Behavioural economics

‘Nudge’ people to act using behavioural economics

When a government agency communicates with you, do you respond rationally?

Not necessarily. That’s why more and more government agencies are interested in researching and applying the principles of ‘nudging’ or behavioural economics when writing policy and communicating with the public.

Nudge theory, first proposed by Richard Thaler and Cass Sunstein in their book Nudge: Improving Decisions about Health, Wealth and Happiness, challenged the way people make decisions.

Using insights from psychology and behavioural science, behavioural economics showcases behaviours that are different from those usually assumed in economics, where people behave in a rational and calculated way, weighing up costs and benefits when making choices.

It recognises that people have finite attention spans, that decisions may be emotional and driven by factors like fear and stress, and that beliefs can play a part in determining choices.

Further research has confirmed you can alter behaviour by changing the way you present information.

Governments are embracing these findings. In Britain, David Cameron’s Cabinet office has set up the Behavioural Insights Team or ‘nudge unit’ to apply the insights to the design of public policy. Likewise, government agencies in the US, Canada, Singapore and Australia have developed ‘behaviourally informed’ policies and programs.

BWD has completed a project for a government agency examining how behavioural economics principles can be applied to its communications. We were asked to examine, and report on, research findings from a seminal paper by the British Cabinet Office’s Behavioural Insights Team and a field trial, testing ways in which letters were written and presented to the public by the UK Financial Conduct Authority. We were then asked to apply the findings to a suite of communications we were commissioned to write and design.

These lessons emerged:

Make it easy. Make it as straightforward as possible for people to do what you’re asking them to do.

Highlight key messages. Draw people’s attention to important information or actions required of them (open with two, clear, direct bullet points).

Use personal language. Personalise language so people understand why a message or process is relevant to them (use pronouns: you, we, our, yours).

Tell people what others are doing. Highlight the positive behaviour of others; for instance that ‘9 out of 10 people respond promptly’.

Highlight the risk and impact of dishonesty. Emphasise the risk and consequences of not conforming/responding.

Prompt honesty at key moments. Ensure that people are prompted to be honest at key moments when filling in a form or answering questions.

Reward desired behaviour. Incentivise or reward behaviour that saves time or money.

Simplify the message by reducing text.

Suggest that taking action is easy.

Send reminder correspondence three weeks later. Reminder letters sent three to six weeks after the first helped lift response rates, with a three-week gap working best.

The use of a CEO signature reduced responses, and messages on envelopes have virtually no effect. Hand-writing recipients’ names on letters results in a spike in responses, as does having, as the signatory, a local representative or someone perceived to be ‘close to home’.

In the US, the Internal Revenue Service (IRS) has also identified ways to get better results from written communications. It has seen increased compliance and less confusion among taxpayers, for example, after making improvements in response to the US Plain Writing ACT (2010). This law requires all federal government agencies to communicate with the public in a ‘clear, concise and well-organized manner’.

Many of the IRS’ recommendations are similar to those of the British researchers, and include:

Focus on addressing the taxpayer’s needs, not the IRS’.

Use short paragraphs and sections.

Prompt the reader to act with headings and lists.

Interestingly, the studies revealed potential differences in responses according to gender, age, business size and so on. And information on local cultural practices and beliefs can have some effect when applying the principles of behavioural economics.

Whether ‘nudges’ have only a short-term effect with recipients becoming desensitised to the information remains to be seen. Because field research in the field is fairly new, researchers stress the need to conduct more trials and update and finesse what’s been done if behavioural economics principles are to be applied most effectively.

 


 

By Derryn Heilbuth