Decision-making & Analytics
Or is the system really to blame for the explosion in plastic packaging in recent decades? Professor Chater says: “Placing too much emphasis on individual responsibility and how we ‘nudge’ individuals to make better decisions ignores the bigger picture: that the problems we are trying to address are invariably caused by systems that need to be reformed.” The need for system change Professor Chater explores the issue with his colleague George Loewenstein in their paper, The i-frame and the s-frame: How focusing on individual-level solutions has led behavioral public policy astray . The authors have been enthusiastic supporters of ‘nudging’ individuals to make better choices for their health, finances, and
the environment. However, they have reached the conclusion that trying to ‘fix’ the individual can be disappointingly ineffective. “A lot of nudges don’t substantially change behaviour,” says Professor Chater. “And most changes that are made quickly fade. Smart meters are put in drawers, gym memberships lapse, and many dieters regain weight that they have lost. “When there is a lasting shift, it doesn’t always address the underlying problem. “For example, nudging people onto a more expensive ‘green’ energy tariff may sound promising, but it doesn’t increase the supply of clean energy. The main impact is that is shifts the existing supply from one set of consumers to another. “Worse still, signing up can
convince individuals they’ve done their bit for climate change and reduce the appetite for more painful – and effective – choices, such as a carbon tax. “What we really need is systemic change. Houses must be insulated, gas boilers replaced by heat pumps, electric vehicles subsidised, and the charging infrastructure improved.” That conclusion is in stark
ruling out fines for landlords whose properties did not meet energy efficiency standards also caused controversy. In doing so, the Prime Minister sent a message that the UK was ahead of the curve on climate change and, with the cost-of- living crisis hitting many families, he was giving individuals more choice on when they made environmental switches. “Recent government policies tend to shy away from regulation and pass responsibility to the consumer – an approach that is very unlikely to work,” says Professor Chater. “The fact is that most problems are created by systems rather than individuals and much of our behaviour is shaped by the systems we live within. “Real change requires difficult and complex policy choices.” Nudge, not fudge That does not mean that policymakers and business leaders should abandon behavioural science. It remains a useful tool to drive progress. But Professor Chater argues that it should complement systemic change, not replace it. The key is to ensure we use behavioural science effectively. One such use is to identify how existing systems are creating problems and encouraging damaging behaviours. The minimum repayments set by credit card companies are a prime example. An experiment led by Neil Stewart, Professor of Behavioural Science at WBS, found that volunteers who received a credit card statement with no minimum repayment chose to pay off significantly more of their debt. This proved to be more effective than including a warning about the cost of repaying only
the minimum amount. Professor Stewart says:
so successful is that there was widespread public support for reducing plastic waste, built over time. “If you try to nudge people – through legislation or other means – without that consensus, there will be a natural reaction against that,” says Professor Chater. “People don’t like being coerced.” That resulted in a backlash against the extension of Ultra Low Emission Zone (ULEZ) in London, which introduced daily charges for motorists to improve air quality. “The thing that was missing there was a general public agreement that this was the way we wanted to go,” says Professor Chater. “Many people thought, I didn’t sign up for this. Whereas we’ve had years of David Attenborough documentaries to show us how damaging plastic waste can be.” British Columbia used clever design to win public support for an even more significant piece of legislation – the carbon tax – in 2014. This might have been widely rejected if it had been billed as raising government funds. Instead, the money is distributed to the population. As a result, people accepted the tax, knowing there would be winners and losers financially. Another area where behavioural science is being used to inform and optimise public policy is healthcare. This was widely seen during the Covid-19 pandemic to encourage people to adhere to lockdown regulations and increase vaccination rates (see the article starting on page 22). It is also being used to help combat antimicrobial resistance. The NHS conducted trials, sending letters to GPs who prescribed more antibiotic drugs than their peers. Simply
“Showing people the minimum repayment option appears to have an anchoring effect. Removing that ‘bad nudge’ could have a huge impact on consumer debt. “People would be prepared to pay their bills off quicker, reducing the amount of interest they pay and reducing their debt. “It would also help firms, as people would be less likely to fall behind on their payments, end up in financial distress, and need their debt written off.” “Trying to fix the individual can be disappointingly ineffective” Behavioural science can also be used to design more effective policy changes that enjoy public support. One success story is the plastic bag tax. For decades, campaigners failed to persuade people to use fewer bags. Yet a tiny tax made a dramatic difference. Shoppers feel they are losing five pence when they pay for a bag – and people hate losing money. But more important is the symbolic significance. Professor Chater says: “Nobody looks at a table full of plastic bags after going shopping and thinks, this is great. Most of us want to play our part in reducing plastic waste. “The charge works as an embarrassing reminder that we have done the wrong thing when we forget to take a bag with us
contrast to Rishi Sunak’s recent decision to dilute many of his government’s key green commitments. News that the UK Prime
Minister will delay the ban on new petrol and diesel cars from 2030 to 2035 drew heavy criticism from car manufacturers and environmental campaigners alike. Postponing targets to phase out gas boiler installations and
and have to pay for one.” One reason the tax was
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