How nudging can ease policy implementation

Urban Life 24 August 2019 Evelina Gunnarsson

Nudging has proven to be a successful technique for creating sustainable behavioural change in policy implementation. In this article, our nudging expert, Evelina Gunnarsson, guides you through the fundamentals and points to an all-new framework that can ease the challenging task of driving policy implementation.

Articles
12 min

By Evelina Gunnarsson

Why don’t we live healthier lives even though we know it is the right thing to do? And why do we sometimes make rash decisions when we should know better? Because we are just human. At home. At work.

Over the last 50 years, research in behavioural science has shown that we are influenced by psychological mechanisms which systematically lead us to fail to act on preferences and thus prevent us from achieving our goals. This insight teaches us how to better understand human behaviour and how to achieve sustainable behaviour changes. If we act on this insight, our ability to effectively implement new policies and encourage citizens to do the ‘right thing’ will improve dramatically. 

The basics of behavioural insight

Behavioural insight (BI) is an approach to understanding and changing people’s behaviour that builds on knowledge from behavioural and social sciences including social psychology and behavioural economics. The term was originally coined by Behavioural Insight Team (BIT), one of the pioneers in implementing BI in public policy that many people have heard of. 

 

BIT explains BI as an evidence-based approach to integrating insights and methodologies from the behavioural sciences in the policy cycle to provide better and more effective regulation.

David Halpern, Chief Executive of the Behavioural Insights Team

Nudging is one application of insight from behavioural science used to influence behaviour and decisions. A nudge is an intervention meant to affect behaviour without changing monetary incentives and without restricting anyone’s choice. The term was coined when Richard Thaler and Cass Sunstein published their popular book Nudge: Improving decisions about health, wealth and happiness. 

One important aspect to emphasise is that not all problems can be solved by nudging and it should be a complement to ‘traditional measures’ of changing behaviour. Nudging is relevant for example to use when people have the skills and the necessary information available to exercise the preferred behaviour. Once this is in place, it is possible to nudge them. 

Nudge, nudge

BI and nudging challenge the traditional assumption that citizens and even business people act rationally. In traditional economic theory, we assume that people make rational decisions. According to rational choice theory, if people know what is good for them and they say that they intend to do something, it should translate to action. In real life, we see that this is often not the case.

Within behavioural sciences, this is usually called an ‘intention-action gap’. The reason why this gap occurs is that we are influenced by cognitive biases and use mental shortcuts, so-called heuristics, and that we have limited self-control. 

A cognitive bias is a systematic deviation from rational judgement, which arises because we have a limited ability to process information and that we systematically misinterpret information. With respect to our limited self-control, we for instance overvalue instant gratification compared to long-term benefits.

Nudging is about understanding these psychological mechanisms, how to predict them and how to help individuals to overcome them. 

When you embark on an implementation process, you need to understand the behaviour you want to change. And this is exactly what BI is all about – understanding the psychology of human decision making, and then successfully achieving a sustainable behaviour change.

Read more about 'understanding the behaviour you want to change' in our implementation whitepaper.

Over the past decade, BI and nudging has become an increasingly established concept and has been used with great success in many areas. Including making people pay their taxes on time, encouraging them save for their pension and to choose green energy contracts. And we see a great potential in using BI when working with policy implementation.

Overcoming economic incentives

Research in behavioural science has shown that people are motivated and driven by factors other than economic incentives, such as sense of purpose: 

Ariely and some other economists enlisted Intel to test different ways to motivate employees. They wondered what would make semiconductor factory workers more productive: a cash bonus, a voucher for a pizza, a note of thanks from their boss, or no reward at all. Employees were given production quotas at the beginning of the day and told they would be given the bonus if they met their goal.

Not only did cash fare the worst of the three rewards, but it had the most short-lived effect. The day after bonuses were handed out, the workers who received cash were 13% less productive than the employees who got nothing at all. The performance of the employees who received thank you-notes or pizzas stayed relatively high for a few days after their reward, before gradually returning to their baseline.

Cash had less impact, Ariely believes, because we think and act on longer time scales, and one-day motivations are in some areas less important than more enduring ones, such as finding meaning in work.

How to factor-in nudging when working with policy implementation 

Within the field, there are several tools and framework to use when you want to change behaviour through BI and nudging. Needless to say – sometimes you may need experts to help you - but to get started and build your knowledge I would point to the newly published OECD framework called BASIC. This is aimed at policymakers and is an overarching framework for applying behavioural insights to public policy from the beginning to the end of the policy cycle. 

With +150 pages, the publication is perhaps not basic reading; the five letters are short for Behaviour, Analysis, Strategies, Intervention, Change. These five stages guide the application of behavioural insights and is a repository of best practices, proof of concepts and methodological standards for behavioural insights practitioners and policymakers who have become interested in applying behavioural insights to public policy. 

The model differs from competing frameworks in a number of areas. Most notably, BASIC contains a so-called diagnostic tool that guides behavioural designers in correctly analysing behavioural patterns and aims to increase the accuracy of the developed strategies.

Perhaps the most important first step is to fully acknowledge that people – not you of course – are hardly the rational thinkers and doers that we want them to be. From there, a wide array of trivial yet surprising insights will emerge. And so will the measures that you and your team are able to take.

 

References and ideas for further reading

Thaler, R.H. & Sunstein, C. R. (2008). Nudge: Improving Decisions about Health, Wealth, and Happiness. 

Halpern, D. (2015), Inside the nudge unit: how small changes can make a big difference, Penguin Random House UK, London.

Kahneman, D., Knetsch, J. L., & Thaler, R. H. (1991). Anomalies: The endowment effect, loss aversion, and status quo bias. Journal of Economic perspectives, 5(1), 193-206.

Ariely, D. (2016). Payoff: The hidden logic that shapes our motivations. Simon and Schuster.

Kollmuss, Anja; Julian Agyeman (2002). "Mind the Gap: Why do people act environmentally and what are the barriers to pro-environmental behavior?". Environmental Education Research. 8 (3): 239–260. 

Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and biases. science, 185(4157), 1124-1131.

OECD’s BASIC Framework

About the author

Evelina Gunnarsson is a nudging and Behavioural Insight expert working out of Ramboll Management Consulting’s Stockholm office. She holds a master’s degree in Behavioural Economics from Copenhagen University. 

Evelina's main expertise is to develop initiatives aimed at changing behaviour by developing interventions, with a clear and measurable effect. Evelina has largely worked on behalf of organisations in the public sector, both in Sweden and in Denmark, and within various areas, such as labour market, finance and social sustainability. Several of the projects that Evelina has carried out have included translating overall policy strategies into concrete behavioural changes.