Tuesday 14 June 2022

Is it time to reconsider nudge theory?

In a surprising recent working paper, Nick Chater (University of Warwick) and George Loewenstein (Carnegie Mellon University) outline a case against 'nudges' as a policy tool. As you may know, nudges take advantage of insights from behavioural science, psychology, and behaviour economics, to change individual behaviour for the better. This idea was popularised in Richard Thaler and Cass Sunstein's 2008 book Nudge. Chater and Loewenstein have been at the forefront of the nudge movement, as members of the advisory board of the U.K.'s Behavioural Insights Team (popularly known as the 'nudge unit').

What is surprising about the working paper is that this is a well-reasoned critique of using nudges to address policy issues, written by two nudge policy 'insiders'. Their main argument is best summarised in the long abstract to the paper:

An influential line of thinking in behavioral science, to which the two authors have long subscribed, is that many of society’s most pressing problems can be addressed cheaply and effectively at the level of the individual, without modifying the system in which individuals operate. Along with, we suspect, many colleagues in both academic and policy communities, we now believe this was a mistake. Results from such interventions have been disappointingly modest. But more importantly, they have guided many (though by no means all) behavioral scientists to frame policy problems in individual, not systemic, terms: to adopt what we call the “i-frame,” rather than the “s-frame.”

Chater and Loewenstein distinguish between 'i-frame' interventions and 's-frame' interventions throughout the paper. They explain the difference as:

The behavioral and brain sciences are primarily focused on what we will call the i-frame: that is, on individuals, and the neural and cognitive machinery that underpins their thoughts and behaviors. Public policy, by contrast, is typically focused on the s-frame: the system of rules, norms and institutions by which we live, typically seen as the natural domain of economists, sociologists, legal scholars and political scientists.

The difference is important, because:

Unlike traditional policies, i-frame interventions don’t fundamentally change the rules of the game, but make often subtle adjustments that promise to help cognitively frail individuals play the game better.

However, the problem that Chater and Loewenstein see is not limited to the modest effects of i-frame interventions when compared to potential alternative s-frame policy or institutional change. They note that:

We have begun to worry that seeing individual cognitive limitations as the source of problems may be analogous to seeing human physiological limitations as the key to the problems of malnutrition or lack of shelter. Humans are physiologically vulnerable to cold, malnutrition, disease, predation and violent conflict, and an i-frame perspective on these problems would focus on hints and tips to help individuals survive in a hostile world. But human progress has arisen through s-frame changes---the invention and sharing of technologies, economic institutions, legal and political systems, and much more, which created an intricate social, political and economic system that has led to spectacular improvements in the material dimensions of life. The physiology of individual humans has changed little over time and across societies; but the systems of rules we live by have changed immeasurably. Successful s-frame change has been transformative in overcoming our physiological frailties.

Chater and Loewenstein also worry that i-frame interventions get in the way of potentially successful s-frame changes:

There is, moreover, a more subtle way in which i-frame interventions undermine s-frame changes: through shifting standards of what counts as good quality evidence for public policy. For many i-frame policies, randomized controlled trials have been widely viewed as a gold-standard method for evaluating and incrementally improving policy... But the gold-standard of experimental testing provides a further push towards i-frame interventions (where different individuals may be randomly assigned distinct interventions) and away from s-frame interventions, where it is rarely possible to change the “system” for some subset of the population...

And that corporations have actively weaponised the i-frame to prevent s-frame solutions. In their view, this has played out following a common pattern:

1. Corporations with an interest in maintaining the status quo put out PR messages that the solution to a problem they are associated with lies with individual responsibility, and that people need to be helped to exercise that responsibility more effectively. That is, the challenge of fixing the social problem is cast in the i-frame...

2. Behavioral scientists enthusiastically engage with the i-frame...

3. There are hopes that proposed i-frame interventions (including nudges, and providing better individual-level incentives, information and education) might provide cheap and effective solutions to conventional s-frame policy levers, such as regulation and taxation. This hope distracts attention from the s-frame...

4. The i-frame interventions show at best modest, and often null, effects, and are sometimes even counterproductive...

5. Corporations themselves relentlessly target the s-frame, where they know the real leverage lies. They spend substantial resources on media campaigns, lobbying, funding think-tanks and sponsoring academic research, to ensure that the “rules of the game” reinforce the status quo.

Chater and Loewenstein outline a number of problems where i-frame interventions have been tested, but where s-frame policy or institutional change would be much more effective. This includes climate change (e.g. i-framed individual carbon footprint calculators vs. s-framed carbon taxes), obesity (i-framed motivational interventions, tray-less cafeterias, etc. vs. s-framed sugar taxes or regulations), retirement savings (e.g. i-framed individual retirement savings vs. s-framed universal retirement saving or public pensions), and plastic waste (e.g. i-framed individual responsibility for recycling vs. s-framed regulations banning single-use plastics). They also point in lesser detail to a number of other applications where i-frame thinking gets in the way of s-frame solutions, including healthcare reform, educational inequality, discrimination, online privacy, misinformation on social media, the opioid epidemic, and gun violence.

Not everyone will agree with Chater and Loewenstein's critiques. However, they are all the more forceful and worth paying attention to, having come from within the advocates of behavioural interventions. That makes this paper potentially much more consequential than previous libertarian critiques, such as those in the book Nudge Theory in Action (which I reviewed here). It will be interesting to see how the advocates of nudge theory respond.

[HT: Tim Harford]

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