Nudge, nudge

On my train rides yesterday to the Royal Economic Society Conference at my new home institution (from September), the University of Manchester, I read Why Nudge? The politics of libertarian paternalism by Cass Sunstein. This is obviously a progression from Nudge, his bestseller with Richard Thaler, and a reply to the often-made criticism about the paternalism inherent in nudge policies.

Why Nudge?: The Politics of Libertarian Paternalism (The Storrs Lectures)

The book is a very good short primer on the philosophy of this kind of intervention, drawing on behavioural psychology and economics. It does not cover either how to do ‘nudges’, or the cognitive biases the policies seek to compensate for – for that, you need the predecessor book. The aim here is to argue back against the view that for all the biases in decision-making that we are learning about, it is better for people to be free to make their own mistakes than to have government bureaucrats or politicians tell them what to do.

Sunstein makes two very strong points in his counter-blast. One is that there is no avoiding ‘choice architecture’. For example, if a government decides not to make pension contribution decisions opt-out, it is thereby choosing to make them opt in. If a cafeteria puts chocolate by the check-out, it is choosing not to put fruit there.

The other is that governments make lots of interventions in individual choice, constantly. These range from declaring some activities (taking drugs, say) a crime punishable by prison or fines to regulations (how you make alterations to your house) to tax incentives (a high tax on cigarettes) all the way through to educational campaigns (pictures of diseased lungs) and advertising (pay your tax on time to avoid the fine). Nudges are indeed at the soft end of this spectrum of government actions.

So why do I, like many others with a libertarian streak, feel uneasy about nudging in general? Not the specifics; the pension opt-out is clearly sensible, and using behavioural insights in designing competition remedies similarly a no-brainer. It’s the general idea of governmental Mad Men that’s disturbing, the sense of manipulation and infantilisation of individual voters that implies. Not that I’m naive about the capacity of individuals – including me – to take sensible decisions much the time. As Sunstein points out, the work of Gerd Gigerenzer on decision-making heuristics clearly suggests people would benefit from the short-cuts well-designed choice architecture can create.

The ‘yuk factor’ I felt grew all the stronger on reading: “Personalized paternalism is likely to become increasingly feasible over time. We can imagine highly personalized default rules, attempting to specify diverse rules for people in different circumstances.” Sunstein acknowledges the huge information advantage people have about their own interests compared to any bureaucrat, but evidently thinks that the information asymmetry will reduce – and anyway argues that the structures of public sector policy-making and impact assessment guard against bad nudges.

I’m not so sure, thinking about the growing pressure of increasingly polarised and populist politics on administrative decisions. We should consider the effect of ‘soft’ behaviour-manipulation policies on how the people feel about politics and government: is nudging going to increase or decrease further the low trust voters have in their governments? And one final question is whether behavioural responses will change the more people understand the cognitive biases and the nudges intended to work around them – will we learn? Is there a Goodhart’s Law for nudge policies?

Don Draper for prime minister?

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5 thoughts on “Nudge, nudge

  1. Good reservations. The “yuk” factor is definitely something that strikes me while reading Nudge, and also regarding the points referred above.
    Take the first example, the inevitability of choice architecture. Well the question is who is to make the decision? You could as a politician, or as a “choice architect” in a bureaucracy definitely choose not to interfere with how owners, managers or staff do order the courses they sell, and make a strong argument that while not serving a specific end (logevity through promoting the healthy choices, if that’s what putting fruit first accomplishes, it’s still just an assumption) this better satisfies what people probably want and is also a constant and dynamic experimenting with what that is. There’s no necessity for som specific person in a political role to make a decision instead of leaving to others to make them.
    And the second point, that politicians do just that, well look at what this meddling accomplishes – from farm policy to moral panics over comics, films or dancing to prohibitions will all their unintended effects. And this is supposed to be an argument FOR interventions!?
    What also strikes me about this Nudge business is that it’s nothing really new about it. In Sweden we recently abolished some “choice architecture”. Until recently (2000) every child was born into the swedish state church. And during most of the 20th century it was quite hard to actually leave. It still takes an active choice for all swedes being born into the church to actually leave. An active nudge toward the “right” protestant faith which we have had for ages. The challenge is not so much to learn the government how to nudge us, but how to make it behave and stop.

  2. Diane
    I have not yet read this book yet (another for the pile) but wonder if your “yuk” reaction could partly be caused by an intersection between “big data” analysis and nudging, resulting in a “nudge too far”. The concept of “personalized default rules” mentioned by Sunstein could be associated with this. The potential for misuse of “big data” for personalised messaging both by governments and business is great. I fear information advantages and asymmetries are progressively being biased to the big data gatherers – to the detriment of the individual.
    Ian

  3. Ian / Diane: yeah, that stuff is very interesting and connects to post-Snowden issues too – though as Ian suggests it was an issue before that, particularly for me in the way that government and business data sources were starting to create an odd hybrid view of the consumer-voter. Apologies for the self-link: combining commercial big data allowed Experian to come up with what they claimed was a much finer-grained version of the index of multiple deprivation – but along with that came a suggestion to redefine deprived areas as “under-served markets” in need of “retail-led regeneration”. Not necessarily a bad thing by itself, but dangerous if those people being affected have little say in shaping the tools that describe them.

    So yes, that’s about who has the power to define how state power views reality… and then we’re quickly into Scott’s seeing like a state – statecraft as a map “designed to summarise precisely those aspects of a complex world that are of immediate interest to the map maker and to ignore the rest. // This transformative potential resides not in the map, of course, but rather in the power possessed by those who deploy the perspective of that particular map.’ (Scott 1998, p.87)

    Which is all probably an inevitable function of the need to summarise in order to be able to take any political action at all – but it does make accountability much more important.

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