‘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.