A nudge in the right direction

I am sitting in a featureless meeting room in the Cabinet Office with a man called David Halpern. And I’m about to hear one of the more surprising – but simple insights – into human nature that I’ve heard in a long time. 

“Do you have kids?” Hapern asks.

“No,” I reply.

“Well, if you do, then this is worth remembering.”

Halpern begins to tell me about the work of American psychologist Carol Dweck, who has spent her career examining how you can improve the academic performance of children. In particular, one set of tests she devised to examine the effect of feedback on learning.

“So you do a maths test and divide your study group in half,” he explains. “In one group, after they have done the test, you say, good result – you’re very smart. And in the other half you say, good result – that was a really good effort. Then both groups are given a really hard maths test a week later. It is deliberately hard and, of course, some kids give up in the face of that.

“Then a couple of weeks later the groups are given a maths test of the same standard as the original. Now the kids who were told it was really good effort are doing about 20 per cent better than they were originally.

“But the kids who were told, you are really smart are doing 20 per cent worse. It is a one-line difference in the way they are given feedback.”

And the reason? “Imagine you hit a difficulty and certainly kids do with hard school work. How do you interpret that? If you believe that it’s just a matter of some people are smart and some people are not, you think ‘I must be dumb’. But if you believe your performance is really to do with your effort – then you try harder. If you can put a kid down a trajectory of believing – it changes their trajectory in the face of challenge.”

Now not many people outside the world of Whitehall will have heard of Halpern or the unit that he runs from a small, cramped corner of the Treasury. But over the past four years the Government’s Behaviour Insights Team (or Nudge unit) has had a profound effect on the way in which Whitehall interacts with the people it is governing – using simple techniques like the example above. The unit uses insights from behavioural economics and psychology to subtly change the processes, forms and language used by Government – to achieve outcomes that are in the “public good” and save money.

The team found, for example, that by changing the wording used to encourage organ donation, more than 100,000 extra people would sign up annually.

In another case the unit experimented with sending out personalised text messages to people who owed money to the courts.

It found that texts which were not personalised resulted in 23 per cent of people paying the fines, while 33 per cent of those people who received the text paid. If no text was sent, only 5 per cent paid.

The unit has also worked to increase the number of people who pay their tax on time, redesigned the process around which people are required to look for work while on benefits and looked at encouraging people to give to charity – all with impressive results.

So how did it all come about? Halpern, a former member of Tony Blair’s Strategy Unit, says he was always interested in the applications of psychology in the real world since buying a second-hand textbook when he was 14 and thinking, “Oh my god this is so cool”.

But during the Blair years Nudge didn’t catch on – even though it was considered.

“The Blair administration was expanding the state – spending more and regulating more, which was Tony’s orientation, often,” Halpern says. “[In that environment] Nudge feels very different. It’s like, ‘we knew you were a nanny state and now we know you’re really an ultra-nanny state’.”

But that all changed with the financial crash and the incoming Conservative-led Government in 2010.

“Their instincts were generally, ‘we’ve got no money and we’re going to constrain the size of the state and deregulate’. So now you are using these approaches as a softer alternative to regulation.”

But, still, a lot in Government were nervous of Nudge – especially as it was being promoted by David Cameron’s infamous blue-sky thinker Steve Hilton. “We were a skunkworks operation of a few people in a corner,” he admits. “You were sort of given this Mission Impossible and told you’ll probably die and we’ll say we’ve got nothing to do with you.”

But the academic theory did work in practice – and the Nudge team were suddenly in demand. “The pivotal moment was about eight months in, when we did a presentation to permanent secretaries and we showed them our first results.  You could see the mandarins were thinking to begin with: ‘We’ve seen it all before – the bright young things are coming into Number 10 – if we keep our heads down, it will all go away.’ But then, they’re not dumb and they see these results and they realise that the marginal costs of these changes are almost nothing.

“They’re all under pressure on budgets. And then you are putting in front of them an approach which is tangibly getting results.”

Now, four years in, Nudge is about to be spun off into a new company – partly owned by the Government, partly owned by the social enterprise charity Nesta and partly owned by Halpern and other employees. It will allow the unit to expand and take on more work outside the constraints of Whitehall. But given that one of Nudge’s theories is “friction cost” – that the harder you make it for people to do things the less likely they are to do it – surely leaving Whitehall will make it less likely that they’ll be used by Government to solve problems?

Halpern admits this could be a problem. “Look, this is an experiment. I do worry a bit that a lot of what happens in Government happens because you bump into people at the margins and you say ‘hey what about this?’. But in some ways, given how Whitehall works, it may be easier for a Government department to go to an outside body to help them with a piece of work than to get another bit of Government to do work for them.

“Certainly the intention is to maintain the continuity of service. Jeremy Heywood [the Cabinet Secretary] will still be able to send an email to me at the weekend and ask, what do you think about so-and-so?”

But Nudge will expand to look at other areas as well. Halpern wants to examine ways of unlocking “hidden entrepreneurs” who adapt products that could grow the economy but never get beyond garages.

“The famous example is of the mountain bike that was created not by a manufacturer but by someone by using bits of other bikes and putting it together in their garage.

“Studies suggest that 6 per cent of Britons have come up with a significant adaptation in the last year. But most of these never diffuse.

“If more of them did, then the benefits would be enormous. We are going to do a study to identify how many good ideas there are and what is stopping them diffuse.”

Whether life outside Whitehall works for Halpern and Behavioural Insights Team time will tell. But that may not ultimately matter. They have already unlocked a mind-change in Whitehall – that is perceptible across most Government departments.

That maybe the only nudge that is necessary.

Nudge and wink: How it works

“Nudge” articulates the idea that people can be persuaded to make the right decisions by simple changes in how choices are presented to them. The theory was laid out in a ground-breaking 2008 book of the same name by economics professor Richard Thaler and law professor  Cass Sunstein.

The American academics argued that people often make bad decisions in areas of their lives – from personal finances and health to broader issues like how they treat the planet. This simple statement challenged the idea that people act in a purely rational way – always making choices that benefit them financially or in some other way – which is often used as the basis for economic models.

Professors Thaler and Sunstein argued that “choice architecture” – how the options are framed – can help “nudge” people towards the most beneficial outcome without actually restricting their personal freedom.

The authors wrote that “the libertarian aspect of our strategies lies in the straightforward insistence that, in general, people should be free to do what they like”.

But they also said it was “legitimate for choice architects to try to influence people’s behaviour in order to make their lives longer, healthier, and better”.

Critics have suggested that stronger measures – a push or a shove – are usually required to bring about significant social change.

“Basically you need more than just nudge,” Baroness Julia Neuberger said after a House of Lords inquiry into the theory’s effectiveness found little to suggest it was effective on a large scale.