March 29, 2012

HERDING THE SHEEP:

Nudge nudge, think think: The use of behavioural economics in public policy shows promise (The Economist, Mar 24th 2012)

 The idea of nudging is based on research that shows it is possible to steer people towards better decisions by presenting choices in different ways.

That theory is now being put to the test. One of the book's co-authors, Cass Sunstein, has been recruited by Barack Obama to the White House. Richard Thaler, the other co-author, has been advising policymakers in several countries including Denmark, France and, above all, Britain, where David Cameron has established a Behavioural Insights Team, nicknamed the Nudge Unit.

The Nudge Unit has been running dozens of experiments and the early results have been promising*. In one trial, a letter sent to non-payers of vehicle taxes was changed to use plainer English, along the line of "pay your tax or lose your car". In some cases the letter was further personalised by including a photo of the car in question. The rewritten letter alone doubled the number of people paying the tax; the rewrite with the photo tripled it.

Changes to language have had marked effects elsewhere, too. A study into the teaching of technical drawing in French schools found that if the subject was called "geometry" boys did better, but if it was called "drawing" girls did equally well or better. Teachers are now being trained to use the appropriate term.

Another set of trials in Britain focused on energy efficiency. Research into why people did not take up financial incentives to reduce energy consumption by insulating their homes found one possibility was the hassle of clearing out the attic. A nudge was designed whereby insulation firms would offer to clear the loft, dispose of unwanted items and return the rest after insulating it. This example of what behavioural economists call "goal substitution"--replacing lower energy use with cleaning out the attic--led to a threefold increase in take-up of an insulation grant.
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Posted by at March 29, 2012 5:40 AM
  

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