‘Nudge’ theory is the new (ish) darling of policymakers. It promotes the use of behavioural economics to help citizens to make the ‘right’ decisions without using expensive levers, such as legislation, regulation, or public information and marketing campaigns. Instead, nudge focuses on ‘changing behaviour without changing minds’ (a great quote from the Behavioural Insights Team—a Downing Street invention, now a mutual).

Influencing behaviour is not new to governments—in fact, it has always been central to public policy. Policymakers want to stop ‘bad’ behaviours and encourage ‘good’ behaviours. Seems sensible—presumably we all want that? But behavioural economics suggests that our decisions are not guided by the perfect logic of a super-computer, but our decisions are dependent on context, social factors, emotions, timing, and a host of other variables. In other words: we’re not perfect.

There are different nudge frameworks, notably from the Institute for Government (IfG) and the Behavioural Insights Team (BIT), who developed a simple and pragmatic framework for policymakers, captured in the mnemonic EAST:

  • Easy—Harness the power of defaults, exploiting people’s strong tendency to go with the pre-set option; reduce the hassle of taking up a service; and simplify messages.
  • Attractive—Include the use of images, colour or personalisation; and design rewards and sanctions. Alternative incentives—such as lotteries—work well and often cost less.
  • Social—People are strongly influenced by others, so show that most people perform the desired behaviour; use the power of networks; and encourage commitments between peers.
  • Timely—Prompt people when they are likely to be most receptive; consider the immediate costs and benefits; and help people to plan their responses to events, to reduce the substantial gap between intentions and actual behaviour.

Government is so confident in the ability for nudge theory to deliver real change that the Civil Service Reform Plan now says that all policymakers should be able to apply behavioural insights, and these approaches are now integrated into civil servants’ development.

How and where it works

Nudge projects have had significant success across the public and private sectors by allowing policymakers to help people make the right decision by ‘going with the grain’ (another great quote from BIT).

A recent example of nudge working on a large scale was the introduction of auto-enrolment pension schemes. In the first six months after employees of large businesses were automatically enrolled into pension schemes, participation rates rose from 61 to 83 per cent (‘Easy’: the power of defaults). A BIT project with the DVLA introduced the inclusion of photographs of vehicles without car tax in reminder letters—payment rates rose from 40 to 49 per cent (‘Attractive’: the use of images).

BIT observed the power of personalisation after adding the recipient’s name to an otherwise generic text message payment reminder, resulting in a significant increase in monies paid to HM Courts Service (‘Attractive’: the use of images, colour or personalisation). Similarly, Care 4 Care, a network built around reciprocity (‘Social’: the power of networks), allows people who help elderly people to ‘bank’ that time so they get it back in the form of care for themselves when they get old. What an incredible idea—one that, if successful and scalable, could transform local authority finances.

In the private sector, you can see the power of defaults used commonly, such as with the requirement for automatic monthly bank transfers for gym subscriptions, and the pre-set privacy settings on social media platforms.

So, all good news. Sure there are risks: it would be easy to reinforce a bad behaviour by suggesting that it was a widespread problem (we all like being part of a community—even one that isn’t behaving well…). But (re)designing systems in the way that BIT are proposing doesn’t have to be expensive—and that’s very attractive in an austere world.

Paramedics as GPs—working until the PIPs squeak

NHS England is developing proposals to train paramedics to become Paramedic Independent Prescribers (PIPs), and provide certain services performed by GPs. I understand the driver: there is a shortage of GPs. I understand the solution: paramedics are medically trained and can, I’m sure, deliver certain GP services. However, we need to be careful not to add unmanageable burden to ambulance trusts, many of whom are already struggling.

In December last year, The Guardian reported that three ambulance trusts rated their status as ‘critical’, just short of the ‘potential service failure’ rating, with more classified as under ‘severe pressure’. But don’t believe that this is simply some sort of Christmas-period issue. In July last year, The Spectator has reported “Figures from the London Health Board showed that 238 people left the London Ambulance Service (LAS) in 2013–14. Only 80 left in 2011–2012.”

My first response to the proposals was “What?! Aren’t they busy enough??” But, the proposals do, of course, have pros and cons. On the one hand, they may offer paramedics valuable career objectives to train and develop further. This may stem the exodus observed by The Spectator. They may also offer the NHS a cost-effective means of satisfying a never-ending demand—hugely desirable by government, doctors and patients. The consultation document says paramedics could be used in “Accident and Emergency Departments, GP practices, Minor Injury Units, Walk-in Centres and Out-of-Hours services“—five very busy health settings that need support.

On the other hand, they may take an already busy workforce and make it work harder, perhaps for unsustainably long hours. And the additional burden doesn’t end with the paramedic. The consultation document says: “Employers will retain responsibility for ensuring adequate skills, safety and appropriate environments for paramedic independent prescribing.” So, training and development costs will be for ambulance trusts to manage—not the beneficiary organisation (such as an acute trust or Clinical Commissioning Group).

The proposals deserve close study and careful answering. Supporting the NHS is important; supporting the ambulance service is equally important. If these proposals are introduced, it’s important that they don’t simply benefit one system at the expense of another.

Swiss localism

​The average household net-adjusted disposable income per capita in Switzerland is £18,390 a year, more than the OECD average of £14,318 a year. Not a very sexy opening sentence. However, with 79 per cent of 15 – 64 year olds in work, Switzerland beats the OECD average by 14 per cent—and those people are working 133 fewer hours per year than the OECD average. That’s not bad.

According to the OECD, compared to the United Kingdom, Swiss life expectancy is higher, water quality is better, work life balance is better, life satisfaction is higher, education outcomes are better—and the list goes on. All this, and they get great skiing, banks and chocolate.

Interestingly, they get this within a domestically competitive tax system too.

In the Global Competitiveness Report 2012, Switzerland was again named the most competitive country in the world. There are lots of reasons why this is the case. Its health, education and labour market environments are excellent. The government has run budget surpluses for the past eight years. It has a VAT rate of eight per cent (yes, eight), but interestingly to me is the domestic tax competition between its cantons.

Local freedoms

Local tax sovereignty in Switzerland leads to continual domestic competition. Following Zug in the 1960s, which began using its social security and taxation autonomy to offer businesses a competitive environment, cantons all over Switzerland have been competing to offer multi-nationals reasons to base their global or European headquarters there.

Currently, the combined federal, cantonal/municipal pre-tax rate in Lucerne is 11 per cent, with half of Switzerland’s cantons offering between 13 and 16 per cent. And this approach has been pretty successful, with companies such as Kraft, Google, Yahoo, Johnson and Johnson, Burger King, Seimens and many, many more all taking the Swiss up on the offer.

How about the UK?

​The Localism Act 2012 attempted to link local fortunes with business rates, but it does not offer the freedoms the Swiss cantons have.

The Business Rates Retention Scheme allows for 50 per cent of business rate revenue to be kept by local councils and 50 per cent by government. Section 69 of the Localism Act 2011 gave councils a new discretionary power to reduce business rates in specific circumstances—as long as it doesn’t qualify as state aid. The onus is on local councils here, who would have to market those potential discounts to the sorts of multi-nationals that are settling in Switzerland so regularly. I’m not sure that councils yet have that sort of experience.

​These new freedoms are still pretty new—let’s see how they do.