Pop Quiz!

Q: What two small changes can you make to reminder texts for job centre interview appointments that increases the likelihood of attendance by nearly 20%?

A: Personalisation and empathy. Going from ‘Just a quick reminder you have a job centre interview tomorrow at 10am’ to ‘Hi Tom, just a quick reminder you have a job centre interview tomorrow at 10am. Good luck! Jerry, your Job Seeker Advisor’

And what small change can you make to a DVLA letter chasing persistent non-payers that increases likelihood of payment by 9%?

Just adding a picture of their car.

And finally, what is the one small change made to tax repayment letters that almost tripled the amount of tax repaid on time in Guatemala?

Adding just one line, informing the recipient of the percentage of people in the local area that pay their taxes on time. Apparently, people don’t like to be compared unfavourably to their neighbours.

These, and many other fascinating experiments, are just some of the stories and examples shared by Dr David Halpern in a packed out LSE public lecture this week. David is the CEO of the Behavioural Insights Team, a government institution set up in 2010 to apply psychology and behavioural economics to public policy-making and to identify what small changes could be made to “nudge” the public into making better decisions. This was groundbreaking stuff, as it was the world’s first governmental institution to explore this field through investment in a dedicated team, and they were revolutionary not only in their field of exploration, but also in their experimental approach. No wonder then, that the event was so popular; the insights David had to share from his time in the ‘Nudge Unit’ (as the BIT became known) were extremely insightful, a few of which I shared in the pop quiz above.

David and his team used a simple framework, which he shared with us, to find which small ‘nudges’ to test, based on four key drivers of social behaviour. These were:

Easy – If you want someone to do something, make it easier for them to do. This makes sense to anyone who has ever tried to switch banks, energy suppliers or mobile phone providers. Unless the process is easy (which thankfully, is now changing due to more switching services available addressing this friction), people give up and don’t do it.

Attractive – if you make a certain type of behaviour more engaging or attractive, more people are likely to do it. The nicest example David gave of this was in a public concourse in Australia, the local council wanted to encourage more people to take the stairs rather than the escalator. They painted a pretty mural on the stairs, and the escalator usage rates plummeted. It was in fact so successful, that the mural has since been appropriated by a large soft drinks firm as advertising space, which is albeit, a slightly depressing end to the tale.

Social  – As the Guatemalans from the pop quiz demonstrate, people are incredibly influenced by what others around them are doing. The more localised a comparison you can make this, the more powerful the effect is.

Timely  – Considering the timing of the nudge can also be incredibly effective. An example of this shared by David, was in an experiment his team did to increase legacy giving amongst the general public. They decided to work with a group of legal firms to add a prompt when people come to their solicitors to go through the process of making a will. Adding this question in the will-making process increased likelihood of legacy giving by 6%. However, simply tweaking this to frame the prompt question around the individual’s passions caused an increase in giving of 10% and the amount of the bequest doubled.

Whilst understanding the method and some of the results of the Nudge Unit’s work was hugely interesting – and that prompted lots of thoughts on how similar techniques can be applied in the commercial and business world  – there were a couple of underpinning principles to David’s approach that he mentioned several times throughout his talk that I felt were some of the most important take-aways, and were in danger of getting lost amongst the fun stats. These principles also align closely to our thinking at PostShift around attributes that are needed for 21st Century businesses to survive, so are worth highlighting here.

The first concerned the implications of the work from an ethical perspective. Whilst all of the experiments that David and his team undertook followed ethical practice, and were only undertaken in fairly uncontroversial areas, there was no denying that the results that came back show that some of these small nudges can cause extremely powerful results. That is fine if the experiments take place in subject areas where everyone agrees the desired behaviour is just that – desired by all; but the next logical step to these experiments is segmenting the experiments to work out which types of nudges work better for different types of people, and tailoring those messages accordingly. Which brings up the question, in a free society, do we want our government using data in this way to nudge us to behaviour that they think is right for us? I’m sure most people wouldn’t object to being nudged to better behaviour that avoids paying late repayment fines (as an example), but what about issues of public health, education or crime? One audience member even asked David to give tips in the Q&A on how you can apply these practices to persuade a member of the public to vote a certain way! To his credit, David didn’t oblige the questionable questioner, but it was clear the possibilities of this approach are far-reaching, and, as David himself put it, ‘who nudges the nudgers?’. In other words, who gives the government the licence and determines the remits for which these approaches should be applied?

David’s answer to this was to return to the principle of transparency. He sees the application and results that can be derived from behavioural economics as a great power, and indeed, thankfully, believes it comes with great responsibility. He stated several times that he felt it was hugely important that the public gives the government permission to do this, and that this should be done by being open and transparent about the work that is being done and the results it is producing, such that this evidence and data can be used by the public to mandate how it should be applied and where the boundaries are.

Being open and data-driven are two attributes that we also believe are increasingly crucial for successful organisations in the 21st century, as they not only foster better trust and understanding but also enabling a more responsive workforce to tackle the ever-shifting landscape of challenges that a digital world brings. Government is no different, and at least in theory, must rely even more on building trust with their electorate than many private organisations, so how they move to build the mechanisms that enable this accountability and data-sharing in a meaningful way to the public will be key.

The final principle that David applied in his work, and that he seemed the most proud of, was to be experimental. The Nudge Unit conducted their work as a series of experiments, and reported on and published not only the successes, but the failures as well. David shared that when the team started working in this way, it was initially met with resistance and a large dollop of scepticism from those in Whitehall and the mainstream media, but they persevered and quietly continued working away on their experiments, and the results ended up speaking for themselves. This has turned the tide of initial opinion, and demonstrated the benefits of the experimental approach to government such that it led to the creation of the What Works Network, which operates in this way.

At Postshift, we also believe in the importance of being iterative, and this is a further attribute (closely linked to an agile way of working) that we highlight as being crucial to new ways of working for successful business, in order that organisations can more rapidly respond to changes in their environment. Therefore it is extremely encouraging to see that David has managed to prove the value of this way of working in the face of such barriers as tradition, bureaucracy and outright criticism from the organisation he was working within. Perhaps due to its roots in psychology and behavioural scientific theory, where experiments and innovation are so valued, the Nudge Unit were able to stick true to their principles in the face of doubts.

As a lone outlier team, doing very different things in very different ways to the rest of a monolithic organisation, the Nudge Unit has some impressive stories and results to share, acting to a certain extent as a type of change agent or new tissue for the government, introducing them to new operating principles. It will be extremely interesting to see how deeply this manages to take root over the course of this government and if it embeds deeply enough to be sustainable over future political terms and the changes this brings.