Nudging

The Economy | Key Ideas

These short primers introduce students to the core concepts, theories and models, both new and established, heterodox and mainstream, contested and accepted, used by economists and political economists to understand and explain the workings of the economy.

Austerity

John Fender

Behavioural Economics

Graham Mallard

Bounded Rationality

Graham Mallard

Cultural Economics

Christiane Hellmanzik

Degrowth

Giorgos Kallis

Economic Anthropology

James G. Carrier

Financial Inclusion

Samuel Kirwan

The Gig Economy

Alex De Ruyter and Martyn Brown

Industrial Policy

Steve Coulter

The Informal Economy

Colin C. Williams

The Living Wage

Donald Hirsch and Laura

Valadez-Martinez

Marginalism

Bert Mosselmans

Nudging

Mark Whitehead and Rhys Jones

Productivity

Michael Haynes

The Resource Curse

S. Mansoob Murshed

In loving memory of Dr Rachel Howell, friend, colleague, inspiration

© Mark Whitehead and Rhys Jones 2024

This book is copyright under the Berne Convention.

No reproduction without permission.

All rights reserved.

First published in 2024 by Agenda Publishing

Agenda Publishing Limited

PO Box 185

Newcastle upon Tyne

NE20 2DH

www.agendapub.com

ISBN 978-1-78821-727-9

British Library Cataloguing-in-Publication Data

A catalogue record for this book is available from the British Library

Typeset by JS Typesetting Ltd, Porthcawl, Mid Glamorgan

Printed and bound in the UK by 4edge

Contents

Preface

1. Nudge: a gentle form of power

2. Histories of nudging

3. Nudges in practice

4. Critiques and controversies

5. The digital future of nudging

6. Conclusion

References

Index

Preface

Nudging is a subtle, but surprisingly controversial, technique for changing people’s behaviours. This may seem like an unusual time to write a book about nudging. The formal practices of nudging have been around for over a decade (they have been informally present for much, much longer). Nudge Units and associated initiatives have been established in over a hundred states and nudges are an accepted part of the policy world. Despite being well established, the value of nudging is being challenged from various perspectives. Some question whether subtle nudges are up to the task of tackling the daunting global political, economic, socio-cultural and environmental challenges of our age (Pedwell 2022). Others have cast doubt on the scientific insights on which nudging is predicated. In these contexts, it is to be expected that readers may think one of two things (or maybe even two of two things): everything that needs to be said about nudging has already been articulated; and why write about something which may already be outdated?

We claim that while much has been written about the pros and cons of nudging there is significant uncertainty about its long-term prospects and direction of travel. In a recent review of nudging Ed Bradon made two interesting observations (Bradon 2022). First, he claimed that despite nudging’s global spread, nudging-related practices are still relatively underutilized policy tools. Bradon estimates that an average-sized national government which mobilized nudging across all of its departments and policy regimes could be expected to deploy 6,000 nudges. He contrasts this to the 165 nudge trials that have so far been developed in two of the most prominent nudge units in the United States. Second, he claims that approximately 80 per cent of attempts to change people’s behaviours, or reform organizational practices, fail. In this context Bradon argues, Nudges are a valuable, modestly resourced and […] dramatically underused way of improving people’s lives. Abandoning them now would be like discovering Aspirin then immediately shutting down production because it doesn’t cure cancer (2022).

This book is based upon the premise that we are still in the relatively early phases of the use and development of nudging, and that the future is likely to be characterized by significant innovation and change (some of it good, some of it not so good) in the use of this policy tool. We thus offer a review of the road that has so far been travelled as a basis for speculating on (and may be even modestly shaping) what the future may hold.

In undertaking this endeavour, we are keen to position ourselves as neither advocates of nudging nor cynics. Our previous research and writing on the science and practices of nudging argues that current work in the field tends to be characterized by two groups (see Jones et al. 2013; Whitehead et al. 2018). First, are those in favour of nudging. This group argue that it is a powerful and influential policy tool, which only raises fairly minor ethical and political issues. Second, are those who are suspicious of nudging. This group tends to question the influence which is often attributed to nudging (arguing that it is actually a fairly insignificant area of policy development), but, at the same time, suggest it raises troubling constitutional and ethical concerns. Rather than seeing ourselves as somewhere in the middle of these differing perspectives, we propose a third position. What if nudging is both more significant than its critics acknowledge and raises more issues than its advocates suggest?

In this book we look back over the past 12 years to consider what lessons from the early history of nudging could usefully inform its future. We also consider the role that nudging could play in helping us tackle a series of emerging social, economic and environmental problems, while reflecting on the political and ethical issues it could also generate. A particular focus in this volume is the increasingly widespread use of nudging within our digital lives. This is an area of nudging that is likely to drive the growing prevalence of nudging in our everyday actions. It is also an area that tends to be associated with the escalation of both the benefits and problems that nudging can generate. We also draw attention to the different forms that nudging can take and how these varied forms raise distinctive advantages and complications. Note, however, this volume is not a how to guide for nudging. Although we do reflect on the operation and effects of nudges in the real world, this book is best thought of as a guide to what nudging actually is, where it has come from, whether we should use it, and, if so, precisely where and when is it best applied.

We would like to acknowledge the support and inspiration of our colleagues in the Department of Geography and Earth Sciences at Aberystwyth University, and members of the Aberystwyth Behavioural Insights Interdisciplinary Research Centre. We would also like to thank Jessica Pykett, Marc Welsh, Rachel Lilley, Martin Burgess, Sandy Stevens and Joram Feitsma who we have worked with on nudge-related research over the past ten years. Finally, we would like to thank the Leverhulme Trust, the Economic and Social Research Council, the Welsh Government and the Independent Social Research Foundation for providing funding support for our research on the impacts of nudging.

1

Nudging: a gentle form of power

Politics, in essence, is a competition between partial truths …

Cowley (2017: 11)

According to Google’s English Dictionary, the action of nudging is to prod (somebody) gently with one’s elbow to attract attention or to coax or gently encourage (someone) to do something. In everyday life nudging is thus synonymous with genteel actions of social notification and encouragement. Although gentle, and often innocuous, nudging is actually a powerful way to exert social influence. In his influential 1936 book How to Win Friends and Influence People, Dale Carnegie reveals the operational logics and power of social nudges. According to Carnegie, the key to long-term social influence is not to be found in aggressive coercion but in a deep understanding of human nature and interpersonal relations. Carnegie’s central insight was that all people want to feel important. So, the key to lasting social influence was not to force people into behaving in certain ways, but to make them feel significant and valued. Carnegie advocated a series of genteel actions to promote change in others: showing sincere appreciation towards other people; demonstrating an interest in the needs and desires of others; recognizing your own mistakes before drawing people’s attention to their own errors; constructing reputations for people that they will want to live up to; and even doing something as simple as remembering other people’s names. There was no science behind Carnegie’s insights. His philosophy of gentle social influence was derived from his experience as a salesman and public speaker. Carnegie did not use the term nudging to describe his techniques. However, as we shall see, his ideas reflect early iterations of the practices of nudging that we aim to explore in this book.

Few of us enjoy forcing people to do things. The appeal of Carnegie’s insights lie in the fact that they suggest that subtle persuasion is both a more socially agreeable and often more effective way to shape the behaviours of those around us than coercion. In addition to their effectiveness, the forms of subtle persuasion promoted by Carnegie carry with them a kind of moral virtue. They suggest that one of the best ways of achieving our goals may be found in being nice to others. The forms of nudging we explore in this book are related to these everyday expressions of social influence and they are, often, associated with virtuous intentions. But they are also distinct. They are distinct because they embody a form of gentle power which has been uncovered and formally codified within various branches of the social, psychological and behavioural sciences. They are also distinct because they embody a collective orchestration of gentle forms of power by governments, corporations and NGOs to address a range of social problems. Consequently, although the forms of nudging we are interested in may be gentle, and socially sensitive, they have proven to be consequential and controversial.

We understand nudging, in its contemporary manifestations at least, as a novel science of social influence. In their definitive text on the matter, Nudge: Improving Decisions About Health Wealth and Happiness (2008), Richard Thaler and Cass Sunstein define a nudge as an intervention that: […] alters people’s behaviour in a predictable way without forbidding any options or significantly changing their economic incentives (2008: 8). There are two important dimensions of this quote. First, is the reference to predictability. Nudging draws on the insights of the behavioural and psychological sciences to suggest that it is possible to anticipate when people are likely to make bad decisions and to know how best to correct them. Now, of course, the insights of the psychological and behavioural sciences significantly predate the modern practices of nudging. As a science, psychology has consistently revealed the varied factors that contribute to human misperception and behavioural pathology (Rose 1997). But, for much of the twentieth century, psychoanalysis has suggested that human behaviour can be regulated by careful reflection on our self and associated therapeutic techniques (Nolan 1999). However, the psychological and behavioural sciences associated with nudging suggest that there may be limitations in people’s abilities to effectively self-regulate their irrational actions. The second important aspect of this quote is the fact that nudging does not seek to forbid behaviours. As a gentle form of power, nudging avoids the use of force or financial incentives and questions the value of education to influence behaviour. Instead nudging seeks to make socially beneficial forms of behaviour easier to perceive and to achieve. On these terms nudging is, perhaps, best thought of as a project that utilizes the power of psychological and behavioural influence within free societies (see Whitehead et al. 2018). In other words, nudging aims to reach that elusive goal of achieving social influence while preserving personal freedom.

Interestingly, the emergence of nudging towards the end of the first decade of the twenty-first century corresponds with a period of significant political, economic and intellectual upheaval. The global financial crisis of 2007–08, and the ensuing Great Recession, mark an important hinge of history. Prior to this time the prevailing political and economic orthodoxy (neoliberalism) suggested that human nature was far too complex to understand and predict (certainly at large scales) (Binkley 2009). According to influential economists such as Friedrich Hayek, Milton Friedman and Frank Knight, the best way of balancing social stability and human freedom was not by exerting social influence (no matter how gentle), but by using systems of market exchange. The financial crisis and Great Recession understandably cast significant doubt on this worldview (see Akelof & Schiller 2009). People started to question why, if markets worked so efficiently, do they consistently generate turmoil and social crises? Furthermore, if the financial crisis was linked to errant behaviours in the financial markets would it not be a good idea to try and understand those behaviours better and regulate them more effectively? And so it was that in the wake of the Great Recession Thaler and Sunstein’s book Nudge appeared almost as if on cue. The book was