Making Sense of a Crisis: Analyzing the Pandemic Unemployment Insurance Crisis in New York State from a Behavioral Psychology Perspective and Looking Toward Reform

Abstract

This thesis analyzes the pandemic unemployment insurance (UI) crisis in New York State (NYS) from a behavioral psychology perspective. I argue that evidence of administrative burdens and sludge experienced by New Yorkers suggests that the crisis was a failure from this perspective. I ask, how was the NYS UI crisis a failure from a behavioral psychology perspective, and why did this crisis and subsequent failure occur? I hypothesize that the NYS UI crisis failed in this way by imposing frictions – difficulties experienced in the delivery of public services – in the form of administrative burdens and sludge on New Yorkers. Additionally, I hypothesize that the reasons for this occurrence are rooted in the federal-state partnership that underpins the UI program throughout the country. I employ a methodological approach based on NYS-specific and UI or behavioral psychology expert interviews, social media research, and firsthand observations. In line with my first hypothesis, I find that New Yorkers experienced policy and program design rife with administrative burdens and sludge in trying to receive UI during the pandemic. Secondly, my findings for why this crisis and failure occurred support my second hypothesis, that it was due to the federal-state partnership design of the program, while offering a more comprehensive conclusion. My expert interviews reveal four primary explanations: the federal-state partnership of UI, the combination of unprecedented shock and inadequate policy and program design, the creation of a novel program (Pandemic Unemployment Assistance), and the fear of fraud among policymakers. Informed by these findings, I offer a set of policy recommendations that is two-fold, beginning at the NYS level before turning to the federal level to offer a holistic vision of UI reform. I recommend that NYS create a UI crisis response protocol, adopt user-friendly systems and practices, and replace their mainframe with the public cloud. At the federal level, I recommend the amendment of Social Security Act Section 303a to allow for full automation of the claims process, the full integration of the Integrity Data Hub across the country, and that the federal government look to use existing mechanisms for benefit delivery when designing future UI programs that reach new populations.