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In an open-plan government office – jackets over the backs of blue swivel chairs, coffee cups and drinks cans liberally scattered on desks – eight civil servants are trying to change the way governments work. Deep in the heart of the UK’s Treasury building in Whitehall the Behavioural Insights Team – or the “Nudge Unit” as some prefer to call it – is coming up with new ways to subtly change people’s behaviour. From persuading drivers to renew their car tax on time to reminding those who have been fined to pay up before the bailiffs are sent around, the Nudge Unit is already having a dramatic impact. And in this time of austerity it has also managed to bring in far more money than it actually spends, which isn’t bad for an untested theory.

“It’s the coolest, most interesting part of policy,” says David Halpern, the unit’s head. “Normally policy takes years and years to have an effect; we see results very fast. It’s very, very unusual.”

Politicians tend to use two main tools to make a difference: legislation and, well, talking. Both can work. For instance, Barack Obama’s affordable healthcare act will lead to some 30 million Americans receiving health insurance that they otherwise would not have.

The nudge theory, first promoted by US academics Richard Thaler and Cass Sunstein, argues that people’s behaviour can be changed if they are given a little push. The theory had become popular in certain academic circles but it wasn’t until two leading British politicians discovered it that the opportunity to move the theory from academia into reality could take place.

In 2007, David Cameron (then leader of the opposition, now prime minister) and chancellor George Osborne (then shadow chancellor) were beginning to think about the sort of government they would want to lead if they came to power in the UK. One of their senior advisors, Rohan Silva, had read Thaler and Sunstein’s work and decided to give the professors a call.

Thaler was excited at the idea of persuading politicians to put his ideas into practice and soon realised that Cameron and Osborne saw the nudge theory as the perfect example of the “small government” philosophy with which they were comfortable. Governments tend to be wary of experiments for one very simple reason: lots of experiments don’t work. Voters and the media tend to be less sanguine about failure than academics in a research environment. But the confident pair of Cameron and Osborne “were enthusiastic from the start”, says Silva over a cup of tea at 10 Downing Street. “It fits in perfectly with our governing philosophy.”

Cameron and Osborne’s backing – Halpern reports directly to the prime minister – doesn’t necessarily make the Nudge Unit ideological. Halpern spent six years working for Tony Blair when the latter was prime minister and the unit has the support of several senior Labour figures. Yet Halpern admits it helps that he is working with a government that has no money to spend and is generally distrustful of legislation as a tool for change.

Yet the unit’s success may lead to its demise. Already several government departments have embraced the theory and are working on changes without the direct assistance of Halpern’s unit. A sunset clause was written into the unit’s terms of reference that is due to come to a close before the end of the year. However, by then it may well have been taken up by various governments around the world, several of whom have been watching events in London with a keen interest. The Australian state of New South Wales has already signed a contract to set up its own unit and Canada, Singapore and France are all considering similar experiments.

Nudge Unit policies

  1. Organ donation
    The UK doesn’t have enough organ donors, something that costs hundreds of lives every year as patients wait in vain for an organ transplant. Very few Britons carry a donor card though research suggests that many would if prompted; so, the unit tried to increase the number of people being asked. Anyone applying for a driving licence now has to say if they want to donate their organs. It’s called a “prompted choice mechanism” and it’s working.
  2. Tax payment
    People who are self-employed have to sort out their own tax arrangements. Deadlines are given for payment and fines are threatened for lateness, yet still many people don’t pay on time. Working with the UK’s tax collectors, HMRC, the Nudge Unit devised a letter to be sent to those who had already missed a deadline telling them that most people in their area had already paid their tax. It has increased on-time payments by 15 per cent.

  3. Courts failing to collect fines
    Courts are good at issuing fines but not so impressive at collecting them. Instead the bailiffs are sent in, costing the state far more. Two members of the Nudge Unit shadowed some bailiffs and realised that many of the homes they entered had lots of unanswered post, thus letters reminding offenders to pay up were not being read. They suggested personalised text messages and it has led to a six-fold increase in payments.

  4. Persuading people to take the tube to the Olympics
    With hundreds of thousands of people heading to the Olympic village each day, organisers hoped to encourage them to leave their cars at home and take public transport instead. Every ticket holder was issued with a free tube ticket, resulting in the vast majority of attendees hopping on the Underground.

  5. Missed doctors appointments
    The NHS (National Health Service) loses millions every year through missed appointments. The Nudge Unit set up an experiment at a regional NHS body where patients were asked to fill out their appointment card themselves; nearer the time a reminder told them how many patients turn up on time. Missed appointments have been cut by 31 per cent and other NHS organisations are considering following suit.

  6. Loft insulation
    Most people agree that insulating your loft is a good thing; it saves energy and lowers costs. Energy companies have even offered free insulation yet not enough people have signed up. The unit realised that people were turning down free insulation because it is a hassle to clear the loft. They offered free loft clearance – and then insulated once it was empty. This has trebled the uptake.

  7. Tax honesty On self-assessment tax forms
    A lot of information is taken on trust but do people always tell the truth? Respondents are normally asked to sign the form at the end promising that everything is accurate. A nudge experiment using car-insurance claims asked people to sign at the start of the form, before they filled it in. It resulted in customers reporting 10 per cent more mileage.

  8. Persuading sole traders to employ an extra person
    There are 3.6m sole traders in Britain but taking on an extra worker is fraught with red tape. The unit believes that many would consider employing someone else if it was easier. They propose that a bank sort out things like tax and National Insurance payments, leaving the sole trader to simply pay the salary; an experiment is due to start next year.

  9. Car-tax payment
    Failing to pay your car tax can mean that you lose your car. The problem is that the letter the UK government sends drivers who have missed a tax payment doesn’t spell out the punishment quite so starkly. The Nudge Unit decided to rewrite the letter, including a line in bold that simply stated: “Pay your tax or lose your car.” The move doubled tax payments; when a photograph of the car was included, payments tripled.

  10. Encouraging healthy eating
    The UK has an obesity problem that successive governments have struggled with; promoting sport and healthy eating has failed to make an impact. The unit suggested that making fatty foods more expensive could help in the same way that increasing tax on tobacco has cut the number of smokers. This proved politically dangerous in the UK though – “Fat tax” headlines meant the government dropped the idea.

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