• Home
  • About Donald
  • Contact Donald

Donald Marron

Musings on Economics, Finance, and Life

Feeds:
Posts
Comments
« Everything You Should Know about Taxing Carbon
Should Governments Tax Products That Are Fun But Harmful? »

Can Nudges Improve Government?

September 16, 2015 by Donald

Behavioral “nudges” can increase college enrollment by low-income students, boost health insurance take up, encourage federal workers to save for retirement, cut delinquencies on student loans, reduce vendor fraud, and save paper, according to the first annual report of the White House’s “nudge” unit.

President Obama established the unit—officially known as the Social and Behavioral Sciences Team (SBST)—to use insights from psychology, behavioral economics, and other decision sciences to improve federal programs and operations. Those social sciences increasingly appreciate what regular folks have long known: people are imperfect. We procrastinate. We avoid making choices. We get confused and discouraged by complex forms. We forget to do things. We sometimes lack the energy to weigh decisions thoroughly, so we act based on what we think our peers do or how choices are framed. And we sometimes cut corners when we think no one is looking.

Changing how people engage with the choices they face—“nudging” them—can reduce those imperfections and substantially affect their decisions. The SBST is exploring how that insight can improve government activities. To date, it’s completed more than 15 pilots exploring such questions as:

  • Can prompted choice and sending reminders increase service-member participation in employee retirement plans? Yes.
  • Can personalized text messages reduce “summer melt,” the failure to enroll of low-income students accepted to colleges? Yes.
  • Can reminder emails reduce student loan delinquencies? Yes, modestly.
  • Can a simple change to a form reduce vendor low-balling of the fees they owe the government? Yes, a bit.
  • Can redesigning a collection letter increase debt recovery? No, at least not the letter that SBST tested.
  • Can notifying doctors that they are especially high prescribers of controlled substances reduce inappropriate prescriptions in Medicare? No, but SBST is trying new notifications.
  • Can a pop-up box get employees to print double-sided rather than single-sided? Yes.

These examples run the gamut from the life-changing to the almost trivial. But they illustrate a common theme: details matter. Policy debates usually focus on high-level issues. Should health insurance be offered on exchanges? Should student loan repayments be limited as a share of a borrower’s income? But after such issues are settled, their impact depends on how policies are implemented. The nitty-gritty of designing forms, deciding how and when to prompt people, and framing and communicating options really matter.

The SBST’s first year also demonstrates the importance of testing new approaches before rolling them out at large scale. It isn’t enough to recognize that particular nudges can influence people. Where possible, agencies should test different approaches to see how they work in specific circumstances. Letters comparing your behavior to your peers’ may encourage people to conserve electricity and pay their taxes, for example, but as one pilot found, that doesn’t mean that they will get doctors to prescribe fewer opioids.

On Tuesday, President Obama signed an executive order making the SBST a permanent part of the White House and directing government agencies to use behavioral sciences to improve their programs and operations. That move is consistent with a larger, bipartisan effort to bring more evidence to bear on the design and implementation of federal programs. The government shouldn’t operate in the dark when there’s an opportunity to use evidence to make programs more efficient and effective.

That potential comes with responsibility, however. One of the most important lessons from behavioral science is that framing matters. Government nudges are a perfect case in point. I’ve been characterizing the SBST’s efforts as “pilots” and “testing new approaches” to improve government activities. Those words are innocuous or positive. As a recent headline illustrates, however, this effort can also be characterized as “President Obama Orders Behavioral Experiments on American People.” That sounds much more ominous.

That characterization reflects concern about the goals of government nudging and the oversight of experiments. Are they really trying to improve our government and lives? Or are they manipulating us to do whatever Uncle Sam wants?

The most effective response is transparency. Tell the American people about the experiments, their goals, and their results. The SBST deserves good marks on that dimension. Its first report provides a good deal of information about each of the pilot studies, both the successes and the failures. As behavioral approaches spread, the government should build on that transparency to ensure that policymakers, media, and the public have the evidence they need to judge their merits.

Advertisements

Share this:

  • Twitter
  • Facebook
  • LinkedIn
  • Email
  • Google
  • Reddit
  • Print

Like this:

Like Loading...

Related

Posted in Behavioral Economics, Politics | Tagged Behavioral Economics, Politics |

  • Most Requested

    Tax Policy Issues in Designing a Carbon Tax

    Carbon Taxes & Corporate Tax Reform

    Spending in Disguise

    How Big Is the Federal Government

  • Twitter

    Follow @dmarron
  • Get Updates by Email

    Click Here to Subscribe
  • Get Updates by RSS

    Subscribe in a reader
  • Share or Bookmark

    Bookmark and Share
  • Recent Posts

    • Three Things You Should Know about the Buyback Furor
    • Talking Money, Inflation, Fiat, & Bitcoin
    • How Should Tax Reform Treat Employee Stock and Options?
    • Eight Thoughts on Business Tax Reform
    • The 3-2-1 on Economic Growth: Hope for 3, Plan for 2, Pray it isn’t 1
    • Outside Research Organizations Can’t Replace CBO’s Budget Team
    • Can Trump Make Mexico Pay for the Wall?
    • Taxing carried interest just right
    • Britain Builds a Better Soda Tax
    • Budgeting for Federal Lending Programs Is Still a Mess
    • How Should We Use the Revenue from Taxing Carbon?
    • Happy 70th Anniversary to the Council of Economic Advisers
    • What Should We Do with the Money from Taxing “Bads”?
    • Should Governments Tax Unhealthy Foods and Drinks?
    • Should Governments Tax Products That Are Fun But Harmful?
  • 30-Second Economics

  • Tags

    Accounting Afghanistan Antitrust Arbitrage Auction Auto Banks Baucus Behavioral Economics Birds Budget Budget Process Business CBO Citigroup Climate Change Consumers Corporate Income Tax Data Debt Debt Limit Defense Deficit Economics Economy Energy Environment Europe Fannie Mae Federal Reserve Finance Freddie Mac GDP GM Google Graphics Greece GSE Health Housing Humor Incentives Income Inflation Interest Rates International Internet jobs Life Macroeconomics Measurement Medicare Microeconomics Monetary Policy Mortgage Natural Gas Nature Oil Politics Pricing Recession Regulation Search Social Security Spending Stimulus Stock Market Student Loans TARP Taxes Teaching Tragedy of the Commons Treasury unemployment Warrants
  • Categories

  • Archives

    • April 2018
    • March 2018
    • October 2017
    • September 2017
    • August 2017
    • July 2017
    • January 2017
    • October 2016
    • March 2016
    • February 2016
    • January 2016
    • December 2015
    • November 2015
    • September 2015
    • June 2015
    • May 2015
    • February 2015
    • November 2014
    • October 2014
    • September 2014
    • August 2014
    • July 2014
    • June 2014
    • April 2014
    • March 2014
    • February 2014
    • January 2014
    • December 2013
    • November 2013
    • October 2013
    • September 2013
    • August 2013
    • July 2013
    • June 2013
    • May 2013
    • April 2013
    • March 2013
    • February 2013
    • January 2013
    • December 2012
    • November 2012
    • October 2012
    • September 2012
    • August 2012
    • July 2012
    • June 2012
    • May 2012
    • April 2012
    • March 2012
    • February 2012
    • January 2012
    • December 2011
    • November 2011
    • October 2011
    • September 2011
    • August 2011
    • July 2011
    • June 2011
    • May 2011
    • April 2011
    • March 2011
    • February 2011
    • January 2011
    • December 2010
    • November 2010
    • October 2010
    • September 2010
    • August 2010
    • July 2010
    • June 2010
    • May 2010
    • April 2010
    • March 2010
    • February 2010
    • January 2010
    • December 2009
    • November 2009
    • October 2009
    • September 2009
    • August 2009
    • July 2009
    • June 2009
    • May 2009
  • Economics & Finance

    • Brad DeLong
    • Calculated Risk
    • Capital Gains and Games
    • Econbrowser
    • Economist's View
    • EconomistMom
    • Greg Mankiw
    • Infectious Greed
    • Keith Hennessey
    • Marginal Revolution
    • Modeled Behavior
    • Paul Krugman
    • Tax Policy Center
    • The Big Picture
    • The Money Illusion
  • More Fun Blogs

    • Donald and Esther’s Travels
    • Kottke
    • Olivia Judson
  • Seeking Alpha Certified

    Creative Commons License
    The content of dmarron.com carries a Creative Commons license.

    wordpress stat
  • Translate this blog into

    Albanian Arabic Bulgarian Catalan Chinese Simplified Chinese Traditional Croatian Czech Danish Dutch Estonian Filipino Finnish French Galician German Greek Hebrew Hindi Hungarian Indonesian Italian Japanese Korean Lativian Lithuanian Maltese Norwegian Polish Portuguese Romanian Russian Serbian Slovak Slovenian Spanish Swedish Thai Turkish Ukrainian Vietnamese
  • Advertisements

Create a free website or blog at WordPress.com.

WPThemes.


loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.
%d bloggers like this: