Most government policy has been based on the assumption that people rationally seek to maximise their welfare. But it is emerging that ‘homo economicus’ is increasingly showing signs of choice stress, due to information overload and general modern-day complexity. In their quests to identify alternative mechanisms for influence, psychologists and economists have started straying into each other’s fields in their study of individual decision-making in a variety of social and everyday settings.
In ‘Nudge’, Richard Thaler and Cass Sunstein argue that people make many more decisions reactively and in-the-moment than analytically, drawing on arbitrary factors – product packaging, convenient access, simplicity or brand familiarity – as the primary basis of choice. Thaler’s list of the fallacies of choice include ‘anchoring’ (cognitive and perceptive bias based on personal experience), skewed perspectives of representativeness (for example, the perception that the probability of a coin toss outcome changes after a sequence), and ‘status quo’ (inbuilt bias against change).
The opportunity to influence choices for individual and common good comes in architecting sensible defaults, so that human laziness is rewarded by better individual and collective outcomes. Thaler’s examples include setting savings plan enrolment and risk profile defaults to ‘on’ and ‘conservative’, and placing healthy food options at eye-level. In so doing, designers of every conceivable inflection point become ‘Choice Architects’, embedding implicit pointers to redirect the sheep, protecting us from our inherent laziness and inattentiveness.
With its promises of quick wins for seemingly simple interventions, the theory has attracted followers, including UK Prime Minister Cameron, who established a ‘Behavioural Insights Team’ with the remit to ‘find innovative ways of encouraging, enabling and supporting people to make better choices for themselves’. The team initially tackled the application of behavioural insights to fraud (design changes that lead to higher compliance), energy efficiency (uptake of energy efficiency measures), consumer affairs (collective purchasing schemes) and health (organ donation and smoking cessation).
A subsequent review, initiated by the House of Lords to determine the feasibility of using social and contextual cues to influence behaviour to complement laws and regulation, found that while ‘nudging’ worked at the individual level, there was little evidence that the interventions translated into societal or useful large-scale behavioural change. The report concluded that ‘behavioural change interventions appear to work best when they are part of a package of legislative, regulatory and fiscal measures’, and that ‘nudging’ provided ‘not more than a useful perspective on the design of interventions’. Useful behavioural change, the authors concluded, takes time – typically more time than the term of an elected politician.
For the Behavioural Insights team , the honeymoon is over. Its reliance on randomised controlled trials via its ‘Test, Learn, Adapt’ process to drive policy direction is defensible but no substitute for results. At the Guardian, James Harkin has argued that the cause and effect relationship between behavioural intervention and a desired outcome (reduction of crime in New York, socially engineered re-invigoration of the HushPuppies brand) was tenous, and that while ‘turning’ and ‘tipping points’ could often be seen in retrospect, they are devilishly hard to engineer. The question of whether behavioural insights are spurious or useful must surely be settled by evidence and repeatability, and the Behavioural Insights Team is in the box seat to make the argument. The team’s next Annual Report will need to choose its words carefully to avoid fuelling further critique.