What is a nudge, does it actually work and why should you care?
Nudge theory is a Nobel Prize-winning concept penned by University of Chicago Economist Richard Thaler and Harvard Law School Professor Cass Sunstein. It’s also referred to as choice architecture which stems from the field of behavioural economics and libertarian paternalism, a term coined by Thaler and Sunstein. Nudging steers people towards positive outcomes in everyday decisions. This type of behavioural economics has been adopted by business and governments, as well as school and charities around the world.
UK Prime Minister David Cameron popularized nudging and created an entire nudging unit for the bureaucracy. It was immediately successful and became so popular other government departments sat on a wait list for the unit’s services. Other countries including the United States have followed suit with their own nudge units.
A classic example of a nudge is to require people to opt out of being an organ donor, instead of asking them to opt in. No rules or legislation need to be changed, and that small tweak gave a big boost to organ donor levels in the US.
In the UK, government offered rebates to anyone who insulated their attics. The uptake was dismal. The British Government realized people didn’t want to clear out their attics because they served as a storage space and it was too much work. So, government offered an ingenious solution: an attic cleaning service. People had to pay for the service out of their own pocket, but just that service offering provided enough of a nudge that attic insulation uptake increased significantly.
This success led the British Government to try other nudges. The tax department sent handwritten notes to people behind on their taxes. The handwriting got people’s attention and they were way more likely to pay their taxes. Another successful nudge has been to automatically enroll Brits in a national pension savings plan. People can opt out if they wish, but the auto-enrollment led to a significant jump in pension plan contributors in the UK.
Political parties have also discovered the value of nudges. During an election, politicians are often found on the doorstep. They target voters committed to support to remind them to make sure they vote when the polls open. Through research, politicians know that a strong face-to-face nudge delivers significantly higher returns at the polls for them than a hand-written letter, a phone call or no action at all. Sasha Issenberg has studied this campaign tactic extensively and outlines much of his knowledge on mobilizing voters in his highly acclaimed book, The Victory Lab.
Barack Obama used nudges to mobilize voters as well. The campaign designed a website: barackobama.com/makeaplan. His campaign bought billboards and designed an ad that asked three questions, all about polling information – time, location and how they planned to get to the poll. By visiting the Obama website, people could request a ride to the polls, and receive the information they needed from the campaign, which helped ensure they voted. The campaign estimated it increased voter turnout nearly ten percent with this get out the vote (GOTV) nudge strategy. The billboards were the nudge in this example.
Not everyone believes that nudging is a fair way to influence people. Critics of nudging claim there are no guarantees nudges are based on good information or good intentions. There can be a lack of accountability, ethical standards and incentive to bring in new ideas and information. Nudges as policy are much easier to accomplish than broad legislative change which can be a dangerous direction for governments to move in.
The other major criticism of nudge theory is that unlike other systems, nudging is a closed loop and may not allow for any type of feedback. Governments and public servants will hear from the public quite quickly when a change is made that is unpopular. Conversely, nudges are so small, the choice or change so subtle, they almost can’t be seen, and therefore can’t really be questioned or reviewed like traditional laws and regulatory changes.
Critics also see nudge-makers, often government bureaucrats, as removing a citizen’s power, and while the nudge may lead to effective policy goals and outcomes, it can leave people uninformed and removed from any real choice. There is a fear that nudging will lead to a technocracy, which thrives on a sophisticated but narrow view of issues whereas democracy thrives on a diversity of people and opinions. Governments should be wary of giving an unaccountable public service too much power.
It is from the public, the voting masses, that the elected derive power and the public should always have a clear view of what government is trying to achieve or change. Nudges run the risk of turning citizens into blind consumers, directed toward a product, instead of being provided with information and left to make decisions on their own.
It remains to be seen whether a gentle nudge will become an unethical shove but the idea of nudging is certainly another public policy tool worthy of consideration.