Category Archives: Behavioural Economics

House of Lords attacks nudging ???

Baroness Neuberger, chair of the House of Lords Science and Technology Sub-Committee,  was on the Radio 4 today programme. yesterday.  Her thesis seemed to be that nudging techniques alone are not sufficient to tackle some of the huge challenges that our country faces, such as climate change or obesity. 

Well that was the headline anyway … Firstly, the report didn’t actually attack nudging, only that it shouldn’t be applied in isolation and secondly the media reports seem to miss the fact that the select committee’s report was based on two case studies. One of those case studies was all about encouraging a significant reduction in car use, if we are to have any chance of meeting agreed carbon reduction targets. However, I’ve not seen any significant press coverage on this point.

The Baroness’ select committee report, apparently, at least attacks civil servants for their interpretation of the steer that they are getting from their political masters, or possibly the policies themselves.  On one hand, the Government are stating a preference for the consideration of behaviour science techniques (which the scrutiny committee applauded);  but at the same time, they are also taking away the financial freedoms for Government Departments to be able to do anything else anyway. The select committee argues that the nudge alone is not enough.

On the Today programme, the Times columnist, Philip Collins, argued that there is an ideology behind nudging: “There’s a feeling that it’s better if things are done in a voluntary way, rather than through regulation and the state.”  But, both agreed that nudging was only part of the solution. Philip trotted out defaults the classic examples of auto-enrolment on pensions, organ donation and “save more tomorrow schemes”. 

The truth behind the headlines, as ever, is more balanced. For instance, one of the key recommendations from the select committee report  is that the Government should appoint an independent Chief Social Scientist to provide them with robust and independent scientific advice and to advise and shape the development of such policies. If the Sub-Committee really felt that these policies had no part to play then what would be the point of such an advisor. The BBC was just trying to make a headline, along with previous ones such as “Nudge or Fudge ?”.

That isn’t to say that nudges are the ultimate panacea. Of course, many times we will need to consider the environment (such as regulation) within which  nudges will sit. If you’ve read Thaler’s book, you’ll know that the first “[i]N” in Nudge stands for incentives – he never saw “pure social science” standing alone. However, what is important with the behaviour science approach is to design the overall package of measures together so that they can be mutually re-enforcing. We all know what if we hear nine pieces of advice that we don’t like, but just one that we do like; then we’re much more likely to take comfort in the tenth piece of information as it sits nicely with our current world view and gives us an excuse not to have to change.

Baroness Neuberger also challenged whether there was any catalogued evidence that nudging works, at a societal level.  She felt the case had only been proven at an individual level.  She argued that you may get a marginal difference in individual behaviour; but the Government are not doing the evaluations correctly when applied to a population.  With organ donation, she argued that actually the thing that would make the difference was training of the staff.  (It is that classic problem that in the real world, you can never set up an “experiment” such that you can only change one thing at a time – not at a realistic level, for a topic that matters quite so much – and hence you can never be quite sure which of the interventions that you made that be be credited with causing the difference.)

Of course, there is a massive “Catch 22” situation in this argument. Unless we undertake the interventions then we’ve got no chance of being able to gather the appropriate evidence. Also, it is a brave project manager, who cancels something essential for his own project in favour funding the evidential framework in order to assess whether the intervention worked in practice and support future projects. (The solution, by the way, is for the programme manager to set the context and mandate the use of the appropriate evidential frameworks and to give the project manager freedom to set financial priorities within his project.  It also takes the right culture for the project manager and the programme manager to be prepared to willingly cut entire projects – even their own – because there aren’t sufficient funds to do “everything necessary” and it is better to do everything necessary on a smaller number of projects than it is to do a large number of parts of projects.  Unfortunately, such cuts don’t necessarily make the best PR when communicating this approach.)

Completely missing from the headlines was the fact that one of the two case studies that the Select Committee looked at was: reducing the reliance of the British public on the car.

One of their specific recommendations from the Select Committee was that the Government should:

    (a)  establish and publish targets for a reduction in carbon emissions as a result of a reduction in car use;

    (b) publish an estimate of the percentage reduction in emissions which will be achieved through  reducing car use and  the timescale for its achievement; and

    (c) set out details of the steps they will take if this percentage reduction is not achieved by this time.

You can listen again to Tuesday’s Radio 4 Today Programme (at 07:50) at: bbc.

You can see a slightly longer video report by the Baroness on the www.parliament.uk site.

You can also download the reports there at:

  • Report: Behavour Change
  • Report: Behaviour Change (PDF)
  • Inquiry: Behaviour Change
  • Science and Technology Sub-Committee I

  • Another excellent video from Rory Sutherland

    This video is a cracking watch … Rory, described as a thinking man’s Boris Johnson, discusses “interventions for the good” and transport decision-making gets a special mention.

    Rory describes that the problem is that most train journeys start with a car journey.  Hence,  he describes modal shift as an “asymmetric decision” because the vast majority of time, you take the decision on whether to get the train when you’re already in a car. There is all sorts of extra anxiety such as “When is my train ?”, “Is it running on time ?”,  “Will I get a parking space ?”, “Will the car be safe ?”, “Have I got change to buy a parking ticket ?”.  Hence, it is much easier to stick with the status quo and stay in that warm comfy car.

    Hence, the technological solution – the journey planner – can help lift the decision-making into a fair playing field. Journey planners, such as Transport Direct, allow the would-be traveller to make the decision on how to travel before they set out.  The best course of action might still be the car, but at least the options are more likely to be considered fairly.

    Quick link (whilst I sort out the embed feature).

    Will London grind to a halt on the 4th January 2011 ?

    On the 4th Jan 2011, London will turn off the Western Extension Zone (WEZ) of the London Congestion Charging Zone. Will London grind to a halt ?

    It was mostly a political decision and an electoral campaign pledge but Boris has consulted widely and the result was that the central congestion charging zone should stay, but the western extension zone should go. London joins an elite band of cities who have actually implemented road pricing and then decided to turn it off. In the rest of the country, many cities have struggled to even get on the band wagon: Manchester, Edinburgh and Cambridge all had negative referenda and voted against road pricing (or, in Manchester’s case, against a £1.6bn investment in the transport infrastructure of the City). However, London is now prepared to jump off the band wagon, or at least within one foot anyway. So what happens when you jump off the wagon ?

    On hearing a talk from TfL about the forthcoming changes to the zone, I was reminded of some great behavioural science about a nursery in Israel which decided to fine parents who turned up late to pick up their children. What’s interesting in that case is what happened when they decided to take the fine away.

    Professor Dan Ariely describes it really eloquently in his book: “Predictably Irrational”. We live in one of two worlds. One world is characterised by social exchanges, the other is characterised by monetary transactions. Unfortunately, these two worlds cannot co-exist. Imagine that you’ve been invited around to your first Christmas meal with your new girlfriend and her family. Her mum cooks up a sumptuous feast and there is everything there that makes the meal special: sausages in blankets, your favourite stuffing, both turkey and ham interlaced together … You get the idea. But, imagine the sound of the “scratching of the record”, as you get up and stretch and proclaim what an amazing dinner that was. However, instead of offering to wash the dishes, instead you break open your wallet and offer to pay for your share of the meal. This approach just doesn’t sit well within the social world. It jars and it grates and it destroys any social relationships. The world of social exchanges, where people amicably take it in turns, return favours and think of each other; and the world of monetary exchanges where we expect hard-nosed contractual arrangements just cannot co-exist. And, the policy-maker who tries to combines these two worlds in his policies does so at his peril.

    Unwittingly, the nursery in Israel broke the social norms by introducing the fining system in the first place, and then when it didn’t work for them, they ended up with the perception of a fine that just happened to be set at zero. Social relationships are not that easy to re-establish. As Professor Ariely puts it “once the bloom is off the rose, or once the social norm is trumped by a market norm, it will rarely return.” The owners of the Israeli nursery found that they then had a double whammy working against them and the parents became even more tardy at picking up their children. After all, there was now no social contract and the economic contract had also been taken away.

    So the question is: Will London’s road system grind to a halt on 4th January 2011 ?