what is a nudge
nudges use behavioural insights from economics and pyschology to achieve behavioural change, by using small suggestions to influence human behaviour
- maintains freedom of choice, unlike policy its not mandate there is always an opt out option
- gentle push
- build on basic insights from funadmental research into human behaviour
is it common
many places around the world use BI to public policy
Thaler and Sunstein
example of food nudging
experiment where you place food in store can change food uptake by as much as 25% - including healthy food
- the positioning of food changes the demand of the items placed in favourable places
what is a choice architect
Choice architecture refers to a scenario in which the environment in which someone must make a decision has been carefully designed to try and influence that decision
simple nudge examples
- toilet seat = bug picture = aim
- hotels - join the rest of your guests in helping reusing towels for environment = conditional cooperation
- water companies give timers
- pension scheme defaults
what are the 10 nudges
- default rules = organ donors - big effect
- simplification = make it easy = donor
- using social norms = morality, conditional coop, vaccines
- ease and conveinience = system 1
- disclose = important info that will deter or attract - missing hospital appointments
- warnings graphics
- precommitment
- reminders
- implementation intentions - talk to concious
- nature of consequences
how do nudges work - they include fundamental pychological mechanisms
- cognitive costs = people think with system 1
- make people use reflective thinking
- use the fact that people have reference dependent preferences and are loss averse = power of defaults
- people are present biased - but reminds people of their long-run self interest (health)
- appeals to peoples social preferences
Benartzi 2004
save more tomorrow
- Pension problem in US = because of active enrolment
- Behavioural research suggests this limits uptake because of procrastination - people are present biased = would rather benefit today although this means greater losses in the future
- change the choice architecture of retiremnet plans by incorporating defaults
results from SMT
- automatic enrolment = only 10% opt out
- automatic investment = but only 3% enough?
- automatic escalation = commit now to increase savings rate later = relates to the planner = when pay increases, savings increase = loss aversion - wont take money away from you
- scheme is successful and getting epople to save
Hallsworth 2017
tax collector = uses message framing in letters to play on social norms, conditional coop, loss aversion
- using insight gained from behavioural research that many people are conditional cooperators
- how to nudge people to pay self employed taxes = similar to public good game
- control = normal reminder letter
- treatements = basic - 9/10 people pay on time - loss aversion - you will lose out on public services - minority norm = 9/10 pay and your in the minority that hasnt
- looked at how many people paid their tax within 23 days of getting the letter
results from tax letter experiment
- mainly all treatments of letters accelerate the tax payments
- but not significant difference between loss framed and gain = as BE would have expected
- social norm letter biggest effect
- especially the minority norm frame
main findings from the tax letter
there is value in incorporating moral costs into taxpayer communication
- is this something that works repeatedly - as we see in conditional cooperation it falls off after multiple rounds
- cost effective - just adding more lines
should governments invest more in nudging
- it is cheap
- nudges are different to traditional policy tools = mandates that appeal to rational self interest
- behaviour change and cost effective
comparing nudge to monetary incentive
Benartzi 2017
- automatic enroll but you decide how much you want to contribute
- paying students to attend a education fair about retirement plans
- the active nudge generated a 200 increase in savings plan contributions per person, whereas moentary only 58 = costs of nudge significantly lower
- nudge is better at changing behaviour and cheaper
what is the mindspace framework
framework using 9 behavioural science principles that can be used to guide policy design
- because proved to be cost efficient
- and effective and changing behaviour
what are the 9 MINDSPACE steps
M = messenger
I = incentive - system 1 shortcuts - reference point - loss aversion - present biased (underwigh their own future interests)
N = norms - conditional coop - dont want minority - boomerag effect
D = defaults
S = saliency - attention is drawn to
P = priming - system 1 - unconcious
A = affect - emotions
C = commitment - procrastination
E = ego
