Just how well has the 'nudge unit' done?

Broadcast at BBC News:Nudging – concept of changing people’s behaviour without recourse to the law but to psychology – has been one of the big policy ideas of the last few years
The coalition government set up a “nudge unit”, officially called the Behavioural Insights Team, in 2010. But just how successful has it been?
David Halpern, who heads the unit, told the Today programme’s Evan Davis that it has enjoyed a wide range of successes. He said that by adding the line “‘most people pay their tax on time’ to a letter you get a significant increase in the number of people who pay their tax on time and you get a reduction in complaints.
“It turns out it’s a nicer way, to encourage people than to threaten them.”
But Professor Gerd Gigerenzer, director of the Max Planck Institute for Human Development, told the programme that he did not “object against nudging per se but against the philosophy underlying it, namely that basically that people are born more or less stupid.”
There is, he said, a real alternative to nudging, that of educating people to become “risk-savvy citizens: to invest in to making people competent”.

In Tests, Scientists Try to Change Behaviors

Wall Street Journal: “Behavioral scientists look for environmental ‘nudges’ to influence how people act. Pelle Guldborg Hansen, a behavioral scientist, is trying to figure out how to board passengers on a plane with less fuss.
The goal is to make plane-boarding more efficient by coaxing passengers to want to be more orderly, not by telling them they must. It is one of many projects in which Dr. Hansen seeks to encourage people, when faced with options, to make better choices. Among these: prompting people to properly dispose of cigarette butts outside of bars and clubs and inducing hospital workers to use hand sanitizers.
Dr. Hansen, 37 years old, is director of the Initiative for Science, Society & Policy, a collaboration of the University of Southern Denmark and Roskilde University. The concept behind his work is known commonly as a nudge, dubbed such because of the popular 2008 book of the same name by U.S. academics Richard Thaler and Cass Sunstein that examined how people make decisions.
At the Copenhagen airport, Dr. Hansen recently deployed a team of three young researchers to mill about a gate in terminal B. The trio was dressed casually in jeans and wore backpacks. They blended in with the passengers, except for the badges they wore displaying airport credentials, and the clipboards and pens they carried to record how the boarding process unfolds.
Thirty-five minutes before a flight departed, the team got into position. Andreas Rathmann Jensen stood in one corner, then moved to another, so he could survey the entire gate area. He mapped where people were sitting and where they placed their bags. This behavior can vary depending, for example, if people are flying alone, with a partner or in a group.
Johannes Schuldt-Jensen circulated among the rows and counted how many bags were blocking seats and how many seats were empty as boarding time approached. He wore headphones, though he wasn’t listening to music, because people seem less suspicious of behavior when a person has headphones on, he says. Another researcher, Kasper Hulgaard, counted how many people were standing versus sitting.
The researchers are mapping out gate-seating patterns for a total of about 500 flights. Some early observations: The more people who are standing, the more chaotic boarding tends to be. Copenhagen airport seating areas are designed for groups, even though most travelers come solo or in pairs. Solo flyers like to sit in a corner and put their bag on an adjacent seat. Pairs of travelers tend to perch anywhere as long as they can sit side-by-side….”

The Innovators

Kirkus Review of “The innovators. How a Group of Inventors, Hackers, Geniuses, and Geeks Created the Digital Revolution” by Walter Isaacson: “Innovation occurs when ripe seeds fall on fertile ground,” Aspen Institute CEO Isaacson (Steve Jobs, 2011, etc.) writes in this sweeping, thrilling tale of three radical innovations that gave rise to the digital age. First was the evolution of the computer, which Isaacson traces from its 19th-century beginnings in Ada Lovelace’s “poetical” mathematics and Charles Babbage’s dream of an “Analytical Engine” to the creation of silicon chips with circuits printed on them. The second was “the invention of a corporate culture and management style that was the antithesis of the hierarchical organization of East Coast companies.” In the rarefied neighborhood dubbed Silicon Valley, new businesses aimed for a cooperative, nonauthoritarian model that nurtured cross-fertilization of ideas. The third innovation was the creation of demand for personal devices: the pocket radio; the calculator, marketing brainchild of Texas Instruments; video games; and finally, the holy grail of inventions: the personal computer. Throughout his action-packed story, Isaacson reiterates one theme: Innovation results from both “creative inventors” and “an evolutionary process that occurs when ideas, concepts, technologies, and engineering methods ripen together.” Who invented the microchip? Or the Internet? Mostly, Isaacson writes, these emerged from “a loosely knit cohort of academics and hackers who worked as peers and freely shared their creative ideas….Innovation is not a loner’s endeavor.” Isaacson offers vivid portraits—many based on firsthand interviews—of mathematicians, scientists, technicians and hackers (a term that used to mean anyone who fooled around with computers), including the elegant, “intellectually intimidating,” Hungarian-born John von Neumann; impatient, egotistical William Shockley; Grace Hopper, who joined the Army to pursue a career in mathematics; “laconic yet oddly charming” J.C.R. Licklider, one father of the Internet; Bill Gates, Steve Jobs, and scores of others.
Isaacson weaves prodigious research and deftly crafted anecdotes into a vigorous, gripping narrative about the visionaries whose imaginations and zeal continue to transform our lives.”

Neuroeconomics, Judgment, and Decision Making

New edited book by Evan A. Wilhelms, and Valerie F. Reyna: “This volume explores how and why people make judgments and decisions that have economic consequences, and what the implications are for human well-being. It provides an integrated review of the latest research from many different disciplines, including social, cognitive, and developmental psychology; neuroscience and neurobiology; and economics and business.

The book has six areas of focus: historical foundations; cognitive consistency and inconsistency; heuristics and biases; neuroeconomics and neurobiology; developmental and individual differences; and improving decisions. Throughout, the contributors draw out implications from traditional behavioral research as well as evidence from neuroscience. In recent years, neuroscientific methods have matured, beyond being simply correlational and descriptive, into theoretical prediction and explanation, and this has opened up many new areas of discovery about economic behavior that are reviewed in the book. In the final part, there are applications of the research to cognitive development, individual differences, and the improving of decisions.
The book takes a broad perspective and is written in an accessible way so as to reach a wide audience of advanced students and researchers interested in behavioral economics and related areas. This includes neuroscientists, neuropsychologists, clinicians, psychologists (developmental, social, and cognitive), economists and other social scientists; legal scholars and criminologists; professionals in public health and medicine; educators; evidence-based practitioners; and policy-makers.”

Do We Choose Our Friends Because They Share Our Genes?

Rob Stein at NPR: “People often talk about how their friends feel like family. Well, there’s some new research out that suggests there’s more to that than just a feeling. People appear to be more like their friends genetically than they are to strangers, the research found.
“The striking thing here is that friends are actually significantly more similar to one another than we were expecting,” says  James Fowler, a professor of medical genetics at the University of California, San Diego, who conducted the study with Nicholas A. Christakis, a social scientist at Yale University.
In fact, the study in Monday’s issue of the Proceedings of the National Academy of Sciences found that friends are as genetically similar as fourth cousins.
“It’s as if they shared a great- great- great-grandparent in common,” Fowler told Shots.
Some of the genes that friends were most likely to have in common involve smell. “We tend to smell things the same way that our friends do,” Fowler says. The study involved nearly 2,000 adults.
This suggests that as humans evolved, the ability to tolerate and be drawn to certain smells may have influenced where people hung out. Today we might call this the Starbucks effect.
“You may really love the smell of coffee. And you’re drawn to a place where other people have been drawn to who also love the smell of coffee,” Fowler says. “And so that might be the opportunity space for you to make friends. You’re all there together because you love coffee and you make friends because you all love coffee.”…”

How Britain’s Getting Public Policy Down to a Science

in Governing: “Britain has a bold yet simple plan to do something few U.S. governments do: test the effectiveness of multiple policies before rolling them out. But are American lawmakers willing to listen to facts more than money or politics?

In medicine they do clinical trials to determine whether a new drug works. In business they use focus groups to help with product development. In Hollywood they field test various endings for movies in order to pick the one audiences like best. In the world of public policy? Well, to hear members of the United Kingdom’s Behavioural Insights Team (BIT) characterize it, those making laws and policies in the public sector tend to operate on some well-meaning mix of whim, hunch and dice roll, which all too often leads to expensive and ineffective (if not downright harmful) policy decisions.

….One of the prime BIT examples for why facts and not intuition ought to drive policy hails from the U.S. The much-vaunted “Scared Straight” program that swept the U.S. in the 1990s involved shepherding at-risk youth into maximum security prisons. There, they would be confronted by inmates who, presumably, would do the scaring while the visiting juveniles would do the straightening out. Scared Straight seemed like a good idea — let at-risk youth see up close and personal what was in store for them if they continued their wayward ways. Initially the results reported seemed not just good, but great. Programs were reporting “success rates” as high as 94 percent, which inspired other countries, including the U.K., to adopt Scared Straight-like programs.

The problem was that none of the program evaluations included a control group — a group of kids in similar circumstances with similar backgrounds who didn’t go through a Scared Straight program. There was no way to see how they would fare absent the experience. Eventually, a more scientific analysis of seven U.S. Scared Straight programs was conducted. Half of the at-risk youth in the study were left to their own devices and half were put through the program. This led to an alarming discovery: Kids who went through Scared Straight were more likely to offend than kids who skipped it — or, more precisely, who were spared it. The BIT concluded that “the costs associated with the programme (largely related to the increase in reoffending rates) were over 30 times higher than the benefits, meaning that ‘Scared Straight’ programmes cost the taxpayer a significant amount of money and actively increased crime.”

It was witnessing such random acts of policymaking that in 2010 inspired a small group of political and social scientists to set up the Behavioural Insights Team. Originally a small “skunk works” tucked away in the U.K. Treasury Department, the team gained traction under Prime Minister David Cameron, who took office evincing a keen interest in both “nonregulatory solutions to policy problems” and in spending public money efficiently, Service says. By way of example, he points to a business support program in the U.K. that would give small and medium-sized businesses up to £3,000 to subsidize advice from professionals. “But there was no proven link between receiving that money and improving business. We thought, ‘Wouldn’t it be better if you could first test the efficacy of some million-pound program or other, rather than just roll it out?’”

The BIT was set up as something of a policy research lab that would scientifically test multiple approaches to a public policy problem on a limited, controlled basis through “randomized controlled trials.” That is, it would look at multiple ways to skin the cat before writing the final cat-skinning manual. By comparing the results of various approaches — efforts to boost tax compliance, say, or to move people from welfare to work — policymakers could use the results of the trials to actually hone in on the most effective practices before full-scale rollout.

The various program and policy options that are field tested by the BIT aren’t pie-in-the-sky surmises, which is where the “behavioural” piece of the equation comes in. Before settling on what options to test, the BIT takes into account basic human behavior — what motivates us and what turns us off — and then develops several approaches to a policy problem based on actual social science and psychology.

The approach seems to work. Take, for example, the issue of recruiting organ donors. It can be a touchy topic, suggesting one’s own mortality while also conjuring up unsettling images of getting carved up and parceled out by surgeons. It’s no wonder, then, that while nine out of 10 people in England profess to support organ donations, fewer than one in three are officially registered as donors. To increase the U.K.’s ratio, the BIT decided to play around with the standard recruitment message posted on a high-traffic gov.uk website that encourages people to sign up with the national Organ Donor Register (see “‘Please Help Others,’” page 18). Seven different messages that varied in approach and tone were tested, and at the end of the trial, one message emerged clearly as the most effective — so effective, in fact, that the BIT concluded that “if the best-performing message were to be used over the whole year, it would lead to approximately 96,000 extra registrations completed.”

According to the BIT there are nine key steps to a defensible controlled randomized trial, the first and second — and the two most obvious — being that there must be at least two policy interventions to compare and that the outcome that the policies they’re meant to influence must be clear. But the “randomized” factor in the equation is critical, and it’s not necessarily easy to achieve.

In BIT-speak, “randomization units” can range from individuals (randomly chosen clients) entering the same welfare office but experiencing different interventions, to different groups of clientele or even different institutions like schools or congregate care facilities. The important point is to be sure that the groups or institutions chosen for comparison are operating in circumstances and with clientele similar enough so that researchers can confidently say that any differences in outcomes are due to different policy interventions and not other socioeconomic or cultural exigencies. There are also minimum sampling sizes that ensure legitimacy — essentially, the more the merrier.

As a matter of popular political culture, the BIT’s approach is known as “nudge theory,” a strand of behavioral economics based on the notion that the economic decisions that human beings make are just that — human — and that by tuning into what motivates and appeals to people we can much better understand why those economic decisions are made. In market economics, of course, nudge theory helps businesses tune into customer motivation. In public policy, nudge theory involves figuring out ways to motivate people to do what’s best for themselves, their families, their neighborhoods and society.

When the BIT started playing around with ways to improve tax compliance, for example, the group discovered a range of strategies to do that, from the very obvious approach — make compliance easy — to the more behaviorally complex. The idea was to key in on the sorts of messages to send to taxpayers that will resonate and improve voluntary compliance. The results can be impressive. “If you just tell taxpayers that the majority of folks in their area pay their taxes on time [versus sending out dunning letters],” says the BIT’s Service, “that adds 3 percent more people who pay, bringing in millions of pounds.” Another randomized controlled trial showed that in pestering citizens to pay various fines, personal text messages were more effective than letters.

There has been pushback on using randomized controlled trials to develop policy. Some see it as a nefarious attempt at mind control on the part of government. “Nudge” to some seems to mean “manipulate.” Service bridles at the criticism. “We’re sometimes referred to as ‘the Nudge Team,’ but we’re the ‘Behavioural Insights Team’ because we’re interested in human behavior, not mind control.”

The essence of the philosophy, Service adds, is “leading people to do the right thing.” For those interested in launching BIT-like efforts without engendering immediate ideological resistance, he suggests focusing first on “non-headline-grabbing” policy areas such as tax collection or organ donation that can be launched through administrative fiat.”

Innovation Contests

Paper by David Pérez Castrillo and David Wettstein: “We study innovation contests with asymmetric information and identical contestants, where contestants’ efforts and innate abilities generate inventions of varying qualities. The designer offers a reward to the contestant achieving the highest quality and receives the revenue generated by the innovation. We characterize the equilibrium behavior, outcomes and payoffs for both nondiscriminatory and discriminatory (where the reward is contestant-dependent) contests. We derive conditions under which the designer obtains a larger payoff when using a discriminatory contest and describe settings where these conditions are satisfied.”

The promise and perils of giving the public a policy ‘nudge’

Nicholas Biddle and Katherine Curchin at the Conversation: “…These behavioural insights are more than just intellectual curiosities. They are increasingly being used by policymakers inspired by Richard Thaler and Cass Sunstein’s bestselling manifesto for libertarian paternalism, Nudge.
The British and New South Wales governments have set up behavioural insights units. Many other governments around Australia are following their lead.
Most of the attention so far has been on how behavioural insights could be employed to make people slimmer, greener, more altruistic or better savers. However, it’s time we started thinking and talking about the impact these ideas could have on social policy – programs and payments that aim to reduce disadvantage and narrow divergence in opportunity.
While applying behavioural insights can potentially improve the efficiency and effectiveness of social policy, unscrupulous or poorly thought through applications could be disturbing and damaging. It would appear behavioural insights inspired the UK government’s so-called “Nudge Unit” to force job seekers to undergo bogus personality tests – on pain of losing benefits if they refused.
The idea seemed to be that because people readily believe that any vaguely worded combination of character traits applies to them – which is why people connect with their star sign – the results of a fake psychometric test can dupe them into believing they have a go-getting personality.
In our view, this is not how behavioural insights should be applied. This UK example seems to be a particularly troubling case of the use of “nudges” in conjunction with, rather than instead of, coercion. This is the worst of both worlds: not libertarian paternalism, but authoritarian paternalism.
Ironically, this instance betrays a questionable understanding of behavioural insights or at the very least a very short-term focus. Research tells us that co-operative behaviour depends on the perception of fairness and successful framing requires trust.
Dishonest interventions, which make the government seem both unfair and untrustworthy, should have the longer-term effect of undermining its ability to elicit cooperation and successfully frame information.
Some critics have assumed nudge is inherently conservative or neoliberal. Yet these insights could inform progressive reform in many ways.
For example, taking behavioural insights seriously would encourage a redesign of employment services. There is plenty of scope for thinking more rigorously about how job seekers’ interactions with employment services unintentionally inhibit their motivation to search for work.

Beware accidental nudges

More than just a nudge here or there, behavioural insights can be used to reflect on almost all government decisions. Too often governments accidentally nudge citizens in the opposite direction to where they want them to go.
Take the disappointing take-up of the Matched Savings Scheme, which is part of New Income Management in the Northern Territory. It matches welfare recipients’ savings dollar-for-dollar up to a maximum of A$500 and is meant to get people into the habit of saving regularly.
No doubt saving is extremely hard for people on very low incomes. But another reason so few people embraced the savings program may be a quirk in its design: people had to save money out of their non-income-managed funds, but the $500 reward they received from the government went into their income-managed account.
To some people this appears to have signalled the government’s bad faith. It said to them: even if you demonstrate your responsibility with money, we still won’t trust you.
The Matched Savings Scheme was intended to be a carrot, not a stick. It was supposed to complement the coercive element of income management by giving welfare recipients an incentive to improve their budgeting. Instead it was perceived as an invitation to welfare recipients to be complicit in their own humiliation.
The promise of an extra $500 would have been a strong lure for Homo economicus, but it wasn’t for Homo sapiens. People out of work or on income support are no more or less rational than merchant bankers or economics professors. Their circumstances and choices are different though.
The idiosyncrasies of human decision-making don’t mean that the human brain is fundamentally flawed. Most of the biases that we mentioned earlier are adaptive. But they do mean that policy makers need to appreciate how we differ from rational utility maximisers.”
Real humans are not worse than economic man. We’re just different and we deserve policies made for Homo sapiens, not Homo economicus.

Five Reasons for Choice-Preserving Approaches

Cass Sunstein at Nudges vs Shoves: “Psychologists and behavioral economists have identified many sources of human errors, including self-control problems, “present bias,” unrealistic optimism, and limited attention.  Building on these underlying findings, a great deal of work has explored the possibility of enlisting libertarian paternalism, or nudges, to make people’s lives go better.  Nudges preserve freedom of choice and thus allow people to go their own way.  But in light of behavioral findings, there has also been increasing interest in asking whether mandates and bans have a fresh justification.1  The motivation for that question is clear: If we know that people’s choices lead them in the wrong direction, why should we insist on, or adopt a precommitment to, approaches that preserve freedom of choice?  Some skeptics, notably Professors Ryan Bubb and Richard Pildes, object that behavioral economists have “trimmed their sails” by adopting an unjustified presumption in favor of choice-preserving approaches.2

It should be agreed that if a mandate would increase social welfare, suitably defined, there is a strong argument on its behalf.  No one believes that nudges are a sufficient approach to violent crime.  In the face of a standard market failure, coercion has a standard justification; consider the problem of air pollution.  We know that there are “behavioral market failures” as well.  If people suffer from unrealistic optimism, limited attention, or a problem of self-control, and if the result is a serious welfare loss, there is an argument for some kind of public response.  We could certainly imagine cases in which the best approach is a mandate or a ban, because that response is preferable, from the standpoint of social welfare, to any alternative, including nudges.
Nonetheless, there are many reasons to think that if improving social welfare is the goal, nudges have significant advantages and are often the best approach.  They may well have high benefits without high costs, and in any case their net benefits may be higher than those of alternative approaches.  Five points are especially important.
First, choice-preserving approaches make sense in the face of heterogeneity.  By allowing people to go their own way, they reduce the high costs potentially associated with one-size-fits-all solutions, which mandates often impose.  Second, those who favor nudges are alert to the important fact that public officials have limited information and may themselves err.  If nudges are based on mistakes, the damage is likely to be less severe than in the case of mandates, because nudges can be ignored or dismissed.  Third, nudges respond to the fact that public officials may be improperly affected by the influence of well-organized private groups (the public choice problem).  If so, the fact that people can go their own way provides an important safeguard, at least when compared with mandates.  Fourth, nudges have the advantage of avoiding the welfare loss that people experience when they are deprived of the ability to choose.  In some cases, that loss might be severe.  Fifth, nudges recognize that freedom of choice can be seen, and often is seen, as an intrinsic good, which government should respect if it is to treat people with dignity….”

Coke Creates Volunteering App For Local Do-Gooders

PSFK: “If you’ve ever wanted to volunteer some time but didn’t know where to look, Coke Romania has the app for you. After teaming up with digital marketing company McCann Bucharest, Coke just created a new app that shows good Samaritans local volunteer opportunities. ‘Radar For Good‘ scans your location and brings up NGO’s, soup kitchens, orphanages, or libraries that want help right now.
Any opportunity that “Radar For Good’ discovers is a site that is definitely looking for volunteers at that moment. The app shows company names, websites, and contact information, as well as directions from where you are. It even allows you to save your favorite organizations for future reference, and has options to receive notifications from those companies.
Coca-Cola has numerous iOS apps, most of which deal with their soda products, but ‘Radar For Good’ is the first of its kind. While the app currently only works in Romania, Coke’s innovative creation has opened doors for similar mobile apps to get started in the United States.”