First Obama, now Cameron embraces 'nudge theory'

Andy McSmith reports on the doctrine sweeping Downing Street

Many years ago, when David Cameron was still at school, boys of his age would fall about laughing at a Monty Python sketch involving two men in a pub, one of whom was desperate to draw out information about the other's sex life. His continually repeated phrase was: "Nudge, nudge, wink wink, say no more!"

Nudge – with or without a wink – has a special meaning in modern political theory, and was very much in vogue in Mr Cameron's circles two years ago, before the current economic crisis began. Then it disappeared, as if they had decided to say no more. Now, it appears, it is back. The man who elevated "nudge" into a political catchphrase, the Chicago-based academic, Richard Thaler, says that his idea is at last getting serious attention in Downing Street, as it is in Barack Obama's White House.

A "behavioural insight team" – known colloquially as the "nudge unit" – is reported to be growing in influence inside No 10. The team includes the academic David Halpern, a former adviser to Tony Blair. He reports to Steve Hilton, Mr Cameron's director of strategy, and the Cabinet Secretary, Sir Gus O'Donnell. Vince Cable, the Business Secretary, is said by Professor Thaler to be "very much on board".

Professor Thaler visited Britain in 2008 to promote his theory, met Cameron, and made such an impression that for a time he acted as unpaid adviser to the Tory leader. His day job is directing the Center for Decision Research at the University of Chicago where he "studies behavioural economics and finance as well as the psychology of decision-making which lies in the gap between economics and psychology". He also "investigates the implications of relaxing the standard economic assumption that everyone in the economy is rational and selfish, instead entertaining the possibility that some agents in the economy are sometimes human".

To some people this may sound a statement of the bleeding obvious. Young people would be behaving rationally if the money they spend on iPhones was put into a pension fund instead, but most are not going to do anything so far-sighted without very heavy prompting. According to Professor Thaler, we would all invest in the stock market if we were rational, but we do not. Smoking, overeating and taking no exercise are other examples of irrational behaviour.

Nudge theory is an attempt to resolve a classic Conservative dilemma: since they believe in the small state and low taxation, should the Conservatives just leave us to our bad habits, and accept the undesirable social consequences that will follow, or use the levers of state to try to improve our behaviour?

There is a powerful libertarian wing within the party whose general prejudice is to allow people to do as they please provided they do not break the law. There are also paternalists who believe that the fortunate in society have a duty to protect the less fortunate from the consequences of their own folly. Libertarianism and paternalism are assumed to be necessarily in conflict.

In 2008, Professor Thaler and Cass Sunstein wrote a book called Nudge: Improving Decisions about Health, Wealth, and Happiness in which they claimed that there is a middle way that enables the state to be both paternalist and libertarian. Instead of ordering people around or leaving them to behave in self-defeating ways, the state can nudge them into behaving sensibly.

The example they gave which has attracted most publicity – not because it is the most important, but because it is so wacky – is the success story of the public loo in Amsterdam airport where men were nudged into urinating in the pan, despite the many distractions which were apparently spoiling their aim. This small, but desirable, improvement in male behaviour was achieved by painting a picture of a house fly on the porcelain. The quantity of misdirected urine is said to have fallen by 80 per cent.

In the UK it has long been assumed that if people are given financial inducements to cut their fuel bills through better insulation, they will do it. Nudge theory allows that they are not necessarily that rational, but will be influenced by what their peers are doing. Therefore, the way to persuade people with excessive fuel bills to do something about it is to tell them what the average bill being paid along their street is. Very few consumers will willingly pay more than their near neighbours.

The authors called their philosophy "libertarian paternalism". Another phrase they introduced was "choice architecture", a concept implying that the state can be the architect that arranges personal choice in way that nudges consumers in the right direction.

Not everyone who had read their book was overwhelmed. The writer Peter Wilby thought it was "pretty marginal to what politics ought to be about". But it impressed David Cameron, who met Professor Thaler at around the time that the book was published. He and his adviser, Steve Hilton, were looking for a neat idea that would suggest the Conservatives had found the ideal median between state intervention and laissez-faire. In August 2008, the book was included in a list of suggested summer reading circulated to Tory MPs.

Then all went quiet. As the economic crisis hit the UK, there were important things to talk about, and the next time the Tories reached for a big idea, they produced the Big Society. But the Big Society left the Civil Service cold – despite the fervent conviction David Cameron put into his exhortations to the public to be more civic-minded – because it did not translate well into policies.

It does not answer the question whether it is government's business to deter people from adopting bad habits that damage their health or wealth, yet ministers have to make these choices. If they intervene, they can be accused of running a nanny state; to do nothing risks appearing irresponsible and uncaring. But if the theory works, they can avoid either of those extremes – by nudging.

Wonks at the White House

They are the wonk's wonks: two middle-aged scholars from Chicago whose gift for explaining even the most complex legal and economic conundrums, in terms that Joe Public can understand, has turned them into cult figures in both the dusty halls of academia, and beyond.

But for men who are frequently hailed as visionaries, and whose books – in particular the hugely influential Nudge – have achieved the rare distinction of filling libraries, holidaymakers' suitcases, and presidential bedside tables, Cass Sunstein and Richard Thaler boast surprisingly dodgy political antennae.

The first time they encountered a local politician called Barack Obama, they presumed that his career was headed nowhere. "I met him at a neighbour's apartment," Thaler once recalled. "At the time he was running third in the primary [for the Senate election]. So we thought: great guy; probably never hear about him again."

Fortunately, for their careers at least, they were wrong. Mr Obama's rise has propelled the academic career of Thaler, hitherto an largely anonymous 64-year-old economic theorist, into orbit.

Sunstein, a formidably brainy law professor, has done even better: he now earns a crust as the White House regulatory "tsar", bringing the ideas that informed Nudge to bear on White House decisions on everything from shaming companies so they pollute less to getting people to make use of their tax-free pension plans. With his wife Samantha Power, who sits on the National Security Council, he forms one of Washington's foremost power-couples.

Guy Adams

Sport
Luis Suarez and Lionel Messi during Barcelona training in August
footballPete Jenson co-ghost wrote Suarez’s autobiography and reveals how desperate he's been to return
News
newsMcKamey Manor says 'there is no escape until the tour is completed'
Voices
Hunted: A stag lies dead on Jura, where David Cameron holidays and has himself stalked deer
voicesThe Scotland I know is becoming a playground for the rich
News
people
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Architect Frank Gehry is regarded by many as the most important architect of the modern era
arts + entsGehry has declared that 98 per cent of modern architecture is "s**t"
Money
Welcome to tinsel town: retailers such as Selfridges will be Santa's little helpers this Christmas, working hard to persuade shoppers to stock up on gifts
news
Arts and Entertainment
Soul singer Sam Smith cleared up at the Mobo awards this week
newsSam Smith’s Mobo triumph is just the latest example of a trend
News
Laurence Easeman and Russell Brand
people
Sport
Fans of Dulwich Hamlet FC at their ground Champion Hill
footballFans are rejecting the £2,000 season tickets, officious stewarding, and airline-stadium sponsorship
News
Shami Chakrabarti
people
Arts and Entertainment
Benedict Cumberbatch has refused to deny his involvement in the upcoming new Star Wars film
filmBenedict Cumberbatch reignites Star Wars 7 rumours
Sport
football
News
news
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Business Analyst - Surrey - Permanent - Up to £50k DOE

£40000 - £50000 Per Annum Excellent benefits: Clearwater People Solutions Ltd:...

***ASP.NET Developer - Cheshire - £35k - Permanent***

£30000 - £35000 Per Annum Excellent benefits: Clearwater People Solutions Ltd:...

***Solutions Architect*** - Brighton - £40k - Permanent

£35000 - £40000 Per Annum Excellent benefits: Clearwater People Solutions Ltd:...

Senior Research Fellow in Gender, Food and Resilient Communities

£47,334 - £59,058 per annum: Coventry University: The Centre for Agroecology, ...

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker