Nudge and the European Union

Curated on Posted on by Stefaan Verhulst

Chapter by Alberto Alemanno: “Europe has largely been absent from the US-dominated debate surrounding the introduction of nudge-type interventions in policy-making. Yet the European Union and some of its Member States are exploring the possibility of informing their policy action with behavioural insights. While a great deal of academic attention is currently been paid to the philosophical, ethical and other abstract implications of behavioural-informed regulation, such as those concerning autonomy, dignity and moral development, this chapter charts and systematizes the incipient European Nudge discourse.

Besides a few isolated initiatives displaying some behavioural considerations (e.g. consumer rights, revised tobacco products directive, sporadic behavioural remedies in competition law), the EU – similarly to its own Member States – has not yet shown a general commitment to systematically integrate behavioural insights into policy-making. Given the potential of this innovative regulatory approach to attain effective, low-cost and choice-preserving policies, such a stance seems surprising, especially when measured against growing citizen mistrust towards EU policy action. At a time in which some EU countries are calling for a repatriation of powers and the European Commission promises to redefine – in the framework of its Better Regulation agenda – the relationships between the Union and its citizens, nudging might provide a promising way forward. In the aftermath of the Brexit vote, this promise has not only been shared by the 27 remaining Member State but also represents one of their major priorities . Yet with promises come challenges too.

The chapter proceeds as follows. Section 2 sets the scene by discussing the growing appeal of nudging among policymakers within and across Europe. Section 3 introduces the notion of behavioural policymaking and contrasts it with that of nudging. Section 4 describes the early and rather timid attempts at integrating behavioural insights into EU policymaking and identifies some domestic experiences. Section 5 discusses the institutional and methodological efforts undertaken by the EU and some of its member states to embrace behavioural policymaking. In turn, section 6 discusses the major difficulties of integrating behavioural insights into EU policymaking and offers some concluding remarks….(More)”

Escaping Paternalism: Rationality, Behavioral Economics, and Public Policy

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Book by Mario J. Rizzo and Glen Whitman: “The burgeoning field of behavioral economics has produced a new set of justifications for paternalism. This book challenges behavioral paternalism on multiple levels, from the abstract and conceptual to the pragmatic and applied. Behavioral paternalism relies on a needlessly restrictive definition of rational behavior. It neglects nonstandard preferences, experimentation, and self-discovery. It relies on behavioral research that is often incomplete and unreliable. It demands a level of knowledge from policymakers that they cannot reasonably obtain. It assumes a political process largely immune to the effects of ignorance, irrationality, and the influence of special interests and moralists. Overall, behavioral paternalism underestimates the capacity of people to solve their own problems, while overestimating the ability of experts and policymakers to design beneficial interventions. The authors argue instead for a more inclusive theory of rationality in economic policymaking….(More)”.

Imagining the Next Decade of Behavioral Science

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Evan Nesterak at the Behavioral Scientist: “If you asked Richard Thaler in 2010, what he thought would become of the then very new field of behavioral science over the next decade, he would have been wrong, at least for the most part. Could he have predicted the expansion of behavioral economics research? Probably. The Nobel Prize? Maybe. The nearly 300 and counting behavioral teams in governments, businesses, and other organizations around the world? Not a chance. 

When we asked him a year and a half ago to sum up the 10 years since the publication of Nudge, he replied “Am I too old to just say OMG? … [Cass Sunstein and I] would never have anticipated one “nudge unit” much less 200….Every once in a while, one of us will send the other an email that amounts to just ‘wow.’”

As we closed last year (and the last decade), we put out a call to help us imagine the next decade of behavioral science. We asked you to share your hopes and fears, predictions and warnings, open questions and big ideas. 

We received over 120 submissions from behavioral scientists around the world. We picked the most thought-provoking submissions and curated them below.

We’ve organized the responses into three sections. The first section, Promises and Pitfalls, houses the responses about the field as whole—its identity, purpose, values. In that section, you’ll find authors challenging the field to be bolder. You’ll also find ideas to unite the field, which in its growth has felt for some like the “Wild West.” Ethical concerns are also top of mind. “Behavioral science has confronted ethical dilemmas before … but never before has the essence of the field been so squarely in the wheelhouse of corporate interests,” writes Phillip Goff.

In the second section, we’ve placed the ideas about specific domains. This includes “Technology: Nightmare or New Norm,” where Tania Ramos considers the possibility of a behaviorally optimized tech dystopia. In “The Future of Work,” Lazslo Bock imagines that well-timed, intelligent nudges will foster healthier company cultures, and Jon Jachomiwcz emphasizes the importance of passion in an economy increasingly dominated by A.I. In “Climate Change: Targeting Individuals and Systems” behavioral scientists grapple with how the field can pull its weight in this existential fight. You’ll also find sections on building better governments, health care at the digital frontier and final mile, and the next steps for education. 

The third and final section gets the most specific of all. Here you’ll find commentary on the opportunities (and obligations) for research and application. For instance, George Lowenstein suggests we pay more attention to attention—an increasingly scarce resource. Others, on the application side, ponder how behavioral science will influence the design of our neighborhoods and wonder what it will take to bring behavioral science into the courtroom. The section closes with ideas on the future of intervention design and ways we can continue to master our methods….(More)”.

The Economics of Violence: How Behavioral Science Can Transform our View of Crime, Insurgency, and Terrorism

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Book by Gary M. Shiffman: “How do we understand illicit violence? Can we prevent it? Building on behavioral science and economics, this book begins with the idea that humans are more predictable than we like to believe, and this ability to model human behavior applies equally well to leaders of violent and coercive organizations as it does to everyday people. Humans ultimately seek survival for themselves and their communities in a world of competition. While the dynamics of ‘us vs. them’ are divisive, they also help us to survive. Access to increasingly larger markets, facilitated through digital communications and social media, creates more transnational opportunities for deception, coercion, and violence. If the economist’s perspective helps to explain violence, then it must also facilitate insights into promoting peace and security. If we can approach violence as behavioral scientists, then we can also better structure our institutions to create policies that make the world a more secure place, for us and for future generations….(More)”.

The Pledging Puzzle: How Can Revocable Promises Increase Charitable Giving

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Paper by James Andreoni and Marta Serra-Garcia: “What is the value of pledges if they are often reneged upon? In this paper we show – both theoretically and experimentally – that pledges can be used to screen donors and to better understand their motives for giving. In return, nonprofit managers can use the information they glean from pledges to better target future charitable giving appeals and interventions to donors, such as expressions of gratitude. In an experiment, we find that offering the option to pledge gifts induces self-selection. If expressions of gratitude are then targeted to individuals who select into pledges, reneging can be significantly reduced. Our findings provide an explanation for the potential usefulness of pledges….(More)”.

Private Law, Nudging and Behavioural Economic Analysis: The Mandated-Choice Model

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Book by Antonios Karampatzos: “Offering a fresh perspective on “nudging”, this book uses legal paternalism to explore how legal systems may promote good policies without ignoring personal autonomy.

It suggests that the dilemma between inefficient opt-in rules and autonomy restricting opt-out schemes fails to realistically capture the span of options available to the policy maker. There is a third path, namely the ‘mandated-choice model’. The book is dedicated to presenting this model and exploring its great potential. Contract law, consumer protection, products safety and regulatory problems such as organ donation or excessive borrowing are the setting for the discussion. Familiarising the reader with a hot debate on paternalism, behavioural economics and private law, this book takes a further step and links this behavioural law and economics discussion with philosophical considerations to shed a light on modern challenges, such as organ donation or consumers protection, by adopting an openly interdisciplinary approach….(More)”.

Robotic Bureaucracy: Administrative Burden and Red Tape in University Research

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Essay by Barry Bozeman and Jan Youtie: “…examines university research administration and the use of software systems that automate university research grants and contract administration, including the automatic sending of emails for reporting and compliance purposes. These systems are described as “robotic bureaucracy.” The rise of regulations and their contribution to administrative burden on university research have led university administrators to increasingly rely on robotic bureaucracy to handle compliance. This article draws on the administrative burden, behavioral public administration, and electronic communications and management literatures, which are increasingly focused on the psychological and cognitive bases of behavior. These literatures suggest that the assumptions behind robotic bureaucracy ignore the extent to which these systems shift the burden of compliance from administrators to researchers….(More)”.

Nudging the Nudger: Toward a Choice Architecture for Regulators

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Working Paper by Susan E. Dudley and Zhoudan Xie: “Behavioral research has shown that individuals do not always behave in ways that match textbook definitions of rationality. Recognizing that “bounded rationality” also occurs in the regulatory process and building on public choice insights that focus on how institutional incentives affect behavior, this article explores the interaction between the institutions in which regulators operate and their cognitive biases. It attempts to understand the extent to which the “choice architecture” regulators face reinforces or counteracts predictable cognitive biases. Just as behavioral insights are increasingly used to design choice architecture to frame individual decisions in ways that encourage welfare-enhancing choices, consciously designing the institutions that influence regulators’ policy decisions with behavioral insights in mind could lead to more public-welfare-enhancing policies. The article concludes with some modest ideas for improving regulators’ choice architecture and suggestions for further research….(More)”.

Community Colleges Boost STEM Student Success Through Behavioral Nudging

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Press Release: “JFF, a national nonprofit driving transformation in the American workforce and education systems, and Persistence Plus, which pairs behavioral insights with intelligent text messaging to improve student success, today released the findings from an analysis that examined the effects of personalized nudging on nearly 10,000 community college students. The study, conducted over two years at four community colleges, found that behavioral nudging had a significant impact on student persistence rates—with strong improvements among students of color and older adult learners, who are often underrepresented among graduates of STEM (science, technology, engineering, and math) programs.

“These results offer powerful evidence on the potential, and imperative, of using technology to support students during the most in-demand, and often most challenging, courses and majors,” said Maria Flynn, president and CEO of JFF. “With millions of STEM jobs going unfilled, closing the gap in STEM achievement has profound economic—and equity—implications.” 

In a multiyear initiative called “Nudging to STEM Success,“ which was funded by the Helmsley Charitable Trust, JFF and Persistence Plus selected four colleges to implement the nudging initiative campuswide:Lakeland Community College in Kirtland, Ohio; Lorain County Community College in Elyria, Ohio; Stark State College in North Canton, Ohio; and John Tyler Community College in Chester, Virginia.

A randomized control trial in the summer of 2017 showed that the nudges increased first-to-second-year persistence for STEM students by 10 percentage points. The results of that trial will be presented in an upcoming peer-reviewed paper titled “A Summer Nudge Campaign to Motivate Community College STEM Students to Reenroll.” The paper will be published in AERA Open, an open-access journal published by the American Educational Research Association. 

Following the 2017 trial, the four colleges scaled the support to nearly 10,000 students, and over the next two years, JFF and Persistence Plus found that the nudging support had a particularly strong impact on students of color and students over the age of 25—two groups that have historically had lower persistence rates than other students….(More)”.

The Nollywood Nudge: An Entertaining Approach to Saving

Curated on Posted on by Stefaan Verhulst

Paper by Aidan Coville, Vincenzo Di Maro, Felipe Dunsch and Siegfried Zottel: “This paper investigates the immediate and medium-term behavioral response to an emotional trigger designed to affect biases in intertemporal financial decisions. The emotional trigger is provided by a narrative portraying the catastrophic consequences of poor financial choices. Even when people are fully aware of the most appropriate action to take, cognitive biases may prevent this knowledge from translating into action.

The paper contributes to the literature by directly testing the importance of linking emotional stimulus to financial messages, to influence borrowing and saving decisions, and identifying the interaction between emotional stimulus and the opportunity to act on this stimulus. The study randomly assigned individuals to a featured production — a Nollywood (the Nigerian Hollywood) movie — on the financial consequences of poor borrowing and saving behavior. This treatment is interacted with the option of opening a savings account at the screening of the movie. At the exit of the screening, individuals in the financial education movie treatment are more likely to open a savings account than individuals in the placebo movie treatment. However, the effects dissipate quickly. When savings and borrowing behavior is measured four months later, the study finds no differences between treatments. The paper concludes that emotional triggers delivered in the context of a one-time feature film might not be enough to secure sustained changes in behavior….(More)”.