Behavioral Contagion Could Spread the Benefits of a Carbon Tax

Curated on Posted on by Stefaan Verhulst

Robert H. Frank at the New York Times: “…Why, then, hasn’t the United States adopted a carbon tax? One hurdle is the fear that emissions would fall too slowly in response to a carbon tax, that more direct measures are needed. Another difficulty is that political leaders have reason to fear voter opposition to taxation of any kind. But there are persuasive rejoinders to both objections.

Regarding the first, critics are correct that a carbon tax alone won’t parry the climate threat. It is also true that as creatures of habit, humans tend to change their behavior only slowly, even in the face of significant financial incentives. But even small changes in behavior are greatly amplified by behavioral contagion — the social scientist’s term for how ideas and behaviors spread from person to person like infectious diseases. And if a carbon tax were to shift the behavior of some individuals now, those changes would quickly spread more widely.

Smoking rates, for example, changed little in the short run even as cigarette taxes rose sharply, but that wasn’t the end of the story. The most powerful predictor of whether someone will smoke is the percentage of her friends who smoke. Most smokers stick with their habit in the face of higher taxes, but a small minority quit, and still others refrain from starting.

Every peer group that includes those people thus contains a smaller proportion of smokers, which influences still others to quit or refrain, and so on. This contagion process explains why the percentage of American adults who smoke has fallen by two-thirds since the mid-1960s.

Behavioral contagion would similarly amplify the effects of a carbon tax. By making solar power cheaper in comparison with fossil fuels, for example, the tax would initially encourage a small number of families to install solar panels on their rooftops. But as with cigarette taxes, it’s the indirect effects that really matter….(More)”.

Behavior-first government transformation

Curated on Posted on by Stefaan Verhulst

Report by Deloitte: “…When experts try to explain why so many transformation initiatives fail, both in the commercial world and at government agencies, they rarely talk about habit or other human factors. It’s much easier to focus on a project’s most expensive, visible, or contentious elements, such as new technologies, process redesign, or changes to the organizational chart. But the human element can be crucial to the success of organizational transformation.

This is true when you’re aiming for transformation with a capital T, such as designing and implementing an entirely new operating model. It’s also true when you’re trying to make some aspects of an existing model work better, or when you’re trying to build a new capability. No matter what kind of change an organization wants to implement, it’s crucial to understand how the proposed changes will affect people as individuals, and what it might take—psychologically, emotionally, or politically—to make them change their behavior. After all, if people keep doing the same things in the same way, what has really been transformed?

Even when leaders understand that they need to encourage behavioral change, they often aim for that goal using strategies without a proven track record. For example, they might offer financial incentives to employees who meet certain performance targets, without clear evidence that this kind of reinforcement works in that context. What if the motivating factors that can overcome inertia in a certain situation have more to do with how employees feel about their work, or how they cohere as a community?

Fortunately, thanks to the work of behavioral psychologists and economists, as well as neuroscientists, we understand much more than we used to about human behavior and its drivers. This work has demonstrated, for example:

  • What typically motivates people—a sense of purpose, a sense of autonomy, and the ability to grow in one’s job1
  • Why people engage in “predictably irrational” behavior, and how we can harness this understanding to shape and nudge behavior2
  • How to use customer analytics and customer experience techniques such as human-centered design to drive workforce experience3

We also know that transparency can help a transformation initiative succeed. By keeping stakeholders informed about all aspects of the effort and inviting feedback, project leaders can gain insights into human motivation and behavior, and how their employees are experiencing the change, as those factors pertain to their particular project. This can help leaders understand which aspects of the transformation are working and which are not, and it helps to build trust among everyone involved.

“Behavior-first change” applies insights from a range of disciplines including anthropology, behavioral economics, neuroscience, and psychology to better understand and influence human behavior—and governments are beginning to apply it to their transformation initiatives. In fact, with more than 200 behavioral insights units in government worldwide, the public sector has been at the forefront of this movement. So, we’re not proposing a behavioral change approach as something radically new. Instead, we’re suggesting government agencies that might already be applying these techniques externally can systematically apply these insights to their own transformations—whether “capital T” programs or more focused efforts—to improve the chances that these programs will realize their intended outcomes….(More)”.

The $100 Million Nudge: Increasing Tax Compliance of Businesses and the Self-Employed using a Natural Field Experiment

Curated on Posted on by Stefaan Verhulst

Paper by Justin E. Holz et al: “This paper uses a natural field experiment to examine the effectiveness of specific nudges on tax compliance amongst firms and the self-employed in the Dominican Republic. In collaboration with the Dominican Republic’s tax authority, we designed messages for more than 28,000 self-employed workers and over 56,000 firms. Leveraging administrative tax data, we find evidence that our nudges (increasing the salience of prison sentences or public disclosure of tax evaders) have large effects on increasing tax compliance, primarily working through the channel of decreasing claimed tax exemptions. Interestingly, we find that firms are more impacted than the self-employed, and that firm size is critically linked to nudge effectiveness: larger firms are considerably more influenced by nudges than smaller firms. We find this latter result noteworthy given the paucity of evidence showing significant behavioral impacts of nudges amongst the largest players in a market. Overall, our messages increased tax revenue by $193 million (roughly 0.23% of the Dominican Republic’s GDP in 2018), with over $100 million constituting income that the government would not have received without our field experimental nudges….(More)”.

Nudging in Public Policy

Curated on Posted on by Stefaan Verhulst

Alice Moseley in the Oxford Research Encyclopedia of Politics: “Nudging” in public policy involves using behavioral, economic, and psychological insights to influence the behavior of policy targets in order to help achieve policy goals. This approach to public policy was advocated by Thaler and Sunstein in their book Nudge in 2008. Nudging is underpinned by a conception that individuals use mental shortcuts (heuristics) in day-to-day decision-making, shortcuts that do not always serve their long-term interests (for instance, in relation to eating and exercise patterns, road safety, or saving for the future). Nudging does not involve seeking to persuade individuals about the merits of pursuing particular courses of action that will better serve their long-term welfare. Rather, it involves altering the choice environment so that when people follow their instincts, using familiar mental shortcuts, the most prominent option available to the policy target will be one that is likely to promote their own welfare, and that of society more widely. Nudging has come to be considered a core part of the policy toolkit in many countries but academic scholarship has also debated the ethical dimensions of nudging, and there is a flourishing research literature on the efficacy, public acceptability, merits, and limitations of this approach within public policy….(More)”.

20’s the limit: How to encourage speed reductions

Curated on Posted on by Stefaan Verhulst

Report by The Wales Centre for Public Policy: “This report has been prepared to support the Welsh Government’s plan to introduce a 20mph national default speed limit in 2022. It aims to address two main questions: 1) What specific behavioural interventions might be implemented to promote driver compliance with 20mph speed limits in residential areas; and 2) are there particular demographics, community characteristics or other features that should form the basis of a segmentation approach?

The reasons for speeding are complex, but many behaviour change
techniques have been successfully applied to road safety, including some which use behavioural insights or “nudges”.
Drivers can be segmented into three types: defiers (a small minority),
conformers (the majority) and champions (a minority). Conformers are law abiding citizens who respect social norms – getting this group to comply can achieve a tipping point.
Other sectors have shown that providing information is only effective if part of a wider package of measures and that people are most open to
change at times of disruption or learning (e.g. learner drivers)….(More)”.

How behavioural sciences can promote truth, autonomy and democratic discourse online

Curated on Posted on by Stefaan Verhulst

Philipp Lorenz-Spreen, Stephan Lewandowsky, Cass R. Sunstein & Ralph Hertwig in Nature: “Public opinion is shaped in significant part by online content, spread via social media and curated algorithmically. The current online ecosystem has been designed predominantly to capture user attention rather than to promote deliberate cognition and autonomous choice; information overload, finely tuned personalization and distorted social cues, in turn, pave the way for manipulation and the spread of false information. How can transparency and autonomy be promoted instead, thus fostering the positive potential of the web? Effective web governance informed by behavioural research is critically needed to empower individuals online. We identify technologically available yet largely untapped cues that can be harnessed to indicate the epistemic quality of online content, the factors underlying algorithmic decisions and the degree of consensus in online debates. We then map out two classes of behavioural interventions—nudging and boosting— that enlist these cues to redesign online environments for informed and autonomous choice….(More)”.

Do nudgers need budging? A comparative analysis of European smart meter implementation

Curated on Posted on by Stefaan Verhulst

Paper by Sarah Giest: “Nudging is seen to complement or replace existing policy tools by altering people’s choice architectures towards behaviors that align with government aims, but has fallen short in meeting those targets. Crucially, governments do not nudge citizens directly, but need private agents to nudge their consumers. Based on this notion, the paper takes on an institutional approach towards nudging. Rather than looking at the relationship between nudger and nudgee, the research analyses the regulatory and market structures that affect nudge implementation by private actors, captured by the ‘budge’ idea. Focusing on the European energy policy domain, the paper analyses the contextual factors of green nudges that are initiated by Member States, and implemented by energy companies. The findings show that in the smart meter context, there are regulatory measures that affect implementation of smart meters and that government has a central role to ‘budge’, due to the dependence on private agents….(More)”.

Science Fictions: Exposing Fraud, Bias, Negligence and Hype in Science

Curated on Posted on by Stefaan Verhulst

Book by Stuart Ritchie: “So much relies on science. But what if science itself can’t be relied on?

Medicine, education, psychology, health, parenting – wherever it really matters, we look to science for guidance. Science Fictions reveals the disturbing flaws that undermine our understanding of all of these fields and more.

While the scientific method will always be our best and only way of knowing about the world, in reality the current system of funding and publishing science not only fails to safeguard against scientists’ inescapable biases and foibles, it actively encourages them. Many widely accepted and highly influential theories and claims – about ‘priming’ and ‘growth mindset’, sleep and nutrition, genes and the microbiome, as well as a host of drugs, allergies and therapies – turn out to be based on unreliable, exaggerated and even fraudulent papers. We can trace their influence in everything from austerity economics to the anti-vaccination movement, and occasionally count the cost of them in human lives….(More)”.

Are Food Labels Good?

Curated on Posted on by Stefaan Verhulst

Paper by Cass Sunstein: “Do people from benefit from food labels? When? By how much? Public officials face persistent challenges in answering these questions. In various nations, they use four different approaches: they refuse to do so on the ground that quantification is not feasible; they engage in breakeven analysis; they project end-states, such as economic savings or health outcomes; and they estimate willingness-to-pay for the relevant information. Each of these approaches runs into strong objections. In principle, the willingness-to-pay question has important advantages. But for those who has that question, there is a serious problem. In practice, people often lack enough information to give a sensible answer to the question how much they would be willing to pay for (more) information. People might also suffer from behavioral biases (including present bias and optimistic bias). And when preferences are labile or endogenous, even an informed and unbiased answer to the willingness to pay question may fail to capture the welfare consequences, because people may develop new tastes and values as a result of information….(More)”.

What’s next for nudging and choice architecture?

Curated on Posted on by Stefaan Verhulst

Richard Thaler at a Special Edition of Organizational Behavior and Human Decision Processes: “I have long considered all my co-editors of this special issue to be good friends. That is, until they asked me to write an editorial on the topic of “what is next?” When a bunch of experts in judgment and decision-making ask you to do something they know to be impossible, you should be suspicious, right? Do they think I don’t know that predicting the future of science is impossible?

They slyly assigned Katy Milkman the job of luring me into agreeing. The first request came via email with what had to be a deliberately impenetrable subject heading: “Ask for OBHDP Special Issue You’re Co-Editing: 1–3 Paragraphs on the Future of Nudge.” The other three co-editors were copied, the message was long and complicated, and, to top it off, the first word of the subject was “Ask.” Katy surely knew there was no chance I would read that email, which of course was part of her cunning strategy. She figured that when she sent the inevitable follow-up email I would feel guilty about not responding to the first one. Guilt is a powerful nudge.

The expected second email came three days later, this time with a catchier one-word subject line: “Noodge.” (Have I mentioned that these emails arrived in the early days of the COVID-19 lockdown?) This new email began by acknowledging that the first one had been too long and poorly timed, lulling me into a false sense of security that I was being excused and off the hook. But then, Katy launched the heavy artillery. She framed her request in a way that made my acceptance the default option: “Hope you’re up for writing 1–3 paragraphs, but let me know if not and we’ll manage. :)” We all know that defaults are powerful, but did she really think this was going to work on me? Although I was mildly miffed at the brazen noodging, I find it hard to say “no” to Katy, so I stuck to my usual strategy of lying low and ignored this email as well, foolishly hoping she would give up.

That hope was dashed a week later when the third email arrived with the subject line: “pretty please with sugar on top. :)” Plus, she pulled out another trick she had up her sleeve: a deadline! “The introduction is due in just a few days!” She was telling me that this assignment, which I had never agreed to do, was almost overdue. Of course, she also knew I was trapped in my home with very few excuses. Seeing no plausible escape route at this point, I capitulated and agreed to her request.

Conclusion: nudging works! Even on me.

Recall her request was that I write one to three paragraphs. This is already the sixth paragraph so by all rights I should already be done. Certainly, I will not be lured into making any forecasts. Phil Tetlock is her colleague! But since the word processor is already open, I will instead offer a few thoughts about my hopes and dreams for this enterprise.

My first hope is that the range of “nudges” expands. We know a lot about the effect of the kinds of strategies Katy used in her emails to me such as defaults, reminders, deadlines, guilt, salience, and norms. Come to think of it, I am surprised Katy didn’t try “90 percent of all recipients of my emails agree to do what I ask.” While I concede that these ploys often (though not always) work, it can’t be that they span the entire behavioral science repertoire. So I am hoping to see studies using a different set of behavioral insights. I am sure there are good ones out there….(More)”.