On November 25, 2010, six months into government, David Cameron assembled a large group of journalists and commentators in the Treasury for a speech on national happiness. Flanking the prime minister was John Helliwell, a Canadian economist who has previously exhorted policy makers to sing, claiming a scientific justification, If You’re Happy and You Know it, Clap Your Hands at the start of meetings. David Halpern, the author of this intriguing book on a “quiet revolution” working through British politics, reveals that he stopped Helliwell from asking Cameron to croon just hours before the speech. “I apologise to posterity for this YouTube sensation that never was,” he writes.
Halpern is the director of Cameron’s elite Behavioural Insights Team (BIT) — also known as the Nudge Unit — which has brought an understanding of psychology to policy-making, communication with the electorate and, it turns out, the government’s ability to increase our contentment. Richard Thaler and Cass Sunstein’s Nudge (2009) outlined the theory: Halpern details its application in British politics.
Nudging, which recognises that humans are nowhere near as rational as traditional economic models have assumed, appears to have been a success of modern government. Few predicted this. As Halpern, a former Cambridge psychologist and sociologist, says: “It was a high-risk programme: a small team; a new idea [and] a crazy challenge”: to deliver at least a tenfold return within two years. Expecting or willing it to fail were “parliament; the 70,000 civil servants around Whitehall; 450,000 civil servants across the UK, 5m public servants; and of course the media and public”. Worse, one of its key supporters was Steve Hilton, Cameron’s controversial “blue-sky guru” and a man with enemies in cabinet and the civil service.
However, Halpern claims that nudging has, among other things, led to tens of millions of pounds in tax being collected that would have otherwise remained unpaid. The secret was for HMRC to change the wording of its letters so that recipients were told most people in their area had already paid. This affected what Halpern calls the “social” aspect of our subconscious, which means that, generally, we aim to follow our neighbours. He claims that the rewording led to a 16% increase in payment, at negligible cost.
Interestingly, people with the largest 1% of unpaid tax bills (those owing at least £30,000 a year) were most likely to pay after reading: “Not paying tax means we all lose out on vital public services like the NHS, roads and schools.” Realising that their contribution could pay for a teacher or nurse’s salary seems to have jolted the rich into getting out their chequebooks.
Nudging’s other successes include: 100,000 additional organ donors signing up to the national register each year; 20% more people considering changing energy provider, increasing the efficiency of the privatised market; a doubling in the number of army applicants; and more than 5m British workers saving for a pension. The key has often been to “remove friction”: it turns out that people will have their homes insulated if it comes with loft-clearance, irrespective of cost. Subsidies and tax-break proved insufficient: the hassle mattered more than the money.
Nudging, it seems, is here to stay. The BIT employs many more people than it did five years ago, and a sceptical public and press have been largely convinced. But as a century of economics-based policy-making is reconsidered, a new question surfaces. Where else are we and our leaders getting human nature wrong?