A Nudge in the Right Direction?

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The Nudge Unit. It sounds like something from a spoof of 1984. Its proper name – the Behavioural Insights Team – sounds like something from 1984.

Although it’s been described as David Cameron’s pet project, the authors of Nudge – and articulators of nudging – are Professor Richard Thaler and Professor Cass Sunstein.

Nudging people to “better” choices sounds innocuous at one level. Fitbits and similar devices encourage us to walk further or use the stairs in order to meet whatever targets we’ve set ourselves or have been set for us. Traffic light labelling on foods shuffle us down the supermarket aisle to something with less fat, less sugar or simply fewer calories.

And because “nudging” has, quite literally, such touchy-feely overtones, the temptation can be to think that it has nothing to do with the harder-nosed end of government policy or its implementation. That might need a re-think.

From what Professor Thaler was saying in a discussion at Chatham House last week, incentives are already there for people to adopt “better” choices, with penalties for pursuing “poorer” choices. And there are more on the way.

Take, for instance, recent Budget plans for benefit cuts and reduction of tax credits intended to encourage people to work, linked to an increase in the national minimum wage to a new national living wage. These make up classic nudge behaviour on two fronts and they build on previous nudge activity around benefits and welfare for those out of work, tax collection by HMRC and any number of other government initiatives. On the face of it, nudging leaves you with the choice of responding to the nudge, but I’m not sure how much of a genuine choice exists in all of these cases.

I’ll be intrigued to see what frontier behavioural economics – and subtle or not so subtle nudging – tackles next. Health data look like low-hanging fruit, but Professor Thaler reckoned that application of behavioural economics is limitless and that work is only just getting started.

Climate change. Education. Investment. All are ripe for behavioural economists to have their say and nudge us in the direction they – or government – would like us to go. I’ll pay that bit more attention to the Budget and policy changes in future, seeing if I can detect the signs of the behavioural economists’ nudging hand and read the runes of what we’re being nudged to choose next.

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