A nudge toward growth?

The Independent’s John Rentoul looks at the findings of David Halpern and his Behavioural Insight Team at the Cabinet Office

A nudge toward growth?

John Rentoul is Chief Political Commentator for The Independent on Sunday

David Halpern is excited when I speak to him because he has just had the early results of an experiment. He can’t say which bit of the public sector this is, but his team have found that if personalised text message reminders are sent out, they produce a five-fold increase in prompt payments compared with impersonal text messages. All it takes is a ‘Dear Ms Jones’ at the start and Ms Jones responds completely differently. For this trial, someone had to type the personalised bits of 400 texts, but Halpern says that it would be easy to automate the “personal touch”, and that if the findings hold in a more extensive trial it would result in an “amazing” improvement in productivity.

Halpern is a bit like a white-coated boffin, enthusing over things he is trying out in his laboratory, only his lab is the pilot schemes across the country that test human behaviour. He is head of the Behavioural Insights Team at the Cabinet Office, known as the Nudge Unit because its job is to find ways of nudging citizens into doing things that make public services work better, or – a new focus in recent months – that promote economic growth.

The beginnings

The Nudge Unit was inspired by the book Nudge, by Richard Thaler and Cass Sunstein, the Chicago professors who popularised ways of applying insights from behavioural science to government and business, and it was set up in the early days of the coalition government. David Cameron, who met Thaler in 2008, was keen, which gave the unit the impetus it needed. Previously, Halpern had worked in the No. 10 Strategy Unit for Tony Blair, but Blair had little interest in behavioural psychology – not least because the unit attracted the wrong sort of headlines when a line in a report about using the price mechanism to encourage healthy eating was blown up into a plan for a ‘fat tax’. Gordon Brown was keen to compete with Cameron, so he encouraged another enthusiast, Liam Byrne, to adopt nudge theory as Cabinet Office minister. But it was not until Cameron came to No. 10 that the idea thrived. Halpern was tempted back on secondment from the Institute for Government to oversee the unit. It is tiny in Whitehall scale, with just eight staff, but it has had a good first year and a half thanks to the personal interest of the Prime Minister, the enthusiasm of Oliver Letwin, the minister in charge, and the authority of Gus O’Donnell, the current Cabinet Secretary and another convert.

Early findings

The team’s first annual report, published in September, lists some findings of its research and some changes it has made. A trial in Bedford, for example, cut missed NHS appointments by 31% by doing three things: prompting patients to repeat the time and date of their appointment; asking them to fill in the appointment card; and sending a reminder telling them how many patients turn up on time.

Halpern also wants to test changes to tax forms such as asking taxpayers to sign a declaration of honesty at the start rather than at the end, which in American trials encouraged insurance applicants to make fuller declarations. He wants to see public services copy the device used by Amazon and Google of showing customers alternate ‘A and B format’ web pages to see how they respond differently to wording, layout and price changes.

Recently, his unit has been looking at how to use behavioural science to boost economic growth, looking in particular at the decisions of sole traders to hire a single or second employee. Halpern suggests that many sole traders are unlikely to be persuaded to hire by National Insurance holidays or similar incentive schemes tried in the past. He thinks they are put off by the psychological barrier of engaging with the bureaucracy of employment: “They say, ‘How do I do it? I don’t really know about it.’” As a result, he is close to finalising talks with “a couple of major banks” on their launch of a product through which a small-business person could pay an employee. “The employer would pay in the gross pay and it would pay out net, and do all the work of tax, National Insurance and so on,” he says. “Hey presto,” he adds, turning from a scientist into an unlikely civil-service magician. If it works, he says, there are 3.6 million sole traders in Britain, and if a small percentage could be persuaded to hire one other person, that could mean hundreds of thousands of new jobs. This is the sort of policy that could make a big difference.

A required choice

Halpern’s unit has already had one notable success. Since July this year, online applicants for driving licences have had to say whether they want to register as an organ donor to complete the application. This is not what some doctors wanted – an opt-out scheme to replace the scheme where people had to opt in to organ donation. Instead, it is what behavioural scientists call a ‘required choice’: applicants have to choose yes or no; they cannot just leave the answer blank. But it is estimated that it will double the proportion of people volunteering for organ donation to around 70%, adding a million to the register over five years. Halpern says that one civil servant who had worked in central government for more than 10 years, and who was involved with the organ donor change, recently told him: “This is the first time in my life I did something that I could see had changed lives for the better.”

I would guess that Halpern’s unit, which has a ‘sunset clause’ on which Halpern insisted, meaning it is due to close down mid-2012, will find that its remit is renewed.

Further reading

John Rentoul

John Rentoul is chief political commentator for The Independent on Sunday, and visiting professor at Queen Mary, University of London.

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