The Nudgy State

How five governments are using behavioral economics to encourage citizens to do the right thing.

BY JOSHUA E. KEATING | JANUARY 2, 2013

IDEAS IN THE ATTIC

Britain

Prime Minister David Cameron frequently expressed his admiration for Nudge, the ideas of which meshed well with the more state-centric brand of conservatism -- known as "big society" -- that the Tory leader championed on the campaign trail. In 2010, Cameron set up the Behavioural Insights Team -- quickly dubbed the "nudge unit" by the press -- a group of behavioral economists, with Thaler acting as a consultant, given a mandate to "find innovative ways of encouraging, enabling and supporting people to make better choices for themselves."

The unit has undertaken a number of trial programs so far. In one, non-payers of car taxes were sent a letter, including a picture of their car, warning in plain English that their vehicle would be lost if they did not pay up. Including the photo tripled payment rates. The unit has also seen enormous success in informing people by text message that they're late on taxes or fines.

In another intervention, insulation firms set up a service to clean out customers' attics while installing insulation. (It was found that people were much more likely to pay for new energy-saving insulation if they didn't have to go through the trouble of sorting through years worth of junk.) The unit has been an occasional target of ridicule on Fleet Street, but its interventions have been successful enough -- about £300 million ($485 million) in savings so far -- that other governments are looking to copy it.

ADRIAN DENNIS/AFP/Getty Images

 

Joshua E. Keating is an associate editor at Foreign Policy.