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Nudge don't Yank: Have nudges made a difference to inequality?

Nudge don't Yank: Have nudges made a difference to inequality?
CREDIT: GETTY IMAGES

In recent years, there has been increasing conversation around inequality. Nudge units have been proposed as a potential tool to address this issue (Nudge, 2008). In this essay, I will argue whether a nudge unit would be able to solve problems associated with inequality such as poverty, education, health, etc.

However, before we delve into the nitty-gritty of the debate, we should perhaps remind ourselves of what these nudge units do.

So What are Nudge Units?

Nudge units are a relatively new tool in the policymaking arsenal, designed to help people make better choices. The idea is that if policymakers can nudge people in the right direction, they will be more likely to make choices that benefit themselves. These units use 'Nudge theory' (also known as 'choice architecture'), which assumes that the decisions people make in everyday life are not completely rational and influenced by behavioural biases.

Nudge units use behavioural economics to encourage people to make better choices. For example, they include: Nutrition labels on food packages, Vouchers for people to give to charities instead of gifts at weddings, Reminders when to renew library books or parking permits, Incentives for people to take the bus rather than driving to work, and Green energy price comparison websites

How did Nudge units come about?

The first nudge unit in the UK was set up in 2010 by the then Prime Minister David Cameron, with the aim of making government services more accessible and easy to use. It was established with the aim of improving public services by "helping citizens to make better decisions". It has conducted more than 100 projects across government departments since then, including efforts to tackle obesity, reduce energy use and help young people get into work. It has also been involved in the design and trial of new government policy initiatives such as the introduction of a green deal and the national identity card scheme.

Since then, nudge units have been set up in other countries, including Australia, India, France, the Netherlands, the United States, Japan, and Canada.

Are Nudge units effective?

In the contemporary debate, the efficacy of nudge units (and behavioural economics) in public policy has been called into question. With a number of high-profile failures of their policy interventions, critics have suggested that behavioural economics should instead be used to improve the understanding of how people make decisions, rather than the design of public policy. Despite this criticism, there is some evidence to suggest that nudge units can be effective in some cases.

Nudge units work with (often government) policy makers (rather than individuals) to make better policy decisions. The largest economies in the world have nudge units, including the United Kingdom, the United States, Canada, Japan, and Australia. So if governments across the globe are adopting these models, they must be doing something right. So, what exactly are they doing right? Is it working? And could it work elsewhere in the world?

In a study, doctors who were overprescribing antibiotics were sent letters suggesting alternatives to prescribing them. In the letters, doctors were reminded that antibiotics are ineffective against viral infections, and should be prescribed only for an infection caused by bacteria. The letters reduced antibiotic prescriptions by 15% over six months, according to one study.

Behavioural interventions can be an effective way of encouraging individuals to make healthier choices. But the case study quoted above also highlighted some of the potential pitfalls of this approach. For instance, the guidelines in the letter were not tailored to the individual needs of each patient, so it might not have had the desired impact in some cases. An updated 2016 study also highlights that the intervention had no effect on the providers' behaviour. In a different trial, "active choice" intervention prompted doctors to fill in any gaps in the prescribed care. it resulted in a 35% relative increase in the ordering of influenza vaccine and cancer screening. Clinicians, however, reported alert fatigue.

Many examples of behavioural interventions have been shown to work, but research shows that nudges are subjected to what is known as "behavioural backlash" when the people whose behaviour is being influenced realize that they are being made to do things they do not actually want. This can lead to an increase in so-called "maladaptive behaviours" such as overeating or smoking, and even undermine the original objectives of the intervention (in this case, to reduce antibiotic use). It is also important to remember that such approaches only apply to individual choices, and do not address the wider systemic causes of poor dietary choices and inadequate retirement savings plans that need to be considered in order to ensure the long-term effectiveness of these interventions.

Boundary conditions, which define how an intervention will be perceived and accepted by its target audience, are particularly important in interventions designed to change behaviour. Behavioural nudges have been shown to work successfully when the behaviour to be changed is seen as a "need", as opposed to something to be avoided or resisted. Nudges can also undermine people's autonomy and be paternalistic - for example, by suggesting that a particular choice is the best choice for the person involved when it is in fact a decision that should be left up to the individual to make on their own. This can also serve to undermine trust in the interventions being used, leading to an unwillingness to accept them in the future. Similarly, nudging tactics may unintentionally encourage people to over-rely on techniques that are not sustainable in the long term - for example, by focusing on small incentives rather than larger structural reforms that address the underlying issues.

Empirical Evidence

A recent Meta analysis published in Econometrica shows the trials run by two of the largest Nudge Units in the United States, including 126 RCTs covering over 23 million individuals, that there is a clear positive effect from the interventions. An 8.7 percentage point take-up effect, or a 33.4% increase over the average control, characterizes the average impact of a nudge in Academic Journals publications. In the Nudge Units sample, the average impact is less at 1.4 percentage points, an increase of 8.0%. The authors of the study call this “sizable and highly statistically significant.”

There are three important things to keep in mind here. First, the study only looked at published experimental data, which means that it is subject to all the same biases as any other published scientific study. Second, the authors only looked at experiments testing the effectiveness of nudges, not real-world applications.

This second point is crucial. Just because an experiment testing the effectiveness of a nudge doesn't show a significant effect doesn't mean that the nudge will work in the real world. There are many factors that can influence the results of an experiment, but those same factors may not be present in the real world. For example, if an experiment is conducted in a controlled laboratory setting with a small number of participants, it may not be able to accurately simulate the complex reality of human behavior.

The third point to consider is heterogeneity. A broad collection of approaches that share a common name such as “nudges” is not homogenous or uniform. There are different approaches that fall under this category like behavioral economics, choice architecture, and social psychology. Each of these approaches has its own unique set of assumptions, methods, and results. Because of the wide variety of approaches that fall under the category of “nudges,” it can be difficult to compare the results of one study to another.

There has been a lot of discussion lately about the role of publication bias in the effectiveness of so-called "nudges." A recent study published in PNAS claimed that properly correcting for publication bias actually eliminated any overall effect of nudges. The publication is titled “No evidence for nudging after adjusting for publication bias,” and some people have used this as the basis for a sweeping dismissal of the nudge idea as a whole. But is this really what the study says? Let's take a closer look.

First, the study suggests that we need to be more careful about how we use nudges. If publication bias is indeed a problem in this area of research, then it's possible that our current understanding of how effective nudges are may be skewed by a selection effect—meaning that we may be overestimating their effectiveness because studies with null results are less likely to be published or receive attention. Second, the study highlights the importance of replication—particularly when it comes to large effects. Given the small sample sizes often used in RCTs of nudges, it's possible that some observed effects may be due to chance rather than actual causation. Thus, replication is essential in order ensure that an observed effect is real and not just an artifact of random variation.

Finally, the study underscores the importance of transparency and data sharing in research. If publication bias truly is a problem in this area, then one way to combat it would be for researchers to make their data available so that others can independently verify their findings and replications can be more easily conducted.

Will Nudge Units be able to address Inequality?

The answer is no, absolutely not, or at least not by themselves. Now, don't get me wrong here. I'm not saying that nudge units aren't valuable tools in the fight against inequality. They maybe, I just don't think they should be the only tool in our arsenal. Sociology, psychology, economics and political science all have their role to play in fighting inequality. All I'm saying is that we shouldn't rely solely on these tools to achieve our goals.

Let's get specific for a moment. According to the studies, there are some legitimate concerns about the research in this field. The first is that there's a whole lot of cherry picking going on. What the researchers are really looking at are the studies that support their conclusions while conveniently ignoring those that fail to support them. The second is publication bias. The third is a lack of transparency and accountability on the part of the researchers themselves. There's no clear definition of what qualifies as a 'successful' nudge unit and the methods they use to achieve that success are largely kept under wraps. The fourth problem is that these studies tend to be very limited in scope. Many of them only look at one very specific intervention within a particular context so it's impossible to draw any broad conclusions about the effectiveness of the approach as a whole. And finally, there's the issue of generalisability.

Just because something seems to work in a particular context doesn't mean it's going to work somewhere else. For example, using 'nudges' to help people save money is a great idea but if people in your society can't afford to save any money in the first place then what's the point? Obviously, this makes it very difficult to assess the effectiveness of these interventions and that's a big problem when it comes to creating policy.

In Closing

It’s to be cautious about the use of nudges and recognise the need for evidence-based studies with high levels of replication and transparency. For ethicists, policymakers, and behavioural scientists alike, we need to keep asking questions. We need to open up the black box of behaviour science and make it more democratic.

Thank you for reading The Behavioural Review!


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