My colleague Max Burton-Chellew and I were sitting in a brilliant Lecture by the behavioural economist George Lowenstein last month. His lecture was refreshing in how clearly he described where the policy implications of his work fit within the bigger picture. This set us talking and afterwards, Max and I (again) found ourselves talking about the limited ways policymakers apply lessons from the behavioural sciences at present.
After the talk, Max wrote a short article on his brilliant science micro-blog page. I’ve pasted what he wrote at the end of my post as I want more people to read it and he sets it out better than I could.
While, of course, I’m very exciting about the growth of behaviourally-inspired policy, I’m concerned about the directions it’s currently going in. Today, I think that behavioural-insights inspired policy is putting the onus too heavily on ‘nudging’ individual decision-makers to do better. It’s understandably popular – it appears to offer politicians the promise of behaviour change for free. However this focus on individual choice is an incomplete application of behavioural insights. Most obviously, it ignores how profoundly the social, physical, economic and cultural environment a person experiences affects how they make life decisions, perceive and interact with people and the wider world. If we want to use behavioural insights to shift behaviour by more than a few per cent, we will need to do better.
Moreover, I think if the current approach does not change, critics will become more vocal and there’s a real risk that public opinion could turn against behaviourally-inspired policy altogether … especially after blunders like this, which reveal how easy it is to make mistakes:
Such mistakes can be forgiven, as behavioural-insight inspired policymaking is still very new. However, moving forward, I see really exciting opportunities for a broad community of researchers, especially those who speak more than ‘economicus‘. Policymakers can, and must, benefit from research that combines the experimental tools of economics with the techniques and rich literatures in psychology, sociology, anthropology and even behavioural ecology. This will allow them to understand how an individual’s decision-making varies in the different communities and organisations they belong to.
It’s exciting to think that in the future, policymakers will incorporate insights from so many behavioural disciplines….some of this work may not be quite so popular with austerity-first politicians (as I doubt you can ‘nudge’ an environment for free)…but I think it could lead to better, more effective policies that can help solve the big challenges our societies’ face. OK rant over! Thanks for reading.
Here’s Max’s article he wrote on his passle microblog (https://max.passle.net/ – go check it out!):
The potential costs and benefits of applying behavioural economics to public-policy
Behavioural economics offers the potential to improve public and individual welfare at relatively little cost, by ‘nudging’ people towards more optimal choices, in what is termed libertarian or soft paternalism. The application of behavioural economics to public policy has the potential to increase rates of organ donation, tax returns and other socially beneficent behaviours without the use of coercion or fines, and therefore it appears to be a win-win situation, but is it so simple?
Behavioural economics has been heralded as a revolutionary paradigm for understanding human decision making, but actually it is basically just the application of psychology to decision making. In fact much of the knowledge was already implicitly known by large businesses and advertising firms, who were ‘nudging’ us towards their desired outcomes via such nudges as buy one get one free, and celebrities wear our clothes, why don’t you? (thank you to Thom Scott-Phillips for crystallising this view). Therefore this new field is only revolutionary if you previously subscribed to a strict form of classical economics that rested entirely on the foundation of rational choice and revealed preferences. This form can be summarised by the tautological axiom: “People choose what they prefer, and [we know what] they prefer [by] what they choose”.
So why do you keep on hearing about behavioural economics (I could have picked one of many features from various broadsheets, but this rather old link was most relevant to this post)? Well, there are two things that make nudging so appealing to cash-strapped governments nowadays, and hence why it keeps on appearing in the news; 1) nudging is soft government, it still lets people have freedom of choice; and 2) it offers temptingly large effects from almost cost free interventions. These aspects are particularly attractive to more right-wing governments that wish to reduce big government and advocate freedom of choice in free-markets. In contrast, left-wing governments applying nudging are at risk of being perceived as a hyper-nanny state.
As behavioural economics is largely the application of psychology to decision making, and the use of randomized controlled trials to test if policy implementations actually work, I am mostly a fan. However there is a danger that by focussing on how to shift people’s choices, in attempts such as trying to reduce obesity, reduce unemployment, or increase saving rates, it allows the creation of a narrative that suggests people are solely to blame for their own failings (i.e. misfortune). I’m sure this wasn’t the intention of those who created the field of behavioural economics, but it is a potential by-product that we may want to guard against.
Otherwise political campaigners may abuse behavioural economics, similar to how Darwinism was abused to justify prejudiced views in the 1930’s, and our political discussions and policy designs may end up implying everyone could be healthy, wealthy and happy, if only they changed their behaviour to match the behaviour of the rich and successful. In other words you are not poor, obese or unwell because of deeper societal structures such as inequality in education, sports facilities, housing or health-care, but because you basically prefer choices that make you poor, obese or unwell. Where have we heard that before?”
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