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The economics of the ‘nudge’: Why the UK government’s new public health policy won’t work

The UK Government recently announced its plans for “Public Health England”, with ‘nudging’ high on the agenda. What the government considers a ‘nudge’ is unclear, though it seems to mean giving people the opportunity to improve their own health. Here’s why I think this is a flawed policy.

As a recent BMJ article pointed out, there appear to be many more ‘nudges’ in the opposite direction. As long as private companies are allowed to push their delicious fatty foods and cigarettes with all the marketing that they desire, it seems that any government ‘nudge’ will be overshadowed. In the UK, the total value of tobacco sales alone was £11.3 billion, while the government suggests a figure of just £4 billion to be ring-fenced for the new public health service. True, Public Health England will be able to spend almost all of this money on ‘nudging’, but with Diageo (the world’s biggest spirit maker) alone pulling in revenue of £7.1 billion and profits of £1.6 billion in 2010/11, it’s hard to see how a measly £4 billion could counteract the industries’ marketing ‘nudges’.

This doesn’t even take in to account the utility individuals gain from scoffing that 3rd bag of Walkers, or guzzling that penultimate pint of cheap lager at last orders. Nor does it take in to account the fact that you really can’t be bothered using that new-cycle-path-shaped ‘nudge’ to get to work tomorrow, or the fact that you’ll have to sacrifice an hour of your valuable leisure time to take your kid to that new playground. Nor does it take in to account the fact that you don’t even have a bike, and you’re too drunk to even notice the ‘nudge’ on that second bottle that says “the average British drinker drinks one glass of wine a night”.

To be fair, I know very little about behavioural economics, and I have not read “Nudge” (though I will). However, my understanding of compensating and equivalent variations tells me that people are going to need some hard-cash-value incentives or disincentives to have them change their behaviour; either that or regulatory restrictions.

So, where does the ‘nudge’ stand in relation to health economics? Is it something that we should be harnessing? Will anybody be trying to evaluate the QALY loss or gain from particular ‘nudges’? Surely we should, otherwise we might be getting ‘nudged’ into accepting a policy that currently has almost no empirical support.

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13 years ago

In regards to the opt-in opt-out I have to agree with Chris about the apathy. I know one of my ex colleagues a while ago did a study which required parental consent, initially it was opt in and they were optimisitically looking to get 10-20% inclusion rate. They then managed to get ethics approval for opt-out and their inclusion rate soared to about 95%. There were no nudges involved here, just a change of format that took advantage of parent’s laziness.

I wish the supermarket’s would stop with their ‘nudges’, it is making lent somewhat harder than planned! In terms of health nudges on the whole, I have to agree that the results will be widely varied, there is no one rule for all. Coming back to laziness however, I feel this will be a key reason for the failing of many nudges. E.g. you can build a cycle line but you can’t make people ride it….especially if it’s cold and wet and there is a nice warm car they could use instead. The ‘you can take a horse to water but you can’t make it drink it’ saying springs to mind!

13 years ago

Yeah, I think the interesting thing is that it changes outcomes by capitalising on human psychology eg laziness. The behaviour that’s been changed is whether people sign up to organ donation, but the reason underlying that behaviour hasn’t, as it’s part of human nature.

We get nudged all the time – like how supermarkets put all their tempting chocolates and magazines near the tills in the hope you’ll make an impulse purchase while waiting.

How well they work will be interesting though: I have a feeling the efficiency of some will fall over time as we get used to them, some will fail completely and others be wildly effective, and cheap.

13 years ago

You might be interested in this –
(The govt’s behavioural economics unit)

Some nudges are obviously up against powerful messages from alcohol and tobacco brands urging you to drink and smoke more. But other nudges could prove to be very effective.

For instance, opt-out organ donation (over opt-in) tends to increase the number of donors – Illinois has a 60% donor signup rate with its opt out policy, compared to the average 38% signup across the US. (from Nudge)

Chris Sampson
Chris Sampson
Reply to  whyareyoulikethis
13 years ago

Thanks for the link: good info.

Hmm, I personally wouldn’t consider the organ donation example a ‘nudge’. How can it be a nudge if it doesn’t change an individual’s behaviour? The behaviour of the individual remains the same, it is just that the consequences of the behaviour have changed. Most individuals will not bother to opt-in or opt-out; the change of policy does not encourage them to donate organs, it just capitalises on their apathy.

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