Is it my imagination, or is behavioural economics everywhere? Nudge theory (Sunstein and Thaler) would have it that, because I've read about it recently, I notice it more.
Nudge argues that everyday people can make logical, but basically irrational decisions based upon the way in which information is presented. Consequently they can be nudged into changing their decisions by changing the way in which options are presented. This concept will be familiar to anyone who has done an accompanied shopping interview.
The current government is a fan. It has established a behavioural insight team, or "nudge unit", to use these ideas, shifting from a nanny state to a nudging state. The unit is headed by Oliver Letwin, with unpaid expert advice from Nudge co-author Richard Thaler. Based in the Cabinet Office, it has looked at everything from organ donations, pensions and consumer choice to giving up smoking.
Not everyone feels the same warmth towards nudging. The Science and Technology Committee recently highlighted that, on its own, it will not bring about behaviour change and needs instead to be combined with traditional government interventions such as taxation, regulation and legislation. Stronger criticism recently, by Labour MP Luciana Berger, is that the measurable benefit does not warrant the £500,000 per year cost of Cameron's "vanity unit".
More fundamental criticism of the government's use of this approach is that it's seen as a slippery slope from controlling the presentation of data to restricted freedom of choice. Government intervention, however, always has an element of wanting to change behaviour and, in an increasingly secular and commercialised society, it could be argued that the role of elected officials, advised by independent advisors, is to attempt to influence change in the public interest. The public interest aspect is the debatable part, but while there is freedom of choice the individual can still opt out and behave as they choose.
The government is currently attempting to increase organ donations by making people state whether they wish to donate or not when they renew their driving licence. This is a nudge towards required choice, but the choice is still there, irrespective of the fact that government has decided that donating organs is desirable behaviour that should be promoted. Nudge has changed the nature of the choice, but both options are still available.
So what future does nudging have? It may not change behaviour in isolation but that does not mean it is without merit. For example, in an attempt to reduce binge drinking previous government interventions have altered licencing hours for pubs and introduced minimum pricing legislation. This does not seem to have impacted hugely on the British boozing culture but maybe with the right nudge through social norms or choice architecture it could. We'd still have the freedom to drink, and the choice of where and when, and maybe that's what nudging is all about: promoting the most beneficial free behaviour, as opposed to reducing or restricting it. Let's see what the vanity unit comes up with next.
