Economist Urges CUs to Look at Data Differently
SAN ANTONIO — Steven Levitt, an academic economist with the University of Chicago and co-author of the bestselling books Freakonomics and Super Freakonomics believes credit unions would benefit if more of them looked at data, particularly information related to incentives, in unusual and novel ways.
The award-winning economist told credit union executives attending PSCU's 2011 Senior Leadership Workshop & Member Forum that economists really have little to offer in the way of understanding of macroeconomics but understand both the impact of incentives and the importance of data very well.
Credit unions in particular want to look at incentives they might use, Levitt suggested, because they are often involved in selling their members on an idea that goes along with a financial product and service. It's not enough to merely offer a CU member a very strong credit card product–any number of banks might offer one of those and maybe better. The key is to offer that credit card as part of a larger idea from the CU. For example, the notion that the CU can be trusted in some way that many banks cannot or that by using the card they are strengthening a financial institution with headquarters in their own community. “Credit unions are fortunate in that they already have a reputation among many consumers for just these sorts of values,” he said.
Levitt also touched upon the challenge in providing incentives to credit union employees, stating almost immediately that research indicated that financial incentives were not the most effective since employees tended to acclimate themselves to them more quickly. He contrasted this with the sort of employee incentive that he had seen when employees of an organization or company truly believed in its mission. As an example he recalled some work he had done with Google on a project to use data drawn from Google searches to possibly predict and locate the source of disease epidemics before public health authorities could do so.