Applying the insights of behavioural economics will mean better – and cheaper – government

The guiding principle is that instead of ordering people around, the state can “nudge” them into making better decisions by framing their choices differently

Share

Shortly after the Coalition came to power, David Cameron brought a team of civil servants into the Cabinet Office to work on a ground-breaking project under his controversial director of strategy, Steve Hilton. And unlike one of the Conservatives’ other big ideas – the Big Society – the “Nudge Unit” is still going strong three years on.

As we report today, the unit is using insights from the emerging field of behavioural economics to subtly change the processes, forms and language used by the Government – saving public money in the process. The team found, for example, that by changing the wording used to encourage organ donation, more than 100,000 extra people would sign up annually. The new phrase – “If you needed an organ transplant, would you have one? If so, please help others” – will now appear alongside every tax disc renewal and driving licence application. Ultimately, it will save hundreds of lives a year.

Such tweaks may sound simple. There are certainly still those in government who are sceptical, unfairly characterising the Nudge Unit as lightweight and ephemeral. Yet over the past two decades in particular behavioural economics and social psychology have established firm grounding, so that the potential  for smarter and cheaper public services is vast and exhilarating.

The guiding principle – articulated by US economists Richard Thaler and Cass Sunstein in their book, Nudge – is that instead of ordering people around or leaving them alone to behave in ways damaging to themselves or others, the state can “nudge” them into making better decisions by framing their choices differently. Organ donation is a case in point.

Finding a successful nudge involves a scientific approach, testing different approaches and forms of words using randomised controls – a principle common in medical research but rare in policy-making. In one instance, where the goal was to increase the proportion of people who pay their taxes on time, some 70,000 citizens received the standard government letter urging them to file their returns on time, while another 70,000 were sent a variation designed by the nudge team. Such large numbers are academically rigorous and provide a very high degree of confidence that the intervention will work on a national scale.
There is still so much more that could be done. So far, the unit has concentrated on the less controversial areas of government activity. Public health and education policy are just two areas where behavioural economics has a significant and beneficial role to play. Rather than be restricted to the Cabinet Office, these insights should be part of the policy-making process across all departments.

Critics who cry “Big Brother” over government attempts to manipulate public behaviour are missing the point. Far from infringing the liberties of citizens, behavioural economics uses our evolving understanding of human nature to liberate us from avoidable errors. It could produce better government and a better society. Indeed, this is about ensuring the state does not need to be Big Brother. The application of behavioural economics is smart, scientific, and liberal, so naturally this newspaper will champion it.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

SThree: Trainee Recruitment Consultant - Dublin

£13676.46 - £16411.61 per annum + OTE: SThree: SThree Trainee Recruitment Cons...

Ashdown Group: Marketing or Business Graduate Opportunity - Norwich - £22,000

£18000 - £22000 per annum + training: Ashdown Group: Business and Marketing Gr...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + Commission: SThree: Are you great at building rela...

Ashdown Group: Database Analyst - Birmingham - £22,000 plus benefits

£20000 - £22000 per annum + excellent benefits: Ashdown Group: Application Sup...

Day In a Page

Read Next
Labour leader Ed Miliband unveils Labour's pledges carved into a stone plinth in Hastings  

Election 2015: Smash the two-party system! Smash the voting system!

Armando Iannucci
Tactical voting is a necessary evil of the current first-past-the-post system, where voters vote against what they do not want rather than in favour of what they do  

Election 2015: Voting tactically has become more fraught in new political order

Michael Ashcroft
General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power