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Inside the Nudge Unit: How Small Changes Can Make a Big Difference by David Halpern
Affordable Care Act / Obamacare, availability heuristic, carbon footprint, Cass Sunstein, centre right, choice architecture, cognitive dissonance, collaborative consumption, correlation does not imply causation, Daniel Kahneman / Amos Tversky, endowment effect, happiness index / gross national happiness, hindsight bias, illegal immigration, job satisfaction, Kickstarter, libertarian paternalism, market design, meta analysis, meta-analysis, Milgram experiment, nudge unit, peer-to-peer lending, pension reform, presumed consent, quantitative easing, randomized controlled trial, Richard Feynman, Richard Thaler, Ronald Reagan, Rory Sutherland, Simon Kuznets, skunkworks, the built environment, theory of mind, traffic fines, World Values Survey
The MINDSPACE framework (Institute for Government, 2010). The 2010 government launches the Nudge Unit Squeezed between Steve Hilton and Rohan Silva, the new Prime Minister’s political advisers, in the back of a Paris taxi was not somewhere I thought I’d find myself in the early summer of 2010. It was still the very early days of the new Coalition Government, and we had come to Paris to see if the centre-right administration of Nicolas Sarkozy shared the interest in approaches to government of the new Cameron–Clegg government in the UK, including nudging, Big Society and well-being. It turned out that they didn’t. Richard Thaler was with us, over from Chicago for a few days while we sought to put into action the plan to create the world’s first nudge unit. We didn’t even know what we would call it at that point. At that time, my role was supposed to be to advise the new unit for a day or so a week, drawing on my knowledge of government and my specific knowledge of behaviour and policy.
Data and transparency 8. A different approach to big policy challenges 9. Well-being: Nudging ourselves, and each other, to happier lives 10. What works? The rise of experimental government Section 4 Where next? 11. Risks and limitations 12. Conclusion: Where next? Notes Index Acknowledgements Copyright About the Book This is the story of an experiment. The Behavioural Insights Team, or ‘Nudge Unit’ as it came to be called, was set up in Downing Street in 2010 by Prime Minister David Cameron. The team’s objectives read like a mission impossible: to transform the approach of at least two major departments; to inject a new and more realistic understanding of human behaviour across UK government; and to deliver a 10-fold return on its cost. If it failed, it was to be shut down on its two-year anniversary – with enough time for voters to forget the whole embarrassing experiment before the next election.
Nothing came of the French effort aside from an excellent lunch, but we made good use of our time together on the Eurostar to think about what the team might do and other important matters, including deciding what it should be called. We eventually settled on the Behavioural Insights Team, though Rohan prophetically predicted that the formal name of the team would be irrelevant since everyone would just call it the ‘Nudge Unit’. Now, five years later, it is hard to imagine what would have become of the effort had Rohan not convinced David Halpern to come back from the comfortable, good life working at the UK’s Institute for Government and as an academic at Cambridge, to resume a full-time role in government. David had a unique background that made him the ideal person to lead this new effort. Not only was he a first-rate academic psychologist with a thorough understanding of modern behavioural science research, but crucially he had also worked in the Strategy Unit at 10 Downing Street in Tony Blair’s administration, so knew the workings of Whitehall intimately.
1960s counterculture, Airbnb, business intelligence, Cass Sunstein, corporate governance, dematerialisation, experimental subject, Exxon Valdez, Frederick Winslow Taylor, Gini coefficient, income inequality, invisible hand, joint-stock company, market bubble, mental accounting, nudge unit, profit maximization, randomized controlled trial, Richard Thaler, road to serfdom, Ronald Coase, Ronald Reagan, science of happiness, sentiment analysis, sharing economy, Slavoj Žižek, smart cities, Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, Steve Jobs, The Chicago School, The Spirit Level, theory of mind, urban planning
In 2013, the British government was embarrassed when a blogger discovered that jobseekers were being asked to complete psychometric surveys whose results were completely bogus.19 Regardless of how the user answered the questions, they got the same results, telling them what their main strengths are in the job market. It later transpired that this was an experiment being run by the government’s ‘Nudge Unit’, to see if individual behaviour was altered by having this survey offer them these findings. Social reality had been manipulated to generate findings for those looking down from above. This logic of experimentation allows for policies to be introduced which would otherwise seem entirely unreasonable, or even illegal. Behavioural experiments on criminal activity show that individuals are less psychologically prone to take drugs or engage in low-level crime if the resulting penalty is swift and certain.
In that sense, due process becomes viewed as an inefficient blockage, standing in the way of behaviour change. The much-celebrated HOPE (Hawaii’s Opportunity Probation with Enforcement) programme, which builds directly on this body of evidence, ensures that repeat offenders know they will be jailed immediately if found up to no good. Projects such as the Hudson Yards quantified community, the Nudge Unit’s fake survey and HOPE share a number of characteristics. Most obviously, they are fuelled by a high degree of scientific optimism that it may be possible to acquire hard objective knowledge regarding individual decision-making, and then to design public policy (or business practices) accordingly. This optimism is scarcely new; indeed it tends to recur ever few decades or so. The first wave occurred during the 1920s, inspired by Watson and Taylorist principles of ‘scientific management’.
Today, the fact that it is ‘quants’ (mathematicians and physicists, equipped with algorithmic techniques to explore large data sets) who are rendering our behaviour predictable is deemed all the more promising, given these individuals are not burdened by any theory of what distinguishes human beings or societies from any other type of system. Secondly, the surveillance. As examples such as Hudson Yards or the Nudge Unit indicate, the new era of behaviourist exuberance has emerged on the basis of new high-level alliances between political authorities and academic researchers. Without those alliances, social scientists continue to labour under the auspices of ‘theory’ and ‘understanding’, as indeed we all do when seeking to interpret what each other are up to in our day-to-day lives. Alternatively, there are companies such as Facebook, who are able to make hard, objective claims about how people are influenced by different tastes, moods or behaviours – thanks to their ability to observe and analyse the online activity of nearly a billion people.
Why Nudge?: The Politics of Libertarian Paternalism by Cass R. Sunstein
Affordable Care Act / Obamacare, Andrei Shleifer, availability heuristic, Cass Sunstein, choice architecture, clean water, Daniel Kahneman / Amos Tversky, Edward Glaeser, endowment effect, energy security, framing effect, invisible hand, late fees, libertarian paternalism, loss aversion, nudge unit, randomized controlled trial, Richard Thaler
., Changing Human Behavior to Prevent Disease: The Importance of Targeting Automatic Processes, 337 SCIENCE 1492 (2012) (exploring role of automatic processing in behavior in the domain of health). 25. See The Behavioural Insights Team, CABINET OFFICE, http://www.cabinetoffice.gov.uk/behavioural-insights-team (last visited Dec. 10, 2012). 26. Id. 27. Various reports can be found at the website of the Behavioural Insights Team. See id. 28. See Oliver Wright, Steve Hilton’s “Nudge Unit” Goes Global, INDEPENDENT (London), Sept. 20, 2012, http://www.independent.co.uk/news/uk/politics/steve-hiltons-nudge-unit-goes-global-8157492.html. 29. See Consumer Policy Toolkit, ORG. FOR ECON. COOPERATION & DEV. (July 2010), http://www.oecd.org/sti/consumerpolicy/consumerpolicytoolkit.htm. 30. See DG SANCO, Consumer Behaviour: The Road to Effective Policy-Making, EUR. COMMISSION (2010), http://ec.europa.eu/consumers/docs/1dg-sanco-brochure-consumer-behaviour-final.pdf. 31.
The Precariat: The New Dangerous Class by Guy Standing
8-hour work day, banking crisis, barriers to entry, Bertrand Russell: In Praise of Idleness, call centre, Cass Sunstein, centre right, collective bargaining, corporate governance, crony capitalism, deindustrialization, deskilling, fear of failure, full employment, hiring and firing, Honoré de Balzac, housing crisis, illegal immigration, immigration reform, income inequality, labour market flexibility, labour mobility, land reform, libertarian paternalism, low skilled workers, lump of labour, marginal employment, Mark Zuckerberg, means of production, mini-job, moral hazard, Naomi Klein, nudge unit, pensions crisis, placebo effect, post-industrial society, precariat, presumed consent, quantitative easing, remote working, rent-seeking, Richard Thaler, rising living standards, Ronald Coase, Ronald Reagan, science of happiness, shareholder value, Silicon Valley, The Market for Lemons, The Nature of the Firm, The Spirit Level, Tobin tax, transaction costs, universal basic income, unpaid internship, winner-take-all economy, working poor, working-age population, young professional
The authors do not attribute the idea to Bentham but say the state should create ‘an architecture of choice’. On becoming US President, Obama appointed Sunstein to head the Office of Information and Regulatory Affairs, based in the White House. Meanwhile, in the United Kingdom, Conservative Party leader David Cameron told members of parliament to read the book; on becoming Prime Minister in 2010 he set up the Behavioural Insight Team, quickly dubbed ‘the Nudge Unit’, in Downing Street, advised by Thaler. The mandate was to induce people to make ‘better’ decisions, in the interest of ‘society’. Steering people is always questionable. How do we know that the nudgers know what is best for any individual? Today’s conventional wisdom becomes yesterday’s error. Again and again, policies or practices that seem unwise turn out later to become norms and vice versa.
Misbehaving: The Making of Behavioral Economics by Richard H. Thaler
Albert Einstein, Amazon Mechanical Turk, Andrei Shleifer, Apple's 1984 Super Bowl advert, Atul Gawande, Berlin Wall, Bernie Madoff, Black-Scholes formula, capital asset pricing model, Cass Sunstein, Checklist Manifesto, choice architecture, clean water, cognitive dissonance, conceptual framework, constrained optimization, Daniel Kahneman / Amos Tversky, delayed gratification, diversification, diversified portfolio, Edward Glaeser, endowment effect, equity premium, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, George Akerlof, hindsight bias, Home mortgage interest deduction, impulse control, index fund, invisible hand, Jean Tirole, John Nash: game theory, John von Neumann, late fees, law of one price, libertarian paternalism, Long Term Capital Management, loss aversion, market clearing, Mason jar, mental accounting, meta analysis, meta-analysis, More Guns, Less Crime, mortgage debt, Nash equilibrium, Nate Silver, New Journalism, nudge unit, payday loans, Ponzi scheme, presumed consent, pre–internet, principal–agent problem, prisoner's dilemma, profit maximization, random walk, randomized controlled trial, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Coase, Silicon Valley, South Sea Bubble, statistical model, Steve Jobs, technology bubble, The Chicago School, The Myth of the Rational Market, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, transaction costs, ultimatum game, Walter Mischel
On the train ride over, Steve Hilton and I got into a heated debate about what the new team should be called. Steve wanted to use the term “behavior change,” which I thought had awful connotations. David Halpern and I were lobbying for Behavioural Insights Team, the name finally chosen. The argument consumed most of the trip to Paris. At some point Rohan took Steve aside and told him to give in, arguing, prophetically, that “no matter what we name it, everyone will call it the ‘nudge unit.’” By the time of my next trip to London, the initial team had been established and was set up in temporary facilities in an obscure corner of the Admiralty Arch, located a short walk away from 10 Downing Street and Parliament. It was winter, and London had been hit with what locals considered a massive snowstorm. Accumulation was about an inch. And it was not much warmer inside than outside the drafty building that served as the team’s first home.
Thinking, Fast and Slow by Daniel Kahneman
Albert Einstein, Atul Gawande, availability heuristic, Black Swan, Cass Sunstein, Checklist Manifesto, choice architecture, cognitive bias, complexity theory, correlation coefficient, correlation does not imply causation, Daniel Kahneman / Amos Tversky, delayed gratification, demand response, endowment effect, experimental economics, experimental subject, Exxon Valdez, feminist movement, framing effect, hindsight bias, index card, job satisfaction, John von Neumann, libertarian paternalism, loss aversion, medical residency, mental accounting, meta analysis, meta-analysis, nudge unit, pattern recognition, pre–internet, price anchoring, quantitative trading / quantitative ﬁnance, random walk, Richard Thaler, risk tolerance, Ronald Reagan, The Chicago School, The Wisdom of Crowds, transaction costs, union organizing, Walter Mischel, Yom Kippur War
The appeal of libertarian paternalism has been recognized in many countries, including the UK and South Korea, and by politicians of many stripes, including Tories and the Democratic administration of President Obama. Indeed, Britain’s government has created a new small unit whose mission is to apply the principles of behavioral science to help the government better accomplish its goals. The official name for this group is the Behavioural Insight Team, but it is known both in and out of government simply as the Nudge Unit. Thaler is an adviser to this team. In a storybook sequel to the writing of Nudge, Sunstein was invited by President Obama to serve as administrator of the Office of Information and Regulatory Affairs, a position that gave him considerable opportunity to encourage the application of the lessons of psychology and behavioral economics in government agencies. The mission is described in the 2010 Report of the Office of Management and Budget.