10.3.2017   

EN

Official Journal of the European Union

C 75/28


Opinion of the European Economic and Social Committee on ‘Towards applying Nudge Thinking to EU Policies’

(own-initiative opinion)

(2017/C 075/05)

Rapporteur:

Thierry LIBAERT

Plenary assembly decision

21.1.2016

Legal basis

Rule 29(2) of the Rules of Procedure

 

Own-initiative opinion

Section responsible

Section for Agriculture, Rural Development and the Environment

Adopted in section

24.11.2016

Adopted at plenary

15.12.2016

Plenary session No

521

Outcome of vote

(for/against/abstentions)

162/3/3

1.   Conclusions and recommendations

1.1.

‘Nudges’ are emerging as a public policy tool to complement those already used by European public authorities (information and awareness-raising, financial incentives, legislation and exemplarity). However, they are proving to be particularly useful for overcoming certain social, environmental and economic challenges.

1.2.

Encourage the use of nudges in public policy-making in conjunction with traditional tools, and in particular their change in approach to individual behaviour. Nudges could thus be integrated into the general public policy framework and accelerate public policy implementation at very little cost. Given their flexibility and simplicity, they can be used simultaneously in different contexts and by different categories of stakeholder: intergovernmental bodies, the internal departments of each ministry, local and regional authorities, NGOs, private organisations, and so on.

1.3.

Prioritise in particular the nudges which meet environmental, social and other objectives (energy/ecological transition, reducing resource wastage, enhancing social well-being, improving population health, etc.). They can thus be used as part of measures which address predefined collective objectives, for which traditional public policy tools have proven ineffective and/or too costly.

1.4.

Promote the exchange of information and good practices on nudges between all potential participants (public institutions, authorities, businesses, associations, NGOs, etc.) at EU level. A platform mapping out the initiatives and/or a dedicated observatory are possibilities to consider.

1.5.

Study in greater depth the different effects of nudges according to culture, socioeconomic profile, geographical area and so on. This would give rise to a better understanding of the advantages and constraints of the scope of nudges and their implementation among countries and sectors, etc. In particular, the question of the duration of the effect of nudges on behaviour deserves to be looked at in greater detail.

1.6.

Identify general conditions of use for nudges so as to reduce their negative impact and ensure that they are ethically acceptable. They could be gathered together in a good practice charter, jointly drawn up by stakeholders and adopted at EU level before being applied in the Member States. In addition, a guide could be published and distributed to interested parties.

1.7.

Introduce information procedures on the use of different types of nudge to ensure transparency for those who are ‘nudged’. Nudges should be understood, discussed and shared to be accepted in the best possible way. This would avoid ‘abuse’ and the risk of manipulation when using nudges.

1.8.

Provide a proper code of ethics for nudges to prevent them drifting towards irresponsible objectives. The following four conditions should be met when organising a nudge: the transparency of the process, flexibility for the persons involved who should always have the choice of acting in one way or in another, the reliability of the information given to them and not making individuals feel guilty.

1.9.

Develop monitoring and evaluation procedures for nudges according to different criteria (social, environmental and economic). This may involve an initial testing phase to gain an understanding of the exact impact of the nudge according to its type, the target group, the context and so on. Swift adjustments could therefore be made if the results of the nudge prove disappointing, or the nudge could even be dropped if deemed ineffective.

1.10.

Encourage the teaching of disciplines related to behavioural economics in training courses (both new and ongoing). This would improve understanding of the tool and encourage various groups (civil servants, company employees, elected representatives, etc.) to use it wisely and critically. This also calls for the barriers between academic disciplines to be broken down since the nudge is based on a cross-cutting approach.

1.11.

Retain a degree of flexibility when using nudges in order to exploit their full potential. As with the other tools available to public authorities, nudges are not a miracle tool, nor are they completely new. However, they can prove very useful in conjunction with other tools in changing certain behaviours. The main attraction of this concept is that it encourages psychological consideration of behaviour when developing public policies, rather than focusing solely on their ‘economic rationality’.

1.12.

Organise, on the initiative of the EESC, the first EU conference on nudges, which would represent a unique opportunity for those working with this tool within the EU to exchange their experiences.

1.13.

In order to deal with the radical shift towards a new economic model which will have major systemic consequences in a number of areas, create a new horizontal permanent body within the EESC that would be tasked with analysing these developments, including nudge thinking and other related subjects such as the circular, sharing economy and functional economy.

2.   A fifth tool for public authorities

2.1.

Public authorities have traditionally used four types of tool to change the behaviour of individuals: information and awareness-raising, financial incentives, legislation (prohibition or obligation) and exemplarity. These four tools have limitations, however, with regard, in particular, to behaviour and responsible consumption, or rather consuming fewer natural resources. There is still a disparity between individuals’ knowledge levels and how they behave on a daily basis.

2.2.

The reasons for the gap between actions and intentions have been analysed through behavioural economics, a discipline which looks at the factors which influence individual behaviour. According to researchers in this discipline, individual actions are determined by many factors. We are complex, deeply emotional beings with limited rationality, influenced by others and social interactions, but also by context and the environment in which we make our decisions.

2.3.

In the end, our decisions and behaviour are largely the result of what Daniel Kahneman, winner of the Nobel Prize for Economics, calls our ‘System 1’: a largely unconscious, automatic and super-fast way of thinking which enables us to take many decisions a day with minimal effort and by saving on our attentional resources. However, this system feeds on stereotypes and associations and often leads us away from mathematical rationality.

3.   Using behaviour to influence choices

3.1.

In behavioural economics, traditional public policy levers may not be enough to change behaviour because they do not take into the account the various factors that influence the decision-making process. In 2008, two American professors, Richard Thaler (professor of economics in Chicago and leading figure in behavioural economics) and Cass Sunstein (Harvard law professor) started from this assumption and published the first ever work on nudges (1), based on the idea that behavioural changes should come from ‘gentle nudges’. The authors define a nudge as ‘any aspect of the architecture of choice which changes people’s behaviour in a predictable way, without eliminating any of the options or drastically changing financial incentives’. To be considered a simple nudge, individuals must be able to avoid the action easily, i.e. nudges are in no way obligatory.

3.2.

The nudge is designed to create ‘architectures of choice’, highlighting the choice seen as most beneficial to the individual and/or group, without changing the number or nature of the choices available. The user or consumer is steered towards what is considered the best choice. Nudges have three characteristics: they provide total freedom of choice for individuals, are simple to implement and cost little to put into practice.

3.3.

Public authorities in some countries are showing increasing interest in nudges as they have two major advantages: they do not restrict the freedom of individuals, and they cost very little but have the potential to make a considerable impact. They can therefore be used as a complementary tool for public policies which seek to make individuals behave more responsibly towards their health, the environment and so on. Nudges give individuals a simpler choice which aids in the decision-making process.

4.   Nudges: one concept, many levers

4.1.

Choice by default. This concept is the process of automatically applying the default solution which the implementing authority considers best, but also simplest to apply. It is based on the inertia of individuals. For example, French income tax declarations have assumed since 2005 that households own a television by default. The estimated fraud rate has fallen from 6 % to 1 % as a result. Default choices are also being used increasingly by banks, energy providers and other businesses which send out electronic bills by default, rather than paper bills printed double-sided, and so on.

4.2.

The strength of social norms, which nudge advocates see as a powerful behavioural determinant. Social norms can be used to encourage individuals to act in a given way. More specifically, this strategy involves highlighting a behaviour exhibited by the majority of those around you (neighbours, colleagues, etc.). It is supposed to encourage individuals to behave in the same way so that they conform to social norms. In 2011, the energy provider OPOWER conducted an experiment in the US. Using information collected about the energy consumption of 600 000 households, letters were sent out which said, for example: ‘Last month you used 15 % more electricity than your most energy-saving neighbours’. Infographics helped them to compare their household’s energy consumption with that of their neighbours and other consumers, and they received a happy ‘smiley’ when their consumption was low. According to OPOWER, following this correspondence, energy consumption fell by an average of 2 % in participating households, which generated a total saving of USD 250 million (2). Many similar experiments have shown a reduction in energy consumption of between 1 and 20 %.

4.3.

Risk of loss, which is designed to highlight what an individual could lose (particularly in financial terms) if they do not change their behaviour, for example with regard to energy consumption. The concept involves giving the individual an estimate of how much they are losing by not changing their behaviour, or, conversely, how much they stand to gain if they do. Non-financial indicators (calories, CO2 emissions, etc.) can also be used to visualise the loss.

4.4.

Emulation, which, for example, is the practice of organising competitions to encourage certain practices, such as in the fight against waste. The French NGO Prioriterre is eager to encourage the public to take an interest in energy-saving. To do so, it organises a ‘Positive-energy family’ challenge every year, which in 2014 brought together around 7 500 families. Families had to decrease their energy consumption by 8 % in order to win various prizes (3).

4.5.

Using games and entertaining concepts. Amsterdam airport introduced one of the most well-known nudges: fake flies were painted inside urinals to encourage men to take proper aim. In 2009, Volkswagen transformed the stairs leading to the exit of Odenplan station, Stockholm, into an enormous keyboard. When pressure was applied to a step, a musical note sounded (4). The aim was to encourage passengers to use the stairs, rather than the escalators. In South Korea, markings on the ground show the risk of being overweight for people using escalators.

4.6.

Nudges can also be used to change how choices are presented and the appearance of certain products, in an effort to highlight those considered healthiest or most environmentally-friendly, etc. This type of nudge is sometimes likened to the principle of branding. Several experiments have also been carried out in canteens with the aim of encouraging customers to eat healthy foods. Healthy foods were displayed at the start of the display stand, which in some cases can double their consumption compared to when they are displayed in the middle or at the end. Other canteens have attempted to reduce waste by reducing plate size: customers filled their plates just as much, but less food was served (bearing in mind that customers can always go back for more if they wish) (5).

5.   A tool used increasingly by public authorities

5.1.

Since 2008, more and more countries have become interested in the potential of public policy tools based on nudges, which have the triple advantage of being low-cost, effective and more attractive to the public than regulations or taxes. The following paragraphs provide a number of non-exhaustive examples.

5.2.

In 2010, David Cameron’s British government created the ‘Behavioural Insights Team’, headed by David Halpern and responsible for applying behavioural science to public policy in the UK. For example, the group made changes to the government website for organ donor registration. It wrote: ‘Every day, thousands of people who see this page decide to register’ and displayed the logo of the NHS (National Health Service), the British social security system, on the website. In one year, sign-up rates went from 2,3 % to 3,2 % (+96 000 registrations). Since 2014, the ‘Nudge Unit’ has functioned independently and advises foreign governments, local authorities, businesses and so on (6).

5.3.

In 2014, the Obama administration also launched a Nudge Squad under Maya Shankar. In an executive order published in September 2015, President Obama ‘encouraged’ government departments and agencies to use the findings of behavioural science (7). The governments of Singapore, Australia and Germany have also set up teams of experts in behavioural economics.

5.4.

In France, the General Secretariat for the Modernisation of Public Action (SGMAP) and the Directorate-General for Public Finances (DGFIP) (8) have been experimenting further with nudges since 2013.

5.5.

The European Commission has set up a Foresight and Behavioural Insights Unit within the Joint Research Centre, headed by Xavier Troussard. In 2016, it published a report which highlights the fact that EU public policies are increasingly incorporating elements of behavioural economics (9). The unit believes that exchanges on the subject should be developed between universities and the political sphere. Above all, it recommends increasing the use of behavioural economics tools in all stages of public policy-making, but also improving discussion of their use and understanding of their impact.

6.   Risks and constraints which cannot be ignored

6.1.

Nudges have their limitations. They need to be carefully designed and implemented and raise both technical and ethical questions. Nudges are not a substitute for informing individuals and educating them about their choices, nor can they substitute the traditional government activities of legislation and financial incentives. Furthermore, the risks and constraints associated with their use must not be under-estimated.

6.2.

Currently, few studies on the effectiveness of nudges are available, particularly in the medium and long term. Some stress the fact that individual reactions to this tool differ markedly. In the experiment carried out by OPOWER, for example, households whose energy consumption was already lower than average tended to increase their consumption when informed of their place in the ranking. Conversely, nudges can instil a sense of guilt or inferiority in those who learn that they consume more energy than their neighbours. Some studies have found that receptiveness to nudges can vary according to individual values and opinions (10), but also according to political and cultural context. More generally, the studies highlight the different impacts of nudges according to population groups, cultures and contexts. It is therefore necessary to assess the effects of nudges, either directly or randomly.

6.3.

Another issue is the duration of the effects of nudges. Studies on water and electricity consumption have shown that the repeated effects of social norms tend to diminish over time, even though they can last to a lesser degree for several years (11). The long-term effect of nudges depends on whether they can make a real change to habits. Once a default option is changed, if it is kept that way, there is no reason to believe that behaviour will not stay the same. This is more a question of whether it is possible to go further or to modulate the action taken. In fact, it appears easier to adjust a tax or a rule gradually rather than a default option.

6.4.

Nudges can have negative effects, as demonstrated by the fact that an individual may tend to act more virtuously after having behaved badly, and vice versa. For example, experiments have shown that buying ‘green’ products could be followed, under certain circumstances, by an increase in negative behaviour, such as cheating or stealing (12). Attempts to encourage virtuous behaviour in some areas can thus have a negative impact in others. These adverse effects, if they do exist, make assessing the overall impact of nudges very difficult. They are apparently very rare and do not call into question the usefulness of nudge-based approaches. However, it is important not to rule out the possibility of such effects.

6.5.

The effectiveness of a nudge is measured in relation to a desirable behaviour, which raises the question of how to define and measure what is desirable. It can be very difficult to assess individuals’ happiness. Nudges also raise the issue of who makes the decision about the objective to be followed, or rather about what is desirable for the individual and/or for society. A public decision-maker could steer the objective and the nudge in a particular direction for opportunistic reasons, although it might also be less intentional, for example as a result of lack of information.

6.6.

Finally, the line between information, communication and manipulation is sometimes blurred. For example, some of the many hotels that encourage their customers to reuse their towels deliberately ‘inflate’ the numbers of hotel guests who do so already (13). The aim of these messages is not to trick their target audience, but to establish a sort of self-fulfilling prophecy by ensuring that they come true. However, customers are in fact led to base their behaviour on a lie. Lying, even if it leads to more virtuous behaviour, is not judged morally acceptable, and even less so by public decision-makers. It can also tarnish the reputation of the decision-maker and reduce the effectiveness of nudges by talking down to consumers.

Brussels, 15 December 2016.

The President of the European Economic and Social Committee

Georges DASSIS


(1)  Thaler, Richard & Sunstein, Cass, Nudge: Improving Decisions about Health, Wealth, and Happiness, Yale University Press, 2008.

(2)  Opower.com

(3)  http://www.prioriterre.org/ong/particuliers/a2210/une-nouvelle-edition-familles-a-energie-positive.html

(4)  https://www.youtube.com/watch?v=2lXh2n0aPyw

(5)  Liebig, Georg, Nudging to Reduce Food Waste, URL: http://www.wiwi-experimente.tu-berlin.de/fileadmin/fg210/nudging_to_reduce_food_waste_Georg_Liebig.pdf

(6)  Nudge Unit Website: http://www.behaviouralinsights.co.uk/

(7)  Executive Order — Using Behavioral Science Insights to Better Serve the American People, 15 September 2015. URL: https://www.whitehouse.gov/the-press-office/2015/09/15/executive-order-using-behavioral-science-insights-better-serve-american

(8)  See, for example, Le nudge: un nouvel outil au service de l’action publique, 13 March 2014. URL: http://www.modernisation.gouv.fr/les-services-publics-se-simplifient-et-innovent/par-des-services-numeriques-aux-usagers/le-nudge-au-service-de-laction-publique

(9)  http://publications.jrc.ec.europa.eu/repository/bitstream/JRC100146/kjna27726enn_new.pdf

(10)  Costa, Dora L. and Kahn, Matthey E., ‘Energy conservation “nudges” and environmentalist ideology: Evidence from a randomized residential electricity field experiment’, Journal of European Economic Association, 2013.

(11)  Ferraro, Paul J., Miranda, Juan Jose and Price, Michael K., The persistence of treatment effects with norm-based policy, American Economic Review, vol. 101, No 3, May 2011.

(12)  Mazar, Nina and Zhong, Chen-Bo, Do green products make us better people?

(13)  Simon, Stephanie, The Secret to Turning Consumers Green, The Wall Street Journal, 18 October 2010. URL: http://www.wsj.com/articles/SB10001424052748704575304575296243891721972