How the ‘nudge unit’ pushed its way into the pri­vate sec­tor

The Cabi­net Of­fice’s in­flu­enc­ing team pulls in rev­enues of £14m a year,

The Observer - - Business - writes Ben Quinn

David Halpern pauses at the men­tion of a quote from one of the govern­ment’s se­nior Brex­iters – that “peo­ple in this coun­try have had enough of ex­perts” – and briefly gazes out of a win­dow in the West­min­ster of­fices of the Be­havioural In­sights Team (BIT).

“Em­pir­i­cally it doesn’t ap­pear to be true,” replies the chief ex­ec­u­tive of the busi­ness that was once the Cabi­net Of­fice team nick­named the “nudge unit”. It was spun off in 2014 as a “so­cial pur­pose com­pany” and is now co-owned by its em­ploy­ees, the Cabi­net Of­fice and the in­no­va­tion char­ity Nesta.

“Michael Gove made that re­mark, and he was talk­ing about a very par­tic­u­lar con­text, but if you ac­tu­ally look at the data, trust in ex­perts has gone up over the last 10-15 years,” says Halpern. “I know ev­ery­one likes to say ‘we’re sick of ex­perts’, but it doesn’t ap­pear to be the case.”

The fi­nan­cial per­for­mance of BIT – which uses be­havioural psy­chol­ogy to change habits and ac­tions – cer­tainly sug­gests ex­per­tise, as a com­mod­ity, is valu­able.

Ten years ago, BIT was a small unit of civil ser­vants es­tab­lished with the re­mit to ap­ply lessons from be­havioural economics and psy­chol­ogy to pub­lic pol­icy. But it has now grown into the type of Bri­tish ex­port suc­cess story that Gove and fel­low Brex­iters might want to cel­e­brate.

The group’s rev­enues last year climbed by a third to £14m and nearly 40% of that in­come came from over­seas. BIT now has a New York of­fice bring­ing in clients across the US and Canada, and sub­sidiaries in Aus­tralia, New Zealand and Sin­ga­pore. The unit’s suc­cesses in­clude send­ing let­ters to Bri­tish GPs who were pre­scrib­ing more than their peers, cutting un­nec­es­sary pre­scrip­tions by 3.3%. BIT’s clients range from gov­ern­ments and pub­lic bod­ies to the World Bank, and its work spans tra­di­tional “nudge” ter­ri­tory – such as us­ing be­havioural psy­chol­ogy to prompt peo­ple to pay their taxes or make bet­ter use of pub­lic ser­vices – to in­volve­ment with Colom­bia’s peace process.

But back in Lon­don there are some par­tic­u­larly in­ter­est­ing ques­tions loom­ing for an or­gan­i­sa­tion that seems a cu­ri­ous cross be­tween a Sil­i­con Round­about startup and a White­hall depart­ment.

What now for nudge in the age of Brexit? Also, for an out­fit cre­ated un­der David Cameron to find ways of do­ing “more with less” un­der aus­ter­ity, what might hap­pen in the event of a Cor­byn govern­ment com­mit­ted to high pub­lic spend­ing? “I worked for Tony Blair for six years, so I did live through a pe­riod where there was a lot of money … but it seems that gov­ern­ments al­ways struggle,” replies Halpern, a psy­chol­o­gist who lec­tured at Cam­bridge, Ox­ford and Har­vard be­fore en­ter­ing govern­ment. He has plenty to say that might in­ter­est not just busi­ness, but con­ceiv­ably a Labour Trea­sury team headed by John McDon­nell.

Halpern’s ideas for al­ter­ing the labour mar­ket, for ex­am­ple, take an ap­proach that tran­scends clas­si­cal left and right views. “Take some­one try­ing to de­cide where to work. They can get info about what they might earn, but not much else. Will you be happy? Do you have pro­gres­sion op­por­tu­ni­ties? Is the boss an ass­hole?” he says. “There are things like [the workplace re­view site] Glass­door, but imag­ine you had some­thing more like TripAd­vi­sor that was filled out and re­ally rich in in­for­ma­tion about firms.”

BIT is ac­tive, too, on the fi­nan­cial front. Work in partnership with the Money Ad­vice Ser­vice has been de­vel­op­ing ways of help­ing squeezed fam­i­lies to tackle debt and en­cour­age “rainy day sav­ings”.

“In In­dia it has been found that if you give work­ers their money in two tranches they are more likely to save. It’s even more ef­fec­tive if you give them the en­velopes with pic­tures of their kids on it, or if they have to tear that pic­ture in or­der to get the money,” he says.

David Halpern would like to see a TripAd­vi­sorstyle site that rates em­ploy­ers.

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