My interest was piqued on the concept of nudge theory when I read about a study which successfully got high school students to make healthier food choices in their school canteen, simply by making the choice to choose fruits and vegetables more convenient, attractive and normative . It got me thinking about the potential of nudging in public governance and regulation, a field that I am particularly interested in. It is plausible to extend the application of nudge theory from a hyperlocal space (like a school tuck shop) to a neighbourhood or even the entire country. Indeed, this concept was broached albeit briefly in class when we discussed how we can use nudge effects to persuade people to increase voter participation in the recent judicial elections. Amongst the points brought up were getting people to like the candidates’ Facebook pages, or telling people the importance of the elections. In this post, I explore the use of nudge theory as a substitute for public regulation in the health domain. I will describe each strategy in turn and end off with a nuanced evaluation of their effectiveness.
On Government Regulation
There is no lack of literature in the use of nudge effects in government regulation. In fact, Cass Sunstein who posited the idea of nudges used to head the Office of Information and Regulatory Affairs. However, to the casual observer, it seems that most government interventions work via explicit law and regulation, rather than subtle nudges. There are a few reasons why this is so. Taking a leaf out of economic theory, it is known that government regulation has both demand-side and supply-side portions. An example of the former is an outright ban on smoking in public spaces, hence making consumers smoke less. In contrary, a supply-side decision would entail imposing a hard limit on the number of cigarettes all producers can produce, hence reducing the amount in the market. Both serve the same purpose – to reduce public smoking. To this end, they work very well. Every 10% increase in tobacco prices result in a 4% fall in demand from consumers (2). Further, in America, such policies have been so effective that tobacco companies have looked to other developing markets to increase their revenue since growth locally have been stagnating. As can be seen, government regulation seems to be an effective measure. This arises from the irrationality of most people. Given perfect information about the health risks of smoking, people still tend not to reduce consumption. Advertising is one possible cause of this irrationality – smoking is portrayed to be hip or cool. In this respect, the heavy hand of the law such as adopting public smoking bans is required. This moves people away from accepting public smoking as a social norm. Hence, government regulation is seen as effective by many.
However, social psychologists have pointed out that government regulation may not be effective. For example, the problem of boomerang effects. Boomerang effects occur when a measure is used to bring about a specific intent, but the opposite of that actually happens. In essence, government regulation can backfire and worsen the situation. Continuing the case on smoking, in Asia, there have been massive spikes in the consumption of illegal cigarettes due to tax duties imposed by the government (3). Illegal cigarettes do not have the same quality control as legitimate ones and could contain more poisonous chemicals in their manufacture, hence it brings more public harm. Whilst government regulation is intended to reduce the consumption of cigarettes, the nett effect was to steer consumers to illicit sources where the government can control less effectively. Secondly, such regulation may not be cost-effective. It takes effort and money to properly enforce policies. Policy without enforcement is ineffective. With these disadvantages, it is not surprising that scholars have been considering nudge theory in getting people to make personally beneficial decisions.
Nudges were first mooted by Sunstein. He defined it as ‘any aspect of the choice architecture that alters people’s behaviour in a predictable way without forbidding any options or significantly changing their economic incentives’ (4). By choice architecture, he meant the environment in which allows people to more easily make decisions that maximise their well being. In his research paper, Marteau notes that nudges are comparatively lower in cost, and appeals to governments who do not subscribe to the in loco parentis doctrine. For example, we can make smoking less appealing by reducing smoking cues – these can include removing public cigarette stubs and ashtrays in dustbins, or getting people to sign a form acknowledging health risks each time they want to buy a pack of tobacco. By doing so, these measures attempt to nudge people into accepting non public smoking as a social norm. This can lead to cascade effects as well – if there is no second hand smoke in the surroundings, smokers will be less inclined to start smoking as well, leading to positive externalities. Moreover, by constantly reminding them of the health risks, we might possibly get them to be constantly aware of its dangers. Of course, there is the possibility that people are numbed to such a measure. This can be seen by a law in some countries forcing cigarette manufacturers to put images of people having diseases arising from smoking. Most smokers ignore the photos on the pack.
However, there are detractors who, while conceding that nudging can be effective, they can only be truly effective when combined in concert with some form of legislation. For example, how do we get shopkeepers to make buyers to sign a health risk form? It is indubitable that it needs some kind of local law to enforce it. Secondly, nudging can also be done by the private sector to further their interests as well, if we further the definition of a nudge originally proposed by Sunstein. Their strategies can be inimical to the effectiveness of government nudging; this possibly calls for some kind of intervention to render their strategies moot.
One thing is certain is that nudging has sparked interest in the wider field of behavioral theory that can ameliorate public health problems. Obesity alone costs $200 billion in health costs a year. The UK Cabinet has a Behavioral Insights Team dedicated to such issues and published a very interesting paper on the various issues. While no concrete government policy arose out of this, the paper shows how nudging is designed to still improve public health while respecting consumer sovereignty.
In conclusion, I believe the public policy challenge is clear. While nudging can be very effective, two forms of government intervention is still required – legislation to implement the nudging strategy nationwide, as well as regulation to prevent other parties from counteracting said strategy. It is also clear that government regulation is effective in itself; however, because it disrupts free market dynamics, governments have to take note on where to draw the line.
Possible Discussion Questions
- In government regulation, there are limits as to what the government can or cannot regulate, such as free speech. Do you think the same limits apply to nudging?
- I mainly discussed about nudging on the consumer-side in this post. Is it possible to extend nudge theory to the producer sector as well or can only government regulation help? For example, how would we nudge food companies to not use hormones and fake additives in their food, other than outright banning them?
- What are your viewpoints on this issue? Do you think nudging or regulation is more effective?
(1) Smarter Lunchrooms Can Address New School Lunchroom Guidelines and Childhood Obesity (http://www.jpeds.com/article/S0022-3476(12)01478-3/abstract?cc=y=)
(4) Nudge: Improving Decisions About Health, Wealth, and Happiness Thaler and Sunstein
(5) Judging nudging: can nudging improve population health? http://www.bmj.com/content/342/bmj.d228
(6) The Healthcare Costs of Obesity http://stateofobesity.org/healthcare-costs-obesity/
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