Has the Department of Health been misusing behavioural economics?

It seems that as soon as Andrew Lansley announced plans to “nudge” the population towards healthier and more socially responsible behaviour, scathing criticisms have been levelled at the alleged naivety – and to some the danger – of his policy backing for voluntary pledges, grounded in nudge theory. The Commons health select committee criticised the Department of Health’s (DH) Public Health Responsibility Deals as ineffective for tackling health and social problems such as smoking, excessive drinking and obesity – warning that they could widen health inequalities; that self-interested companies should not be allowed to set the agenda; and that the government should use legislation if “nudging” fails. The House of Lords Science and Technology Committee similarly questioned the efficacy of using voluntary mechanisms without sufficient regulatory measures to achieve behaviour change. Even internally within government the idea has had little traction; a National Audit Office report last year noted government departments were not consulting the Behavioural Insight Team on issues around alternatives to regulation at the assessment stage. Oliver Letwin even acknowledged that it was “open to question whether any of this would have any effect whatsoever.” The Behavioural Insights Team itself cautioned that “’nudge’ approaches should not be seen as a hard alternative to other policy approaches, but a useful complement or additional tool.”

The recent government decision on minimum alcohol pricing has brought the issue back into sharp focus. David Cameron has effectively clashed with the DH (and the drinks industry) on the issue and has agreed with health experts. The tensions were evident in the decision by the Department of Health to issue a press release about recent achievements of the responsibility deal just as the minimum pricing decision was close to completion. Just as in the past, the Department’s voluntary pledges have come under attack and have been unsettled by evidence that conflicts with its core assumptions by experts and research – including a Sheffield University study that shows raising prices cuts drinking. The consumer watchdog Which? has also conducted an audit of the Government’s use of voluntary pledges to tackle obesity and found that many food companies have failed to commit, and that legislation needs to replace “doomed” voluntary schemes.

It appears that the Department of Health is committing the error that the government’s own Behavioural Insights Team warned against; using “nudge” as a “hard tool”, rather than a complementary addition to other policy approaches such as legislation and regulation. Behavioural economics offers great insights into how pro-social behaviour can be promoted without always relying on ‘hard’ state intervention, and the RSA has demonstrated this in numerous publications as part of its Social Brain project. Similarly, as Matthew Taylor has argued, businesses can use their expertise on (effectively) manipulating our cognitive systems (which they have used for their highly sophisticated marketing strategies) to achieve “downstream” social gains – and therefore they have a part to play in promoting positive behaviour change. But evidence indicates that in highly complex issues that have a huge impact on society – such as how to deal with obesity, drinking or smoking – “nudging” cannot be the centrepiece, but rather a complementary part of a larger, more comprehensive package. The DH’s failure to acknowledge this has led to critics deriding the responsibility deals as coups for big business – an impression reinforced by experts, consumer groups and civil society groups walking out on previous negotiations. A distinct lack of support and collaboration is unlikely to lead to the development of effective policy for meeting complex challenges.

And this is a key lesson we have learned at the 2020 Public Services Hub while researching collaborative and innovative forms of regulation for our Zero Carbon Hub case study.  In zero carbon new homes policy, we found that voluntary schemes alone were insufficient for achieving significant carbon reductions for new homes, and that it was a collaborative form of regulation that explained the major achievements towards zero carbon targets. The careful establishment of the Zero Carbon Hub enabled key stakeholders (including Government, business and civil society groups) to collectively produce solutions, facilitated by the ‘shared space’ provided by the Hub and supported by its clear long-term policy vision, without needing to resort to lobbying government to influence policy. This is in clear contrast to the DH responsibility deals, where the debate is highly polarised and different stakeholders show little interest in engaging one another. Had the Department followed the example of the ZCH, where collaborative regulation – rather than state withdrawal and voluntary nudging – is the organising principle of policy, a significantly more comprehensive and effective approach to tackling public health issues may have emerged. It may be time to see tools such as nudge as valuable parts of a collaborative policy framework that includes regulation – but a new, smarter form that is able to convince industry, government, experts and civil society to participate in ‘shared spaces’; transcending both traditional, top-down state intervention and the ineffectual volunteerism approach promoted by sections of the right. Some on the right see behavioural economics as an opportunity for state disengagement (claiming that a “nudging state” is a better alternative to a “nanny state”) – but if it is to effectively inform policy, behavioural economics should not be (mis)used in this way.