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Nudging for Good: The Power of Behavioral Insights in Shaping Policies

January 22, 2024

In 2012, British policy makers were trying to find a way to increase participation in retirement savings programs.  The approach they settled upon was to “nudge” workers towards participation by making opting into the program the default option rather than by offering two, apparently equally viable choices: to opt in or not.  The results were dramatic.  By the end of 2016, over 26 million workers were participating in the savings program.

The staregy used by these policy makers is known as “nudging”, which has become a standard behavioral intervention for policymakers to improve the access to and the use of public services. “Nudging” refers to creating ‘choice architecture’, or influencing decision-making by how choices are presented rather than by adding incentives or deterrents to the actual choices themselves.   

Popularized by University of Chicago economist and Nobel Laureate Richard Thaler and Harvard Law Professor Cass Sunstein in their 2008 book ‘Nudge: Improving Decisions About Health, Wealth, and Happiness’, nudging has three main features that make it an appealing tool for policy improvement. 

  • Firstly, it does not force people to engage in a specific behavior.
  • A nudge should preserve the freedom of choice. 
  • It does not require a large economic incentive. 

Taking these features into consideration, a nudge only changes the design of how choices are presented to sway individuals towards one choice over another. This is done without offering reward or punishment, and is ultimately the individual’s own choice. This makes nudging a useful and cost-effective tool for policy improvement. 

It is also important to note that the “nudge” must be structured carefully.  For example, an appeal to get people to attend their annual health screens that noted “One Person in Two attends their Health Screen” could result in two possible outcomes:

  • Half have gone, so I should too, or
  • Half have gone, so it doesn’t matter whether I go or not.

A successful nudging campaign must sway a potential client by noting the benefits of health screening such as early detection of diseases making their treatment easier, peace of mind, improved vigor and strength, etc.  And the preferred choice should be implicit in the choice architecture: having the desired outcome printed first or with much greater prominence.  Structured properly, nudging can be an important tool in advancing public policy goals.  

Author
Mohammad Amawi

Managing Partner at Amawi, Takrouri & Associates

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