Here’s a top-up for behavioural economics enthusiasts: Edward Stourton hosts a Radio 4 programme on how the use of Nudge theory in government has gone so far – “liberal paternalism“, if you’re into squaring circles – with Nudge co-author and erstwhile Obama White House insider Cass Sunstein.
In short, it seems it’s more tinkering at the edges still, from my reading of this, than infusing every movement of government. Still early days?
But Sunstein is surely right about the central point here. There is an inevitability to the progress of behaviourally-informed approaches to decision-making, because all it is doing in a sense is introducing deliberate thought to what the default should be where people do nothing, in areas where this was previously not really thought about.
There is no such thing as a ‘neutral environment’, there is always a default. Much about behavioural economics is simply asking, what do you want the default to be? So in the UK, it’s a default that the NHS steps in when you get ill; in some other countries the default is that you pay for it out of your own pocket every time you get ill. You have to insure your way out of that default. This is an example of where in the UK we have thought about what happens if people do nothing and said we need to put something in place as the default is too iniquitous. But this can be applied to pretty much any area of policy-making – and BE, by examining what defaults we want, opens up huge areas of policy to greater scrutiny.
The genie is out of the bottle once the BE question is raised: you now have to make a policy choice. Not acting isn’t an escape route from this choice – because not acting is still making a moral choice: it is choosing the existing default over other possible ones, which implies the status quo default is better than the possible alternatives.
Of course, some will still complain this is the state manipulating people’s lives. But as Thaler and Sunstein say in Nudge – and being relatively politically conventional Americans (i.e. to the right in British terms), they are at pains to make this point – individual choice is still sacrosanct. It’s just within a choice architecture in which, if individuals do nothing, disaster will not befall them. People always default to something, so why not make the default a good thing? To do otherwise would be absurd.
And yes, that means policy-makers making moral judgements about what is good for society. But that is actually nothing novel. As Michael Sandel frequently reminds us, they do that anyway, it’s just that they often do it without acknowledging that they have made a moral choice. Better that important moral philosophical debates on what is good are public and open. Some politicians may shy away from this – which is fine, as long as they realise they are as much imposing their values on the public by doing nothing, as those who advocate nudging.
- Meet Cass Sunstein – Obama’s superego (features.blogs.fortune.cnn.com)
- When “Nudge” Goes Bad (pointsandfigures.com)
- New Review of practical Behavioral Economics by Cass Sunstein (behavioural-investing.org)