not the optimal and adjust that accordingly

Spam
Photo of Wingee Sin
Team

Thanks Kate.
Great idea Gianni! I really like how you have termed it as the "job to be done."

This idea's research design (survey) can be helped by the Common Cents Lab.
http://advanced-hindsight.com/commoncents-lab/

There is a lot of research on irrationality of behaviors that the lab has conducted, and I think can contribute to how you design happiness per dollar metrics.

I have done a lot of work in behavioral design as it relates to financial products, would love to collaborate. Also I agree with Kate, in that this idea, can also relate to the personal pension idea that I have submitted.

Spam
Photo of Gianni Giacomelli
Team

Would love to add your ideas. Lots to be covered. For now, given the paucity if time, I've frankly just focused on the core kernel of the idea. There has to be simplicity in a truly disruptive concept. And then of course execution and detailing it is of paramount importance.

Spam
Photo of Wingee Sin
Team

Sounds great, let me know how I can help!

Spam
Photo of OpenIDEO
Team

Congrats on this being today's Featured Contribution!

Spam
Photo of Kate Rushton
Team

Hi Gianni,

I hope you are having a nice weekend.

What would the user journey be like for 'Happy Penny'?

I am struggling to find examples of finalist ideas for previous challenges that relate to your idea. However, Cobuy from our food waste challenge is a good example - https://challenges.openideo.com/challenge/food-waste/top-ideas/cobuy-group-buying-software-that-helps-people-buy-good-food-at-good-prices-together

Spam
Photo of Gianni Giacomelli
Team

Thanks kate I know I need to write up the story - what's the deadline? I'm short in time until the weekend

Spam
Photo of Kate Rushton
Team

Hi Gianni,

The deadline for refinement is the 23rd January.

Spam
Photo of OpenIDEO
Team

Welcome to the Refinement phase Gianni! We've added new Refinement questions to your original submission that we'd love for you to answer. Please check out the Refinement Phase Toolkit for instructions on how to answer the new questions and other recommendations we encourage all idea teams to consider in the upcoming weeks.

Refinement Phase Toolkit: http://ideo.pn/2du9sf7

Lastly, here's a useful tip: When you update the content of your post, it'd be helpful to indicate this in your idea title by adding an extension. For example, you can add the extension " - Update: Experience Maps 12/21" to you idea title. This will be a good way to keep people informed about how your idea is progressing!

Spam
Photo of Kate Rushton
Team

Hi Gianni!

I look forward to seeing how your idea develops in the refinement phase.

Spam
Photo of Gianni Giacomelli
Team

Sounds great, thanks. Lots of spare time over the end of year break...should help. Thanks for your help.

Spam
Photo of Kate Rushton
Team

Hi Gianni!

Have you seen this article in The Telegraph - http://www.telegraph.co.uk/money/consumer-affairs/money-can-buy-happiness---if-you-spend-in-the-right-way-accordin/ ? 

Spam
Photo of Kate Rushton
Team

The research article - http://foxfellowship.yale.edu/sites/default/files/files/Money%20Buys%20Happiness%20When%20Spending%20Fits%20Our%20Personality%20(1).pdf

Spam
Photo of Bettina Fliegel
Team

Sounds interesting Gianni!  I like how you are reframing the question.  Just to clarify, are you proposing a mechanism that will figure out spending patterns for individuals, and then somehow figuring out what they spend on that makes them happy?  How does it work in terms of monitoring spending?  You mention monitoring credit card use.  Is this something that someone would consent for?  

Spam
Photo of Gianni Giacomelli
Team

Correct. The basic information is included in the credit card payment data. Auto classification of expenditure is already available on Mint, Personal Capital etc - we wouldn't call it "monitoring" but rather "auto classification" etc. If useful we could ask more specific questions about specific expenditures e.g. "What type of travel did you buy?" although a lot of the data will be available e.g. Transaction size shows if someone went to the movies or restaurant alone, and location of the expenditure will show where people will travel. 

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Photo of Rachel Rosenbaum
Team

Gianni, I love this idea! The one sentence description instantly grabbed my attention. I don't know too much about Bhutan's Gross National Happiness index, but your idea instantly made me think about the way we measure "progress." Here's a link to some of their findings, hope it's useful or sparks some ideas for how this might be scaled or apply to other challenges: http://www.grossnationalhappiness.com/

Spam
Photo of Gianni Giacomelli
Team

Thanks Rachel yes I'm aware of what Bhutan has done. I do think the concept may work for more "mainstream" consumers. 

Spam
Photo of OpenIDEO
Team

Congrats on this being today's Featured Contribution!

Spam
Photo of Kate Rushton
Team

Hi Gianni! Thank you for sharing your idea. It is really interesting and is aligned with the community focus of credit unions. There are a few research posts that back-up this idea or add an extra element to it. The right kind of post-retirement bucket lists - https://challenges.openideo.com/challenge/financial-longevity/research/the-right-kind-of-post-retirement-bucket-lists - Retirement goals that involve connections to family, friends and community have shown to make seniors happier than the temporary satisfaction of exotic thrills Instant Gratification - https://challenges.openideo.com/challenge/financial-longevity/research/instant-gratification Interview with Financial Planner - https://challenges.openideo.com/challenge/financial-longevity/research/interview-with-financial-planner Could there be a tie-in with this idea by Wingee Sin - https://challenges.openideo.com/challenge/financial-longevity/ideas/leverage-the-trust-people-have-in-credit-unions-to-create-personal-pensions - or am I being a bit too left-field?

Spam
Photo of Kate Rushton
Team

Is there any chance you could find an image to go along with your post? Images help grab attention and tell a story. You should be able to use the Edit Contribution button on the top of your post and follow the instructions to add images from there. Looking forward to seeing more of your inspiring insights on OpenIDEO.