1 BUREAU OF CONSUMER FINANCIAL PROTECTION

PAPERWORK REDUCTION ACT SUBMISSION
INFORMATION COLLECTION REQUEST

SUPPORTING STATEMENT PART A Supporting Statement

– Part A

CFPB Generic Information Collection Plan for Studies of Consumers using Controlled

Trials in Field and Economic Laboratory Settings
(OMB CONTROL NUMBER: 3170

- XXXX)

ABSTRACT: Under the Dodd

- Frank Wall Street Reform and Consumer Protection Act, the Consumer Financial Protection Bureau is tasked with researching, analyzing, and reporting on topics relating to the Bureau’s mission, including developments in markets for consumer f inancial products and services, consumer awareness, and consumer behavior. The Bureau seeks to obtain approval for a generic clearance to collect data from purposive samples through controlled trials in field and economic laboratory settings . This research will be used for developmental and informative purposes in order to increase the Bureau’s understanding of consumer credit markets and household financial decision

- making.

1. Circumstances Necessitating the Data Collection
A core component of the Consumer Financial Protection Bureau (CFPB , Bureau )’s mission is to understand how consumer financial markets work, the avenues for innovation in financial products and services, and potential risks to consumers. 1 In order to achieve this mission, t he Dodd

- Frank Wa ll Street Reform and Consumer Protection Act (Act) and other
federal consumer financial laws authorize the CFPB to engage in research and general
market monitoring activities to assess trends and emerging risks in consumer financial
markets

. 2 Section 1013(b)(1) of the Act establishes the Office of Research and assigns to it

1 CFPB FY 2013

– FY 2017 Strategic Plan, goal 3, http://www.consumerfinance.gov/strategic

- plan/ 2 DFA Section 1013(b)(1) mandates that the Bureau have research staff whose responsibilities include “[r]esearching, analyzing, and reporting on (A) developments in markets for consumer financial products or services, including market areas of alternative c onsumer financial products or services with high growth rates and areas of risk to consumers; (B) access to fair and affordable credit for traditionally underserved communities; (C)2

the responsibility of researching, analyzing, and reporting on topics relating to the Bureau’s mission, including developments in markets for consumer financial products and services, consumer awareness, and consumer behavior. The Act also established the Office of Financial Education (OFE) within the CFPB, which is responsible for developing and implementing initiatives intended to educate and empower consumers to make bette r

informed financial decisions, and, together with the CFPB’s Office of Research, for conducting research related to financial education and counseling. Using empirical evidence and rigorous research , the Bureau improve s its understanding of consumer finan cial markets
and is able to provide accurate and comprehensive information to consumers, firms, researchers, and policymakers

. The CFPB supports this mission by building an understanding of the markets that the Bureau regulates and the nature of consumer behavior in these markets. Research provides a
scientific basis for policy development, supervision and enforcement, regulation, and consumer education and engagement activities pursued by the CFPB.

The CFPB seeks to use this generic information collection plan to collect data from purposive samples (that do not necessarily represent the general public or a population of regulatory i nterest) through controlled trials in field and economic laboratory settings

. The research will be used for developmental and informative purposes, but not directly providing
a basis for specific policy at the Bureau

. In general, topics that the Bureau is interested in studying include:

 consumer awareness and decision

- making, for example, understanding what financial products or features people are aware of and why they choose one product over another;

 consumer experiences and potential risks to consume rs, including traditionally underserved consumers;

 information disclosure and how disclosure may affect behavior;

consumer awareness, understanding, and use of disclosures and communicatio ns regarding consumer financial products or services; (D) consumer awareness and understanding of costs, risks, and benefits of consumer financial products or services; (E) consumer behavior with respect to consumer financial products or services, includin g performance on mortgage loans; and (F) experiences of traditionally underserved consumers, including un

‐ banked and under

‐ banked consumers.”3

 the effect of educational or other interventions on consumer financial behavior or outcomes;

These topics will usually be in the context of consumer financial product markets,
includ ing mortgages, car loans, student loans, installment loans, small dollar loan s and credit, debit, and prepaid cards. In addition, research may b e related to the CFPB’s mission regarding financial education, includ ing evaluating the effectiveness o f financial education programs and understanding financial planning behaviors, including savings and spending
behavior. The CFPB envisions that the research covered under this generic clearance will be
basic research about consumer credit markets and household finance.

2. Use of the Information The CFPB requests approval from the Office of Management and Budget (OMB) for a generic information collection plan clearance that will allow the Bureau to collect data
from purposive samples through controlled trials in field and economic laboratory settings

. The specific purpose of this generic clearance is to allow the Bureau to better inform and advance scientific understanding of consumer credit markets and household fina nce. For example, the Office of Research envisions a program of data collections
, and this generic
clearance will allow us to monitor and research market developments in a timelier manner. The purpose of r esearch conducted under the expected clearance will not be making regulatory decisions or developing or evaluating specific policies. Studies conducted under this generic approval may identify opportunities for enhanced or improved regulatory or other poli cy actions; however, as noted, the Bureau will not initiate any policy changes based solely on these research projects

. Instead, the CFPB envision s this generic clearance to cover studies with developmental and informative purposes given that research stud ies under this generic clearance will only include purposive samples that do not necessarily represent the general public or a population of regulatory interest

.
R esearch projects under this generic clearance may include pretesting and cognitive interviewing prior to the data collection

. The Office of Research w ill generally pretest4

questionnaires and other user

- interfaces to ensure the collection of reliable information while minimizing respondent burden and costs

. Cognitive testing ensures that a question posed to respondents successfully captures the intent of the question and that i t makes sense to respondents. It can also be used to better understand research results by providing data about why participants responded to q uestions the way they did. The Bureau may also rely on pretesting to ensure that necessary computer hardware and software function appropriately.

This generic clearance will allow the Bureau to conduct data collections which will achieve our research project goals with the least amount of burden on the public

. Collections
under this clearance will be limited to situations in which sufficient data do not already exist
but could be collect ed through data from purposive , n on

- representative samples

.

3. Use of Information Technology

The CFPB will employ information technology as appropriate to reduce the burden of respondents who agree to participate in its research. Computer

- assisted participation will be
used when feasible and appropriate , including online studies

. In general, the Bureau intends to incorporate electronic data

- collection techniques whenever possible, particularly since in many instances they are likely to impose the lowest burden on respondents and may be th e
most cost

- effective. However, the extent to which the Bureau will use electronic data
collection for a given project will be determined by weighing several factors , including response rates and costs

. For example , evidence to date suggests that web

- only data
collections tend to have lower response rates than surveys conducted by mail or phone. 3 The Bureau expects that the most effective mode, including mixed

- mode combinations , may also vary with the complexity and sensitivity of the information to be collected.

4. Efforts to Identify Duplication

3 Roger Tourangeau, Fredrick Conrad, and Mick Couper (2013), “The Science of Web Surveys.” USA: Oxford University Press.5 The Bureau will conduct controlled trials in field and economic laboratory settings to answer questions that have not yet been satisfactorily addressed in the relevant research
literature. In some cases it will be appropriate to replicate previous laboratory and field
studies with in a new population of interest to the CFPB, such as servic e members, students,
older Americans , or people who utilize specific financial products, such as payday loans or
remittances. In these cases, the Bureau will detail the relationship between the proposal and

ex isting studies and will describe how the data collectio n supports the CPFB’s mission . A review of the existing relevant literature will be undertaken before proceeding with a project.

5. Efforts to Minimize Burdens on Small Entities

All of our research projects will be limited to individual consumers, not businesses
, so there will be no impact on small businesses or other small entities

.

6. Consequences of Less Frequent Collection and Obstacles to Burden Reduction The proposed generic clearance will allow the Bu reau to collect a variety of types of data to develop a more complete understanding of consumers’ decision

- making regarding consumer financial products and the characteristics of markets for these products. This knowledge will improve the Office of Research ’s ability to inform the Bureau’s policy work in developmental and formative ways

. Where appropriate, the Office of Research plans to
disseminat e the results of this research by making versions of the data and analysis available publicly

. Therefore , t he data to be collected under this proposed generic clearance will not only improve the CFPB’s understanding of consumer financial markets , but it will also increase the knowledge available to other policymakers and researchers

. The ability to collect d ata , through controlled trials in field and economic laboratory settings
, allow s the Bureau to control both the timin g and direction of the research. By contrast, relying on naturally occurring data would leave the timing, content, and sample population outside of our control. These research projects allow us to isolate cause and
effect by using randomization to control for variables that are unknowable or un

- measurable6

in natural settings. In addition, these studies may be the best way to explore how consumers would behave in transactions environments that are ju st emerging and therefore novel.

For these reasons, data collections under this ge neric are important and valuable to
the CFPB. Without these data collections, CFPB policy development will not be as well informed, and the CFPB will not be able to achieve its mission to understand how consumer financial markets work, the avenues for inno vation in financial products and services, and potential risks to consumers. 4

In addition, Congress has mandated that the CFPB, in consultation with the Financial Literacy and Education Commission and consistent with the National Strategy for Financial
Lit eracy, “develop and implement a strategy to improve the financial literacy of consumers that includes measurable goals and objectives.” ((12 USC 5493 Sec. 1013(d)(1)). The CFPB will be unable to carry out this mandate if it does not have information about consumer experiences navigating the financial marketplace and what strategies can in fact improve financial literacy. If the CFPB does not have a clear understanding of what informational and other financial empowerment needs consumers have, and what finan cial education interventions work, its strategy, goals, and objectives will be without basis. Without periodic information collections on consumer experiences and best practices in financial education,
the CFPB will not have timely information to adjust its programming to meet consumer needs.”

7. Circumstances Requiring Special Information Collection

Most information collections under this generic clearance will require a single interaction between the agency and respondents, but some information collections could require multiple interactions. For example, some studies may ask for subjects to return to the lab more than once, and this could occur within a single quarter. Note that in such cases the respondent would not typically have any burden beyond that single quarter. The CFPB will
work to l imit the burden on respondents and ensure that studies only include repeated

4 CFPB FY 2013

– FY 2017 Strategic Plan, goal 3, http://www.consumerfinance.gov/strategic

- plan/7

interactions when the additional information gained is anticipated to be substantial and valuable to the study

.

8. Consultation Outside the Agency In accordance with 5 CFR 1320.8(d)(1), the Bureau has published a notice Federal Register allowing the public 60 days to comment on this proposed new generic information collection plan. Further and in accordance with 5 CFR 1320.5(a)(1 )(iv), the Bureau will publish a notice in the Federal Register allowing the public 30 days to comment on the submission of this information collection request to the Office of Management and Budget.

9. Payments or Gifts to Respondents

In order to support t he mission of the CFPB, Bureau r esearchers are fundamentally interested in questions such as how consumers make choices and how they might respond to changes in the rules and regulations that govern a marketplace.
Controlled trials in field and economic laboratory settings are an important tool for addressing these questions. In experiments, the researcher strips away extraneous features of the marketplace
, leaving only the essence of the economic environment and the institutions that govern it, placing t hese factors under the researcher’s control.

To ensure that the behaviors exhibited in these environments mirror behavior in other settings , the incentives motivating the behavior must be similar . This is difficult to achieve if subjects are presented with purely hypothetical scenarios since participants’ choices may be guided by a variety of motivations. 5 For this reason it is standard practice
in the sub

- discipline of experimental economics to compensate subjects

. 6 S ometimes

s ubjects are paid a fixed amount for their participation, in essence appreciation for their time, but also additional money based on their choices in the study

. Participants may be

5 Rachel Croson (2005) , “The Method of Experimental Economics,” International Negotiation 10 : 131

- 148. 6 Vernon L. Smith (1976) , “Experimental Economics: Induced Value Theory,” American Economic Review 66(2) : 274

- 279.8

paid different amounts depending on their performance. 7 For each information collection request submitted under this generic plan, the amount of any proposed incentive, and a detailed justification therefor e will be submitted.

10. Assurances of Confidentiality

CFPB shall treat the information in accordance with applicable federal law, including but not limited to the Bureau’s confidentiality rules, 12 C.F.R. Part 1070, and the federal laws and regulations that apply to federal agencies for the protection of confidentiality of pe rsonally identifiable information (PII) and for data security and integrity. These protections include stipulating
, in most instances
, that contractors that
collect data on behalf of the Bureau remove or redact all direct identifying PII , as defined by
the Bureau’s privacy office, before transmitting data to the Bureau and that any contractor staff assigned to the project sign confidentiality agreements

. When appropriate, research
results will be presented in aggregated form to protect the confidentiality o f firms or consumers, and any publicly released version of data will use disclosure protection techniques (e.g., rounding, imputation, exclusion of some variables, aggregation of categorical responses) to minimize the risk of releasing personally identifiable or otherwise
sensitive information (12 CFR 1070.40 et seq. ) . The Bureau treats the information collected from participating persons and institutions in a manner consistent with our confidentiality regulations
, and all data and analyses are sub ject to legal and privacy review prior to their
release.
Consistent with the Privacy Act and the E

- Government Act, a Systems of Records Notice (SORN) has been published, 8 and a Privacy Impact Assessment (PIA) will be submitted for approval, as appropriate. The SORN and PIA will document the ways in which participants’ PII will be collected, stored, and accessed. Specific details regarding

7 Colin Camerer and Robin Hogarth (1999) , "The Effects of Financial Incentives in Experiments: A Review and Capital

- Labor

- Production Framework" Journal of Risk and Uncertainty 19: 7

- 42

. 8 CFPB.022, https://www.federalregister.gov/articles/2012/11/14/2012

- 27582/privacy

- act

- of

- 1974

- as

- amended CFPB.021, https://www.federalregister.gov/articles/2012/10/03/2012

- 24311/privacy

- act

- of

- 1974

- as

- amended9

information handling will be speci fied in individual submissions under this generic clearance, but will conform to these broad guidelines.

11. Justification for Sensitive Questions Questions about an individual’s finances
, for example, how much a person makes or how much their mortgage costs each month, are commonly considered sensitive

. Nonetheless, O ffice of R esearch must sometimes ask such questions in order to understand
consumer behavior and recognize financial trends and emergent risks relevant to consumers.
The Bureau believe s that we are justified in asking these types of sensitive questions because they are central to our mission.

In addition, some people may believe that questions about race or other
socioeconomic factors m ay be considered sensitive

. However , the CFPB is mandated to enforce fair lending law s and focus on the risks to vulnerable populations, including service members, older Americans, and lower

- income consumers. For this reason, the Bureau often
needs to ask these types of sensitive questions. For information collections involving questions of race/ethnicity, the CFPB will ensure that the OMB standards for Classification of Federal Data on Race and Ethnicity (Fede ral Register, October 30, 1997, Volume 62, Number 210, pages 58781

- 59790) are followed.
Respondent participation and all activities within the laboratory setting are voluntary, and subjects will be made aware of this fact. All respondents are free to opt

- out of a data collection at any time and for any reason.
The CFPB will ensure that a citation is made to any applicable System of Records Notice (SORN), and a Privacy Impact Assessment (PIA) is published as appropriate

.

12. Estimated Burden of Information Collection The following tables present estimates of the total number of respondents and burden hours for proposed collections. The number of respondents and average burden per response10

for a specific collection will depend on the methodology used for ga thering information. These estimates, as well as the mix of collection methods used, may be adjusted. Further details on estimated respondents and burden will be provided in each approval request. The total number of burden hours estimated under this gener ic clearance is 34 , 20 0 hours.

For lab research studies
, the CFPB estimate s conducting five data collections in each of
the three years. For field research studies
, the CFPB expect s both small and large data collections, and expect s four data collections in each of the three years. There will be no financial burden on the respondents.

Burden Hour Estimate for All Data Collections, 3

- yr period Types of Projects Subtotal Lab Studies 7 , 200 Field Stu dies 27 , 000 34 , 2 0 0

Burden Hour Estimate for Economic Studies in the Lab, 3

- yr period

Number of Projects Number of

Participants in a Project Hours per

Participant Subtotal

1 5 240 2 7 , 200 7 , 200

Burden Hour Estimate for Economic Studies in the Field, 3

- yr period

Number of Projects Number of

Participants in a Project Hours per

Participant Subtotal

3 3 , 000 1.5 13 , 500 9 1 , 500 1 13 , 500 27 , 000 For each specific collection request submitted under this generic plan, a detailed estimate of the burdens of that particular request will be submitted.

13. Estimated Total Annual Cost Burden to Respondents or Recordkeepers11 There will be no capital, operati ng, or maintenance costs to respondent s as a result of participation in an y information collection submitted under this generic clearance plan

.

14. Estimated Cost to the Federal Government For each data collection that falls under this generic clearance, costs to the Federal government will be estimated.

15. Program Changes or Adjustments
This is a new data collection.

16. Plans for Tabulation, Statistical Analysis, and Publication
The Bureau ’s research projects are intended to expand scientific understanding of

consumer decision

- making in financial domains. Research findings will be published as technical articles that are publicly disseminated as working papers, published in peer

reviewed journals, or published as CFPB white papers. Collection, analysis, and publication of data will span the entire period of the anticipated generic clearance. The Office of
Research plans to conduct an ongoing program of research and therefore plans to apply for an extension to the anticipated generic clearance when it expires.
Because of “publication lag
, ” a typical academic journal article is published one or

more years after initial submission. The publication process for CFPB in

- house products is
shorter than that for external academic publications

. Data collection for a professional publication typically takes at least three to four months, and in some cases could be longer. Data analysis and article preparation typically lasts another three to four months. Thus professional articles in a peer

- review ed outlet of any kind are estimated to be published from 12 months to 36 months from the time that data collection can begin. 9

9 P.K. Trivedi (2006) , “ An Analysis of P ublication Lags in E conometrics” Journal of Applied Econometrics 8(1): 93

- 100

.12

17. Display of Expiration Date

No exemption is requested.

18. Exceptions to the Certification Requirement

The Bureau certifies that this collection of information is consistent with the requirements of 5 CFR 1320.9, and the related provisions of 5 CFR 1320.8(b)(3) and is not seeking an exemption to these certification requirements.13 BUREAU OF CONSUMER FINANCIAL PROTECTION

PAPERWORK REDUCTION ACT SUBMISSION
INFORMATION COLLECTION REQUEST

SUPPORTING STATEMENT PART A Supporting Statement

– Part B

CFPB Generic Information Collection Plan for Studies of Consumers using Controlled

Trials in Field and Economic Laboratory Settings
(OMB CONTROL NUMBER: 3170

- XXXX)

1. Describe (including a numerical estimate) the potential respondent universe and any sampling or other respondent selection method to be used. Data on the number of entities (e.g., establishments, State and local government units, households, or persons) in the universe covered by the collection and in the corresponding sample are to be provided in tabular form for the universe as a whole and for each of the strata in the proposed sample. Indicate expect ed response rates for the collection as a whole. If the collection has been conducted previously, include the actual response rate achieved during the last collection.

The potential respondent universe will vary depending on the research question
addressed and method of data collection employed

. All samples under this generic clearance will be purposive and non

- representative.

2. Describe the procedures for the collection of information.

The CFPB plans to gather primary data from purposive samples through controlled trials in field and economic laboratory settings

. The sections below outline the types of data
collections that the Bureau plan s to conduct.

Trials may be broadly categorized into laboratory and field settings.

A laboratory setting provides researchers with a high degree of control over the research environment for a wide range of possible studies . Participants may be placed in14

situations that isolate features of economic activity or decision

- making to be studied in detail. The researcher may have them interact to provide insight into how people share information, solve problems, and make choices in competitive or cooperative environments

. One advantage of the lab setting is standardization. The rese archer can ensure that participants are given the same instructions, placed in similar contexts, and otherwise treated the same way. Respondents are often asked to use computer software or online resources in order to standardize their experience and reduc e measurement error in collecting their

responses. For example, online lab settings are growing in popularity for this reason, and the
CFPB may employ this type of setting for a lab study.
Another benefit of the lab setting is the quantity and quality of p ossible observation s

. Researchers may reproduce events in the lab that occur sporadically or unpredictably in a real world setting and would otherwise be difficult to observe. A lab setting may also facilitate collection of data on gaze (enabling inference s about attention) and on reaction times (enabling inferences about the ease of processing information).

S ubject s for lab research are typically recruited using convenience sampling, so the samples may not represent the general population , and therefore are not useful for estimating specific parameters or the costs and benefits of any given intervention or idea

. Although this may introduce selection bias that could limit the applicability of the lab findings to other contexts, in many cases a laboratory p rovides a credible economic environment where the
results of the study can be useful for predicting behavior outside the lab. T he sign or direction of the effect frequently carries over to a more general population. F or example, if a laboratory study showe d that one disclosure format resulted in decisions different than
another disclosure format , we co uld reasonably expect that the pattern may remain among other populations. This ability to generalize is important given that particular sub

populations like students, service

- members, or older Americans are frequently of interest to
the CFPB.

A field setting allows researchers to see how economic activity operates in real world environments. It generally allows for research studies to occur over a longer period of time than in a lab. Respondents may be recruited from a variety of sources, including through web panels and existing channels of economic interaction; for example, users of a given15

financial product or service. Outcome data generally comes from some mix of existing administrative sources, which do not burden the participants, and from data collection instruments that are designed to gather the minimal amount of additional data required to
conduct the research.

The CFPB plans to use research studie s under the proposed clearance to learn about
behavior in markets and to test research hypotheses. Results and findings from these
research studies are designed to be used for developmental and informative purposes . The
CFPB does not intend to make regulatory decisions solely based on these studies or use
these studies to develop or evaluat e specific policies

.

Studies will often take the form of a randomized controlled trial (RCT).
Identifying causation is often essential in research to determine the effects on consumers of a particular factor; for example, a financial product, disclosure form, or
financial education training. In observational studies, there is often reason to believe that people who differ in exp osure to the factor of interest also differ in other ways. For example, consumers who use a particular strategy for managing their finances may, on average, differ in many characteristics (education, employment status, income, etc.) from those who do not.
In such a case , it would be incorrect to conclude that the financial strategy alone a ccounted
for differences in outcomes between those who use it and those who do not.
Failing to account for relevant characteristics leads to bias in a researcher’s estima te of whether a causal relationship exists and how strong or statistically significant it is. Since many of these characteristics are unobservable to the researcher, observational studies pose problems for causal inference.
In general, researchers are unab le to observe a counterfactual for a given person ; that is, they cannot observe what the outcome would have been if a person not exposed to the factor had been exposed and vice versa. Randomization of research participants into a treatment group that is ex posed to the factor and a control group that is not exposed or is exposed to a lesser extent allows the researcher to determine whether the observed outcomes were caused by the factor.16 A randomized controlled trial (RCT) is designed to overcome the selecti on bias problem. It uses a control group as a valid counterfactual for the treatment group. For a sufficiently large sample, the treatment and control groups will look very similar to one another since no participant characteristics are used in a random as signment , other than possibly in a stratified approach where they are in fact balanced by construction . This similarity can be verified for observable characteristics and safely assumed for unobservable
characteristics. Differences in outcomes observed aft er comparing treatment and control groups are therefore attributable to the treatment factor.

3. Describe methods to maximize response rates and to deal with issues of non

response. The accuracy and reliability of information collected must be shown to be adequate for intended uses. For collections based on sampling a special justification must be provided for any collection that will not yield “reliable” data that can be generalized to the universe studied.

Recruitment of subjects for lab research projec ts typically involves convenience sampling, which does not yield a sample that is representa tive of the general population.
S mall

- scale field studies by design will include purposive samples and therefore are not necessarily externally valid beyond the population from which those samples are drawn

. This generic clearance will not be used in cases where it is especially important to be representative of a specific population (ex: all Americans or another population of regulator y interest ). T hese studies will be used primarily for developmental and informative purposes, and will not be intended as the main source for making regulat ory decisions or a basis for specific policy at the Bureau

.

4. Describe any tests of procedures or methods to be undertaken.

The CFPB plans to use pretesting and cognitive interviewing to test research
instrument s on a small scale prior to their use in full

- scale research studies

. Respondents will
be debriefed after pilot to ensure that they understood the instrument, which in turn ensures17

that the resulting data collections are effective. These techniques are meant to reduce the total public burden of the information collection by ensuring that the full study information collection is optimi zed.

5. Provide the name and telephone number of individuals consulted on statistical aspects of the design and the name of the agency unit, contractor(s), grantee(s), or other person(s) who will actually collect and/or analyze the information for the agency . The name and telephone numbers of these individuals will be provided in the clearance request for each specific data collection.
The Office of Research is currently staffed with over twenty employees with PhD’s in social science, who are trained in relevant methods. For any research studies that employ
statistical methods submitted for approval under this generic information collec tion plan, such methods will be reviewed by a qualified statistician for scientific rigor; including compliance with the Office of Management and Budget’s (OMB) statistical programs and standards prior to submission to OMB.