Too many small nudges could lead to big problems, argue two social scientists in Singapore.
First, policymakers should act more cautiously when their interventions are designed to nudge people towards making the choice desired by the policymaker, rather than to just make better choices overall. Designs that leverage cognitive biases or impose mental costs to achieve behavioural change are particularly likely to generate welfare losses, because they infringe on people’s autonomy to make the choices that best suit themselves. The best interventions are those that preserve the autonomy to choose as far as possible, while using behavioural insights to help people make choices that are better for society as a whole.
Second, policymakers should evaluate behavioural interventions to consider the broader impacts on societal welfare, rather than just the narrow question of whether the policy ‘works as intended’. Societal welfare can be improved if policymakers use willingness-to-pay estimates to help to quantify the implicit costs of behavioural interventions, and use advances in analytics to target interventions on those who are the most likely to change their behaviour. For example, a more efficient method of implementing social norms interventions may be to focus on households or individuals who value conforming more, and reduce efforts to reach out to those who dislike conforming, and who would not conform in any case.
Finally, policymakers must exercise discretion and even restraint when considering behavioural interventions, particularly because they are relatively easy to implement. Greater openness and scrutiny of behavioural interventions from public agencies will be helpful; the commitment that many public agencies have made to share their findings publicly is an excellent start. In the longer term, we believe that creating an institutional process to coordinate and evaluate behavioural interventions across the whole of government will help to ensure that interventions continue to make everyone in society better off.