Posts Tagged ‘Nudge’

Matthew Taylor’s blog is a very useful source of information on new thinking on a wide range of issues, many of which relate to local government.  It is through his blog that I discovered a recent article, Nudge Nudge, Think Think: Two Strategies for Changing Civic Behaviour.  The article is written by Gerry Stoker, Peter John and Graham Smith and is part of a programme of work called ‘Rediscovering the Civic – Achieving Better Outcomes in Public Policy.  There is also a web site which has a number of useful articles.

The article provides a very clear summary of Richard Thaler and Cass Sunstein’s book, Nudge, about which I have blogged previously.  It then sets the Nudge theory of changing civic behaviour by creating the right choice architecture to guide people into making what policy makers believe are the better choices, against an alternative way of changing civic behaviour – ‘the think strategy’.  In this approach, the emphasis is on creating conditions and processes that mobilise people and enable them to engage in a meaningful deliberative process which is interlinked with democratic structures.  The article gives the (much used) example of participatory budgeting in Porto Alegre, Brazil.

So where Nudge is about getting the messages right and ensuring the default options mean that people’s natural inertia won’t work against their own and society’s wider long term interests, Think is about creating new institutional spaces to support citizen-led investigation.  The article says that, ‘the deliberation strategy assumes that the individual can step away from their day-to-day experiences, throw off their blinkers and reflect on the wide range of policy choices and dilemmas.  People can be knowledge hungry, learn to process new information and reach new heights of reflection and judgement.’

In the best traditions of academics, the article concludes that both Nudge and Think have something to learn from one another and will need to find a way of rubbing along with each other.  Personally, it seems to me that Nudge is based upon a more realistic view of human nature than the deliberative democracy approach.  Maybe the opportunities currently available to people to participate just aren’t attractive enough and it is a case not so much of getting the choice architecture right as getting the engagement architecture right. 

But I’m not convinced – is the appetite really there?  And in a week when the publication of MPs expenses seems to be further eroding public trust in our democratic institutions, it feels as if in the future it is going to be even harder to persuade people to participate.  The duty to promote democracy is all well and good, but there may be more fundamental reasons why people have disengaged. 

30 years ago turnout was at 63% and even in 2004 it was 46%.  Perhaps turn-out isn’t everything but in representative democracies, if people aren’t willing to participate in elections, will significant numbers really engage in collective deliberative decision-making processes, which as the article’s authors point out are time consuming, prone to manipulation and failure.


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I went last night to hear Richard Thaler speaking at the London School of Economics about Nudge – improving decisions about health wealth and happiness, the book that he co-wrote with Cass Sunstein and which was published last year.  At the time both Thaler and Sunstein were working at Chicago University but Sunstein is now working for President Obama as, according to Thaler, the president’s ‘nudger-in-chief’.

Nudge has had quite an impact.  You may remember hearing last August that David Cameron provided his shadow cabinet with copies of the book to pack along with their other summer holiday reading. And this isn’t just an abstract debate.  Last year LB Barnet was given £100,000 by the Department for Communities and Local Government to test ‘nudge economics’ and experiment with ways of encouraging people to reduce litter, recycle and lower carbon emissions.

Richard Thaler began his lecture (click here to listen to the podcast) by saying his starting point was to recognise that people have limited rationality, limited attention spans and limited willpower.  Through the idea of ‘Libertarian Paternalism’, he believed it was possible to reconcile on the one hand the need to protect an individual’s right to choose with the paternalistic desire to improve the welfare of people.  You can do this, Thaler, argued by creating the right ‘choice architecture’.

There is no such thing as neutral choice architecture, Thaler, suggested.  He said that the choice architects always must choose some set of institutional arrangements and so getting the right design is critical.

Given that some designs are better than others, why not pick good designs?  And the argument at the heart of Thaler and Sunstein’s book is that through a nudge (a small feature of the environment that captures our attention and alters our behaviour) you can encourage better outcomes. 

Thaler highlighted the significance of default options.  He emphasised that we all need to be very careful in choosing what the default should be because often they prove to be sticky.  He gave the examples of the wider benefits that could flow from changing the defaults which mean employees must opt into pension schemes and opt into organ donations.

In the world of local government, I think these ideas about default options are very relevant.  Thaler spoke about how even with watching the television we can easily end up watching a programme we are not really interested in, simply because it has followed the previous one we were watching.  In the way that we think about the things that we do and the services we deliver, the default is to continue as we have done in the past.  Challenging the default can be difficult.

Thaler’s second principle of choice architecture is the need to give feedback.  He would like to see all credit card companies, for example, required to send their customers annual statement on their charging policies and personal data on how customers have spent their money.  His contention is that doing this would spawn websites like confused.com which would enable people to make more informed choices about where they can get the best deals.  If you are interested in this kind of thing there is a US web site called www.billshrink.com

Thaler then turned his attention to the financial crisis.  He emphasised the complexity in the financial markets and that the CEOs of major banks had not idea of the risks that their employees were taken, citing this as further evidence of our bounded rationality.  Alongside this there was the irrational behaviour of householders willing to take on ever greater debts.

Thaler argued that to conclude we need to give lots of power to regulators as a result of the financial crisis would be to fall into a trap.  His contention was that if the CEOs of the companies didn’t understand what was going on, what hope is there for the regulators?  His preferred approach would be to improve disclosure sufficiently to impose market discipline while still allowing companies to make money.  His belief is that disclosure to outsiders will improve disclosure within firms.

During the Q& A session that followed Thaler’s lecture, there was an interesting debate about how people could be nudged into making better choices about their health.  Thaler highlighted a designing for better health competition which is inviting people to put forward their ideas for health nudges.  He said from personal experience that he thought New York City’s recent move requiring most cafes and restaurants to show how many calories are in the food they sell was having an impact – he had never realised how many calories are in a muffin!

Another significant area where behaviour change is significant is tackling the causes of global warming.  Thaler’s view was that it would be important to get the incentives and feedback right.  He gave the example of having meters on thermostats to show consumers how much the heating they were using was costing.

There was an interesting observation from one of the questioners that while he would guess that there were numerous economists working at the Treasury he suspected there were probably no behavioural psychologists.  Given that we would all recognise that Thaler and Sunstein are right when they point out the irrationality of human behaviour, are we in our approach to public policy making guilty of making too many assumptions about how people will act?  Despite our current focus on community engagement, do we really have a sophisticated understanding of behavioural psychology?  Would a greater understanding of why people act in the way that they do, make public sector organisations more effective?  Perhaps we should have a behavioural psychologist at all our corporate management team meetings?

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