Britain's "Nudge Unit" persuades 100,000 people to sign up for organ donation a yearby Alex Dean / March 24, 2016 / Leave a comment
Should the government use behavioural science techniques to “nudge” us into making certain decisions? Or is “tricking” someone into doing something morally objectionable? A close study of what nudging entails shows that knee-jerk rejection of government interference in our lives is inappropriate when it comes to this issue—and that, frankly, we’re immensely privileged to be worrying about nudging at all.
Governments do things all the time to influence our behaviour. For example, George Osborne, Chancellor of the Exchequer, announced last week he would be introducing a sugar tax. Drinks with high sugar content are to have a tax placed on them in the hope this will discourage us from consuming so many of them, or nudge the companies making them into changing their formulae, therefore improving the nation’s health.
Financial incentives of this kind were talked about at a recent event called “Smart Britain: Energising Consumers,” hosted by Smart Energy GB. This organisation was set up by the government in 2013 to communicate the benefits of “smart meters,” which display how much money households are spending on their energy to nudge them into using less.
In a broad discussion about nudging chaired by Smart Energy GB’s Chief Executive Sacha Deshmukh, the Financial Times’s “Undercover Economist” Tim Harford discussed policies which aimed to influence behaviour through monetary incentive. We would expect these to be effective, sure, but might not know just how effective they can be. When Australia introduced a “baby bonus” in 2002—which gave $2500 (later $3000) to those having children in a bid to increase the country’s birth rate—something fascinating happened. Harford explained that in the two weeks before the bonus kicked in, the birth rate plummeted, but the day the bonus kicked in, it doubled. Women had been “holding on” in anticipation of it. The financial incentive meant they actually delayed childbirth. Whether the sugar tax will have the desired effect remains to be seen, but taxes and bonuses can certainly work in principle.