LONDON (Thomson Reuters Foundation)—Many of the world’s biggest challenges, such as encouraging people to buy life-saving drugs or unpicking deeply rooted sexism, can be tackled by using subtle psychological cues to change the way people behave, according to experts in London.
Behavioral economics, also known as “nudging,” is about making people more likely to make desirable decisions without directly forcing them to, by incorporating evidence of how people actually behave into policy, advocates told a conference on the subject on Wednesday.
For example, the Behavioural Insights Team, or “Nudge Unit,” set up by the British government in 2010, found that letters encouraging people to pay their taxes had vastly different response rates depending on how they were worded.
Including a note saying most of the recipient’s neighbors had paid their taxes on time, or that taxes are used to fund vital public services, had a bigger impact than plain demands. Similar letters sent out in Guatemala also had positive results.
Much of modern social science, rather than observing how people actually behave, mistakenly assumes “rationality”: that people weigh up costs and benefits carefully before making decisions, said British Cabinet Office Minister Matthew Hancock.
Irrational Behavior
Millions of people die each year from easily preventable diseases which can be stopped by simple and cheap measures like malaria nets, vaccines and deworming pills, said Rachel Glennerster of J-PAL, a global health charity.
She estimates deworming pills have a lifetime benefit of $142 in increased earnings and better health. But many people will not buy them, even when they are extremely cheap.
“The same people who will not pay 40 cents for a deworming pill will scrape together large amounts of money for acute urgent healthcare needs,” said Glennerster. “This behavior is really quite hard to explain under standard economic models.”
There are rational reasons why people may not buy cheap life-saving pills, such as a lack of access to finance or information, but these factors cannot explain the results, which are “surprising to the point of incredulity,” said Glennerster.
Sending people persuasively worded SMS reminders increased the number who took medicine, as did subsidizing deworming pills, which people are less likely to see the benefits of, rather than subsidizing things people do buy, like acute care.
Changing Norms, Not Laws
Glennerster said “nudging” can seem paternalistic, and warned policymakers to be careful when they were not overwhelmingly confident of the benefits of an action, as they can be with certain medical interventions.
