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Christian Bason

When nudge meets design

By May 23rd 2012

This article has previously been published in the Danish weekly, Mandag Morgen.

The question is not whether the public sector should seek to influence the behaviour of citizens. The question is whether it does so effectively enough. To do so, we need to take advantage of the inspiration offered to us by the principles of nudging and design.

A central premise of economic theory is currently under revision: people do not necessarily behave rationally. On the contrary, as thinkers as diverse as Daniel Kahnemann (psychologist and Nobel prize winner) and Cass Sunstein and Richard Thaler (Chicago professors of law and economics respectively) claim, people behave like… well, people.

In other words, we sometimes behave irrationally, and, as social beings, our decisions are influenced by our habits, norms and relationships with others. We do not behave with the sole intent of maximising “utility”. This means, in a broader sense, that our behaviour depends heavily on the context in which we find ourselves.

As an example, Sunstein & Thaler highlight that we are much more likely to take the stairs than the lift when presented with a sign that says: “Most people choose to take the stairs.” They call this principle nudge – to signify that it only takes a few simple adjustments to influence people’s behaviours considerably.

This makes nudging an interesting topic for the public sector – since we in the public sector are preoccupied with getting people to do more of what we want them to do and less of what we don’t want. More exercise, less smoking, more salad, less fat, more subscriptions to organ donation, fewer people politely declining, quicker payments of arrears, fewer debtors, etc.

A British tax authority has looked more closely at this last example in the context of behavioural economics. When they changed the wording of a letter addressed to citizens with significant tax debt to “More than 90 per cent of citizens in your district have already paid their taxes,” payments by debtors rose significantly.

In fact, the British are now so enamoured with the principles behind nudging that they have set up a special unit, the Behavioural Insights Unit, which reports directly to Prime Minister Cameron. This unit has completed a number of interesting studies on nudging in recent years, in part under the guidance of the economist Richard Thaler.

What is special about nudging is that people are given the freedom to choose – they simply need to choose between different alternatives. There is no financial pay-off or penalty involved. Here in Denmark, the tax authority, SKAT, has already used the nudge principles on a website that is very familiar to most Danes: TastSelv, an online service for taxpayers.

It started a few years ago when a couple of smart tax employees began to think about ways to “nudge” more Danes to decide whether they wanted to receive a paper version of their annual tax return when they were going online to check it anyway. Should people choose not to receive the paper version, this would save money.

Their thoughts led to a range of experiments with different placements of an online button, which enabled the visitor to click on “No thank you” for the paper version. The button already existed but was buried deep in the form. After involving citizens in trialling various different solutions, the tax employees found a more suitable place for the button, which made it easier to decline the paper version.

The result? During the first five days of using the new function, more than one million Danes clicked “No thank you” to the paper version. This not only saves a few square metres of rain forest, it also saves a significant amount of taxpayers’ money.

One could say that the practically-minded people in The Danish Ministry of Taxation redesigned the digital service based on the principles of nudging. By “redesign” I mean that they did three things:

  1. 1. They questioned the status quo: have we designed the current solution smartly enough?
  2. 2. They used experiments to come up with a more effective solution by developing possible options (prototypes) for various solutions and testing them directly with citizens.
  3. 3. They used the knowledge they acquired through citizen involvement to develop and implement the new solution.

This way of solving problems could also be called design attitude. This refers to an approach to the world which contends that the world can be improved, that one needs to understand how people behave if one wants to change it, and that one should always seek to develop concrete, tangible solutions. Design attitude combines analytical reasoning with sympathetic insight, empathy and an understanding of what actually delivers change.

This cocktail of nudging and design is incredibly powerful, providing we understand how to bring it into play. It promises something that we are under increasing pressure to deliver in the public sector: ways to create better results for less money. By synthesising these principles, it is in fact possible to develop solutions which are virtually free and which do not require a host of new laws and rules. People’s actual lives, motivations and behaviours are what form the basis of this approach.

Critics – not least in the UK – believe that nudging has the potential to be used as a form of manipulation, because by nudging the public sector proactively attempts to get people to do something that they might not otherwise have done. Think about this point for a minute. Is this not the purpose of all politics? Providing we are open about the terms and background of the redesign of public sector efforts, I can’t see the problem.

The question is not, after all, whether the public sector should try to influence people. The question is whether we are doing it successfully.

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