“Nudging” as the newest tool in rule-making
Richard Thaler, the 2017 Nobel Prize in economics, created with Cass Sunstein, a jurist, the idea of “nudge”. The verb ‘to nudge’ means ‘to push gently’ or ‘to elbow’, and in the rule-making context, it represents figuratively the concept of an intuitive and easily understandable exhortation. Nudges lie outside the traditional “command and control” concept, but at the same time avoids total deregulation, by steering human behaviour through leveraging on individual biases and heuristics. Nudges guide decisions when the instinctual decision-making system prevails over the proper rational system. In this way, nudging lowers the costs of rule-making.
Thaler and Sunstein use the now-famous example of the school canteen. In this canteen, improving eating habits is not obtained by prohibiting junk food, but by placing the healthier food at eye-height. Other modern examples of nudges include the “Nutrition Facts” labelling for certain foods, or the graphic pictures and dissuasive texts on cigarette packets. Another effective strategy is to set default options, which one must be able to get rid of in a simple way. Think of the case of organ donation, or subscription of voluntary social security plans: in most jurisdictions, these are choices that require express consent, and not surprisingly, they are not as common as they should be. If these virtuous choices were to be presumed, with the possibility of opting out with a mere statement, the situation would probably be different. The GPS navigators are another effective metaphor to understand nudges. They are mechanisms that guide, but preserve ultimately the freedom to be ignored. Nudges seems to be of particular use in health and social care, where present decisions affect future individual well-being, but have major implications also for public finances.
To qualify as such, a nudge should not imply significant material incentives or disincentives, such as taxes, subsidies, or the deprivation of personal freedom. Nudges work because they provide information effectively, because they make certain choices easy, or simply because they leverage on inertia. The nudge aims to provide the individual with a framework of decision-making architecture based on empirical evidence. In several jurisdictions, the legislative committees that hear the experts (economists, jurists, sociologists, life scientists) before drafting a bill, are now supported by agencies or units composed by behavioural scientists. The Behavioural Insights Team (BIT) in the UK, and the US Government’s Social and Behavioural Sciences Team, are among the best-known examples. It has been estimated that the use of behavioural sciences in rule-making is now common in some 51 countries. In its latest annual report, the UK Behavioural Insights Team affirms that it has reduced directing patients to overcrowded hospitals, it has contained unnecessary gas consumption, and reduced the number of fines for overcoming speed limits, while it has increased the proportion of students coming from disadvantaged groups who are admitted to prestigious universities, and the number of workers enrolling in voluntary retirement plans. This trend is also happening in international organizations: the World Bank and the United Nations are applying the principles of behavioural science to sustainability and development policies, for example in the anti-corruption field.
Nudges should not replace traditional regulation, but provide a complement to it. Contrary to nudges, which preserve both agency and control for each citizen, “command and control” regulations, like total deregulation, rely on radical reform instances, and therefore end up producing purely coercive or purely libertarian measures. The idea that rule-making should be based on criteria of gradualism and non-invasiveness, while taking into account that individuals sometimes commit self-damaging actions, has been defined “libertarian paternalism”. The degree of appreciation of nudges has been investigated in different cultures, and the level of acceptance seems strong in most countries, with similar patterns in the USA, Canada, Australia, the UK, Germany, France and Italy. Compared to other demographic characteristics, only gender seems to have some influence on the level of appreciation, with women generally more favourable than men.
The idea of exploiting human biases in order to produce effects that are socially optimal is subject to criticism. These criticisms have a multifaceted nature. Some argue that “libertarian paternalism” is likely to be in fact not libertarian but rather manipulative. Terrorizing messages on cigarette packets are considered by some to be explicitly manipulative. When such measures are decided directly by the government administration, the choice is taken away from public legislative debate. In addition to this, the nudge theory seems to imply the existence of a benevolent and rational public official, but in fact even government action can suffer from the same cognitive errors as individual action. Although nudges have had the meritorious effect of making bureaucrats aware of the psychological factors in individual decision-making, they can become an excuse for not protecting enough the rights of the weaker subjects, such as consumers, with coercive instruments. Finally, evidence of the systematic irrationality of individuals, in fact, is considered by some as anything but conclusive. With adequate visual and numerical support, even children can be educated about risk and uncertainty. The cognitive biases which are presupposed by the nudge theory would be therefore unsystematic: investing in risk education and initiating it as early as possible, before individuals adopt risky behaviours, might be a better solution.
An interesting example regards the voluntary screening for breast cancer. In some countries, women over the age of 50 receive a letter of invitation to show up for a voluntary mammography examination at a predetermined date and time. This screening reduces mortality after 10 years from 5 women out of 1,000 to 4. However, in the letter that “nudges” women to be tested, this difference is reported as a relative risk reduction of over 20%, often rounded to 30%, to make it even more convincing. There is no doubt that this is a manipulation. However, there is no doubt as well that the value of saving that single human life, may justify the cost of sending 1,000 letters, and also the time spent on screening by healthy subjects. It is true that disclosure obligations result in additional costs. These costs also affect rational choosers, but as long as they remain low, it is probably an acceptable social burden. Even the costs of illness and malnutrition end up falling in part upon society. Three criteria have been suggested according to which nudges can be considered respectful of personal autonomy: 1) being in line with the authentic goals of a mature individual; 2) being easily avoidable; 3) being adequately advertised and recognizable as such. A further parameter of justification is the fact that a nudge is established through a parliamentary bill. Extra-legal nudges are less susceptible to public scrutiny, whereas nudges decided through the public deliberative process do not diminish personal autonomy.
Sunstein’s final answer to some of these objections has been that nudges actually promote autonomy, by freeing two of the scarcest resources that we have today: cognitive energy and time. Compelling a choice on technical issues, on the other hand, is a form of paternalism. A nudge should be similar to what happens when setting up an electronic device. One is asked to choose explicitly whether 1) to rely on the default settings, as laid down by a superior and enlightened body (because one believes she/he is not competent enough, or not having enough time to do it), or 2) customizing these settings personally and in detail. This does not solve the fundamental disagreement on the issue, which is linked to rather personal perceptions of what is intended with “individual autonomy” or “collective welfare”, and where the boundary lies. On one point, however, I would agree strongly with the authors of the concept, who consider nudges to be unavoidable. There is no such thing as a neutral decision frame, and so it is worth choosing openly the most appropriate nudge.
This article is for information purposes only and is not intended as a professional opinion.
For further information, please contact Luigi Cominelli.
 Assessing the Global Impact of the Behavioural Sciences on Public Policy (2014): https://changingbehaviours.files.wordpress.com/2014/09/nudgedesignfinal.pdf, accessed on Oct. 27, 2017.
 The Behavioural Insights Team Update Report 2016-17: http://38r8om2xjhhl25mw24492dir.wpengine.netdna-cdn.com/wp-content/uploads/2017/10/BIT_Update-16-17_E_.pdf, accessed on Oct. 27, 2017.