The benefits of behavioural insights

I recently relocated from Sydney to Boston. It's not the first time I have moved from my native Australia to this city but even in the few years I have been away, I have been struck by how much has changed, not least in my own field of behavioural insights.

Based on the theory that human behaviour can be influenced by gentle prompting or ‘nudging', behavioural insights or economics has broken free of academia and taken firm root in governments around the world. This is because policymakers have come to recognise that it can be used to improve product and service design and delivery across the public and private sectors, quite a combination - especially when funds are tight.

When I was here as a student, the approach was sparking much interest on campus but had yet to penetrate the Beltway. Not anymore. Last September, President Obama issued an executive order that has the potential to significantly reshape the design and delivery of government services. While not a cure-all for an inefficient or dysfunctional government - what is? - there is no doubt that should improve government.

Executive education

The executive order is not a subversive threat to American liberty, as some of its critics believe and this headline from The Daily Caller implies: “President Obama Orders Behavioral Experiments on American Public.” But it will use what we know about behavioural science to help businesses and individuals better navigate the bureaucracy and improve the choices they make.

This is a promising development. Policy and programme design has been dominated for too long by assumptions that citizens are always rational in the decisions they make, even as a growing body of research shows that they often are anything but.

Carefully considered, the executive order is an effort to combine common sense with social science for the purpose of improving the design, implementation and management of government programs - something all Americans should support.

Specifically, Executive Order 13707 “encourages” federal departments and agencies to “identify policies, programmes, and operations where applying behavioural science insights may yield substantial improvements in public welfare, program outcomes, and program cost effectiveness.” The executive order is a management tool, not a policy instrument. Critics should not confuse the two.

For example, the executive order asks the heads of government agencies to help qualified individuals, families, communities and businesses access government programs and benefits by “streamlining processes that may otherwise limit or delay participation … removing administrative hurdles, shortening wait times, and simplifying forms.”

The annual report of the Social and Behavioral Sciences Team (SBST) of the President's National Science and Technology Council (released simultaneously with the executive order) highlighted some early successes in simplification. A simple text message reminding college-accepted high school graduates to complete pre-matriculation tasks (form-filling, taking required placement tests), led to 8.6% more low-income students successfully enrolling in college versus those who received no text reminders.

The executive order also asks agency heads to “improve how information is presented to consumers, borrowers, program beneficiaries, and other individuals.” In other words, make instructions clear, easy to understand, and easy to access. For example, the SBST annual report cites a test with farmers who received a personalised information letter explaining specific actions required to obtain a loan from the Department of Agriculture were 22% more likely to receive a loan than those who did not receive the targeted outreach.

A force for good

What some critics apparently fear is that the White House is encouraging manipulation of American citizens by government ‘bureaucrats'. Supporters of the executive order, such as Harvard Law School professor Cass Sunstein, administrator of the White House Office of Information and Regulatory Affairs during Obama's first term, and co-author with University of Chicago economist Richard Thaler of the 2008 book, Nudge, sees it another way: helping American citizens make better choices and to remove the barriers that thwart people's best intentions.

However one views the White House initiative, the fact is that many of the “insights” embodied in the executive order are common sense and universally accepted by economists, academics and executives of every political hue.

Indeed, taken at face value the executive order would seem to affirm an argument that conservative academics and policy experts have been making for decades: that businesses and individuals often alter their behaviour when government increases or decreases taxes, issues new regulations, creates new paperwork burdens, or otherwise intervenes in the economy - and that traditional government revenue forecasts fail to recognise these behavioural changes. Tax increases, therefore, might actually reduce total tax revenue, while tax reductions might increase revenue.

While the president's executive order doesn't address this matter specifically, it is a tacit acknowledgment that this line of reasoning, based on behavioral insights, has merit.

In addition, the approach Obama is urging has been tried and tested.

The United Kingdom's Behavioural Insights Team, established by Conservative Prime Minister David Cameron, produced significant government savings, estimated in 2012 at some £300 million over five years. Tax compliance improved. Many people are now making healthier lifestyle choices. A partnership with the food industry to reduce salt levels in food is expected to save some 4,500 lives annually. The UK team has been so successful that, after generating what amounted to billions of pounds in public value, it has now been part privatised and its services are in huge demand by governments worldwide - governments of all political stripes.

The White House effort has already delivered some promising results. If we can set aside partisanship, both conservatives and liberals should be able to unite behind reforms that will make our government both better and cheaper.

Talk about a public impact…

FURTHER READING

• What has ‘behavioural insights' done for us? Although behavioural insights is now in the government mainstream, it's time to pick up the pace, says Adrian Brown

• BITs and pieces: Applying research from behavioural insights can drive huge changes from small steps, says Julia Fetherston

• Micro to macro: Insights from the behavioural sciences are increasingly being applied to policy challenges around the world. A pioneer of this trend is the UK's Behavioural Insights Team - its managing director, Owain Service, tells us about their experiences

• Behavioural insights to better policies: Find how policymakers are applying insights from sciences to strengthen citizen outcomes

• The time to deliver is now: Sir Michael Barber reflects on the lessons learned and insights gained from a career at the heart of government delivery

• Malaysia on the march: Dato Sri Idris Jala is tasked with overseeing Malaysia's sweeping government and economic reforms; he tells us about a role rooted in delivery and implementation.

• Data to delivery: Former Maryland governor and Baltimore mayor, Martin O'Malley, tells us about a new approach to governance and delivery

• The God Revolution: Public impact is easier said than done, admits former UK Cabinet Secretary Lord Gus O'Donnell, who explains why impact is rarely viewed as a key priority among policymakers