Should GCC states nudge their ci­ti­zens?

The National - News - Business - - Analysis - Omar Al Ubay­dli We wel­come eco­nom­ics ques­tions from our read­ers via email ([email protected]) or tweet (@omare­co­nomics)

In 2008, the Univer­sity of Chicago econ­o­mist Richard Thaler and the Har­vard scholar Cass Sun­stein coau­thored a book ti­tle Nudge, wherein they de­scribed novel re­search on chang­ing peo­ple’s be­hav­iour. The book’s suc­cess has led to the es­tab­lish­ment of gov­ern­men­tal be­havioural sci­ence units in many lead­ing economies, such as the United States and the United King­dom, as well the GCC. What is nudg­ing, and should GCC coun­tries em­brace it?

Nudg­ing is de­fined as chang­ing a per­son’s de­ci­sion-mak­ing en­vi­ron­ment with­out re­mov­ing op­tions, and with­out sig­nif­i­cantly al­ter­ing the eco­nomic in­cen­tives as­so­ci­ated with any given op­tion. It is sup­posed to be cheap and non-in­tru­sive, and rules out in­ter­ven­tions such as im­pos­ing a tax on cig­a­rettes, or ban­ning the sale of al­co­hol. In­stead, a “nudger” tasked with mak­ing peo­ple eat more healthily at restau­rants might present calo­rie in­for­ma­tion, and put healthy choices at eye level, ac­com­pa­nied by bright, colour­ful pic­tures, while rel­e­gat­ing un­healthy choices to the small print at the end of the menu.

The sci­en­tific ba­sis for nudg­ing is the laun­dry list of cog­ni­tive bi­ases that peo­ple suf­fer from. These are lim­i­ta­tions to the hu­man brain that re­sult in seem­ingly ir­ra­tional ac­tions, such as the ten­dency to over­value items that have been in your phys­i­cal pos­ses­sion (the endowment ef­fect), or the ten­dency to pro­cras­ti­nate (hy­per­bolic dis­count­ing). Nudg­ing tries to turn the ta­ble on these bi­ases, by mak­ing them a force for sen­si­ble be­hav­iour.

Prac­ti­cal nudg­ing pre-dates 2008 by decades if not cen­turies, as it con­sti­tutes a cor­ner­stone of mar­ket­ing sci­ence. When jew­ellery com­pa­nies show you pic­tures of Hol­ly­wood starts bear­ing their prod­uct, or su­per­mar­kets place choco­late bars near the cash reg­is­ter, they are nudg­ing you to­ward their prod­ucts. What Thaler and Sun­stein have done is try to con­vince gov­ern­ments of the need to de­ploy such meth­ods re­spon­si­bly in the pur­suit of so­cially de­sir­able out­comes – such as health­ier pop­u­la­tions, or safer driv­ing – in a man­ner that is both cheap and eth­i­cal.

This lat­ter point on ethics – which has spawned the phrase “lib­er­tar­ian pa­ter­nal­ism” – de­serves em­pha­sis. Most or­di­nary ci­ti­zens dis­like le­gal re­stric­tions on per­sonal be­hav­iour, such as speed lim­its or “DO NOT EN­TER” signs on a door, some­times lead­ing to the re­stric­tions back­fir­ing: think of young­sters watch­ing in­ap­pro­pri­ate films due to the “for­bid­den fruit” men­tal­ity. Nudges seek to com­bat de­fi­ance by mod­i­fy­ing the en­vi­ron­ment in a way that is both sub­tle and fun­da­men­tally un­re­stric­tive.

The low cost is also highly at­trac­tive. For ex­am­ple, around 73,000 un­nec­es­sary pre­scrip­tions of an­tibi­otics in the UK were elim­i­nated sim­ply by no­ti­fy­ing doc­tors who tend to pre­scribe them a lot com­pared to their peers about this fact.

All gov­ern­ments, in­clud­ing the GCC, have been in­for­mally nudg­ing be­fore the es­tab­lish­ment of be­havioural units. For ex­am­ple, mu­nic­i­pal­i­ties will of­ten dis­play pic­tures of grisly in­juries at high­way in­ter­sec­tions where many danger­ous traf­fic ac­ci­dents have hap­pened, in an at­tempt to nudge peo­ple into driv­ing more re­spon­si­bly.

Should the GCC give nudg­ing a larger role in the policy port­fo­lio? Per­haps the big­gest ben­e­fit of be­havioural units is not in the nudges that they pro­pose, but in the sci­en­tific method that they es­pouse. A key maxim among nudg­ing prac­ti­tion­ers is that the suc­cess of an in­ter­ven­tion is highly con­text-spe­cific, mean­ing that sim­ple changes in the en­vi­ron­ment can have large im­pacts upon a nudge’s ef­fec­tive­ness – what works in Bahrain might not work in the UAE. Ac­cord­ingly, nudges must be ac­com­pa­nied by rig­or­ous eval­u­a­tion, to en­sure cost-ef­fec­tive poli­cies.

Like their western coun­ter­parts, civil ser­vants in the GCC are well-in­ten­tioned and com­pe­tent peo­ple un­trained in the ways of sci­en­tific policy eval­u­a­tion. In­fus­ing work teams with nudge spe­cial­ists can serve the dual pur­pose of gen­er­at­ing cheap, new policy ideas (the nudges), as well as equip­ping tra­di­tional policy spe­cial­ists with the lat­est sta­tis­ti­cal tech­niques for as­sess­ing their poli­cies. In the words of Ben­jamin Franklin: “Tell me and I for­get, teach me and I may re­mem­ber, in­volve me and I learn.”

A “nudger” tasked with mak­ing peo­ple eat more healthily at restau­rants might present calo­rie in­for­ma­tion and put un­healthy choices at the end of the menu

Ju­mana El Heloueh / Reuters

Nudg­ing is con­text-spe­cific. What works in Bahrain might not in the UAE.

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