Modern problems such as climate change, debt and obesity often seem intractable - how do we achieve public policy outcomes in the collective interest while at the same time respecting individual freedom to make decisions? Is there a way that liberty can be respected while moving forward together? In their widely-acclaimed 2008 book Nudge: Improving decisions about health, wealth and happiness, Richard Thaler and Cass Sunstein define a “nudge” as:
“… any aspect of the choice architecture that alters people’s behaviour in a predictable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates. Putting the fruit at eye level counts as a nudge. Banning junk food does not.”1
Informed by advances in behavioural economics, and responding to a fundamentally different decision-making environment of rapid technological advances, consumer empowerment, economic globalization and corporate social responsibility, “Nudge” approaches have been highly influential in the UK and the US in recent years.
Nudges in the UK
Nudges don’t remove choice - they re-structure the “choice architecture” to make the socially optimal choice the default, or the clear and easy option.1 Moving beyond traditional notions of left and right, this approach proved compelling to then Conservative Party leaders David Cameron and George Osbourne, who added Nudge to the required reading list for all Conservative Members of Parliament when it was published in 2008. When they came to power in May 2010 (as Prime Minister and Chancellor of the Exchequer respectively), they decided to apply the principles of Nudge in real life.2 Based out of the UK Cabinet Office, a “Behavioural Insights Team” was launched in July 2010, often called the “Nudge unit”.3
The team/unit is comprised of civil servants and external expert advisers including a co-author of Nudge, American professor Richard Thaler.4 The mandate of the unit is to “make a reality of the Coalition Government’s intention to find intelligent ways to encourage support and enable people to make better choices for themselves.”5 In addition to the development of specific policy development (e.g. on organ donation6), they have increased understanding of behavioural approaches throughout government (e.g. given seminars to senior civil servants, Parliament and the wider policy community7) and worked with the private sector to conceptualize and pilot initiatives (e.g. a smoking cessation pilot run by Boots pharmacy8).
After an in-depth review by the House of Lords in 2011 (including case studies on car use and obesity) the Nudge unit is focusing on the establishment of controlled trials to increase the behavioural evidence base for effective interventions.9
Nudges in the US
While Nudge co-author Richard Thaler was active implementing nudges in the UK, the book’s other co-author Cass Sunstein was busy assuming the highest regulatory policy position in the United States as Administrator of the Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget, an Agency within the Executive Office of the President. A Harvard law professor with an expertise in cost-benefit analysis and behavioural economics, Sunstein took on the position in September 2009, after a nomination by President Obama and confirmation by the Senate.
Upon taking office, Sunstein emphasized that OIRA’s goal would be to create regulatory policy which recognizes the complexity of human behavior, for “homo sapiens rather than homo economicus” 10 - a central distinction found throughout the illustrative examples in Nudge the text. Unlike the Behavioural Insights Team, the purpose of OIRA is not to advance nudges per se, rather it is to review federal regulations, reduce paperwork burdens, and oversee policies relating to privacy, information quality, and statistical programs. The US government is also actively supporting those decision-makers whose objectives are to explicitly meet multiple socio-economic objectives simultaneously, e.g. impact investors and social enterprises. This further reduces the need for regulation in the first place, and/or works to achieve “regulatory”/public protection objectives in areas outside of the government’s jurisdiction. 11
Implications for Canada
In Canada, we have a long history of federally-initiated awareness raising campaigns. Canada’s ParticipAction program for active living has been ongoing since 1973 (closed in 2001, revitalized in 2007), and is renowned around the world. Canada’s Environmental Choice program provides consumers with information on the best environmental performers. But awareness-raising does not make a nudge; rather an active evaluation of the choice architecture affecting the barriers and benefits of decisions would be required to find new ways to creatively transmit best practices and competitively transform markets and cultures. The pioneering work done by Canadian Doug MacKenzie-Mohr in the area of community-based social marketing is of major significance to understanding what works to affect behaviour, and at the federal level, the suite of ecoEnergy programs for home energy retrofits is a recent example of a nudge-based approach combined with economic incentives.12
Like the UK and the US, Canada is also operating in a decision-making environment characterized by rapid technological advances, consumer empowerment, economic globalization and advances in corporate social responsibility. But vis a vis the US and the UK, the potential to leverage nudges has not yet been systematically explored or applied.
- Do we have enough of an evidence base on how people and firms actually behave?
- How can this kind of insight better inform nudges, but also combinations of interventions?
With today’s concerted federal effort to improve the Canadian regulatory system (which includes a structural reform focus) Canada could constructively advance its capacity in this area, for example by creating its own Behavioural Insights unit and developing pilot projects.
Brecknell, Suzannah. “IfG Director to Lead Behaviour Insights Team” Civil Service Live Network. August 11, 2010.
Cabinet Office Behavioural Insights Team. Applying Behavioural Insights to Health. December 2010.
Cabinet Office Behavioural Insights Team. Annual Update 2010-2011. September, 2011.
Cabinet Office. Government Response to the Science and Technology Select Committee Report on Behaviour Change. Published September 2011.
Cacas, M. “OMB's Sunstein presents new way to look at regulation.” Federal News Radio. February 17, 2010.
Froomkin, D. “Cass Sunstein: the Obama Administration’s Ambivalent Regulator” The Huffington Post. June 13, 2011.
House of Lords, Science and Technology Select Committee. Behaviour Change Report. July 19, 2011.
Homer-Dixon, T. “The Enticements of Green Carrots.” The Globe and Mail. August 7, 2009.
Loblaw Companies Limited. Sustainable Seafood Commitment, May 2011.
Mackenzie-Mohr, D. and William Smith. Fostering Sustainable Behavior: An Introduction to Community-Based Social Marketing.New Society Publishers, 1999.
McKinsey Quarterley. Nudging the world toward smarter public policy: An interview with Richard Thaler. June 2011.
Osbourne, G. and Richard Thaler. “We Can Make You Behave” Guardian.co.uk January 28, 2011.
Presidential Documents, Executive Order 13563 of January 18, 2011. Improving Regulation and Regulatory Review, Federal Register, Volume 76, No 14.
Wintour, P. “David Cameron's 'nudge unit' aims to improve economic behavior.” The Guardian. September 9, 2010.
1 “My number-one mantra from Nudge is, “Make it easy.” When I say make it easy, what I mean is, if you want to get somebody to do something, make it easy. If you want to get people to eat healthier foods, then put healthier foods in the cafeteria, and make them easier to find, and make them taste better. So in every meeting, I say, “Make it easy.” It’s kind of obvious, but it’s also easy to miss.” Richard Thaler in McKinsey Quarterley. Nudging the world toward smarter public policy: An interview with Richard Thaler. June 2011. Note this is very similar to Doug MacKenzie Mohr’s barriers and benefits language.
3 It was launched by Cabinet Secretary Sir Gus O’Donnell at a lecture for the charity ProBono. Economics. See: Brecknell, Suzannah. “IfG Director to Lead Behaviour Insights Team” Civil Service Live Network.
4 The unit/team is supported by/reports to a cross-government steering group/board, which includes/d: Steve Hilton (the Prime Minister’s director of strategy), Jeremy Heywood (the prime minister's permanent secretary) Robert Devereux (permanent secretary at the Department of Transport and head of the civil service policy profession) and was/is chaired by cabinet secretary Sir Gus O’Donnell. Compiled with information from: Wintour, P. “David Cameron's 'nudge unit' aims to improve economic behavior.” The Guardian. Thursday 9 September 2010. Brecknell, Suzannah. “IfG Director to Lead Behaviour Insights Team” Civil Service Live Network.
9 Cabinet Office. Government Response to the Science and Technology Select Committee Report on Behaviour Change. Published September 2011.
10 Cacas, M. OMB's Sunstein presents new way to look at regulation. Federal News Radio. February 17, 2010.
11 World Economic Forum. Future of Government: Lessons Learned from Around the World, 2011. See Chapter on Social Enterprise.
12 Homer-Dixon, T. “The Enticements of Green Carrots.” The Globe and Mail. August 7, 2009.