Nudging back in vogue

As seen in the Independent 16 August 2010

The Government has reportedly set up a behavioural insight team at No 10, heralding the return of Nudge as a key policy driver. Andy McSmith’s article in The Independent last week provides an excellent summary of the principles of nudge theory. What it and the original work of Thaler and Sunstein underestimate, however, are the controversies and inconsistencies in the academic research on which these ideas are based.

For example, one key ‘nudging’ principle is to make the ‘desired’ activity the default on the assumption that people are much more likely to stick with this than change. This ‘nudge’ can provide the basis for encouraging people to sign up for organ donation or pensions – in each case the public may be automatically opted in, so must opt out if they don’t wish to be involved in these activities. Research shows that initial uptake is enhanced under these conditions.

However, this idea overlooks other key principles of human decision making that may modify or even nullify this ‘nudge’. For example, when people are actively involved in making a decision they are more committed to it and will stick to it longer, even when the outcomes are not as good as expected. This shows that being involved in the decision is vital in sustaining commitment to the action over time. ‘Nudged’ decisions are associated with less commitment so people will give up on them more readily when the outcomes are disappointing.

So ‘nudging’ people may be effective in the short term. However, in the longer term it may be less effective, particularly in situations where people are likely to experience a mixture of both positive and negative outcomes. Since longer term change is usually the primary objective, we may be better encouraging active involvement rather than a ‘nudge’.

Professor A John Maule
Director: Centre for Decision Research, Leeds University Business School
Linstock Communications Associate
http://www.linstockcommunications.com/