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Public Policy, Behavioral Economics and Marketing

There have been interesting developments at the intersection of public policy, behavioral economics and marketing. Good public policy has always had an understanding of the people it applied to. Still efforts have been made in recent years to improve this further. To make public consideration more explictly central. To create policy with the foibles of the general public in mind.

Behaviorally Informed Policy

Policy (generally) only works if the people it covers follow it. Traffic rules only help if drivers obey them. Poverty reduction measures often only work if those in need know about and claim the money. Medical advice only helps if people follow it which is especially clear as I am writing in Spring 2021. (Covid 19 has made this especially clear). You can always blame the public if they don’t follow medical advice. (To be fair sometimes we, the public, do some pretty silly things). Still it is much easier to change the way you give advice than wish for a new public. As such I hope that behaviorally informed thinking can make its way further into medical communications. (My personal favorite term we have learned over the pandemic is ‘surveillance testing’. I have not run an experiment but I’m guessing this term isn’t the best way to reassure people suspicious of government that nothing sinister is happening).

To enact behaviorally informed policy you need a good understanding of the public, especially your target audience. Of course, this is pure marketing. You probably want to run experiements. Marketing doesn’t have a monopoly on these but we (collectively, not me) have some pretty decent skills in the area. As such, I think marketers have a lot to offer in combating many of the big problems of society. Marketers, along with health speciailists, economists, psychologists etc.., can help improve public policy by tailoring policy better to human behavior. Such improvements can ideally be non-controversial. We might not all agree on a policy but it would be good to get the policies we do agree on well run.

Nudges In Public Policy, Behavioral Economics and Marketing

One of the core terms in behaviorally informed policy comes from Thaler and Sunstein. The term is the now well known, Nudge. If you haven’t read their book now would be a good time. It is on Amazon.

What Is A Nudge?

Rather than placing restrictions or changing economic incentives, nudges influence behaviour by changing the way choices are presented in the environment.

Ly, Mazar, Zhao and Soman 2013.

The key point is that a nudge, in a subtle way, encourages behavior seen as beneficial. It does not prevent an action. Bringing healthy food to eyeline is a nudge to eat healthily. Using a ruler to hit the hands of anyone reaching for a candy bar is not a nudge. For more see here.

Nudges? Evil?

Some people do object to nudging. Some people seem to see anyone thinking about how the public will react to policy is akin to Big Brother. Honestly I don’t really get it, see here. Bureaucrats design policy. They are always going to be designing policy unless you get rid of government. As such, they might as well design it well to my mind, see here. Mostly I just think that critics of nudges have little too worry about in their lives. (I guess they are lucky people). If they believe asking people to opt-out, rather than opt-in, to retirement saving policies is the epitome of evil then they should get out more. Still I guess diversity of thought is one of the things that makes life interesting.

Asymmetric Paternalism

A useful term, if a little ugly, is asymmetric paternalism. This comes from behavioral economists such as Colin Camerer, see here. The explicit idea is that such paternalism applies in a specific type of policy intervention. Some policy interventions are redistributive, e.g. progressive income tax. These aren’t optional, and aren’t nudges. Other interventions seek to solve social problems, e.g., prisoners’ dilemmas. For example, one might ban pollutants which are cheaper than other ingredients, so those using the polutants benefit, but hurt us all. Such bans are not nduges. Neither of these buckets of issues are ripe for asymmetric paternalism to tackle.

Where the idea is useful is when there is an intervention that can help a member of the public make a better decision. How can the government save the person from themselves? This is the paternalism bit. The asymmetric bit comes from the requirements that are sought. The benefits of the government to those making bad decisions must be very high compared to the cost imposed upon those who would make good decisions anyway. Many nudges fit this category. The classic is making healthy food more easily available. The benefits to those who are helped to eat more healthily could (we would need to test) be large compared to the cost to those whose best choice really is the candy. This second group do have a cost — they have to lean further to get their candy — but it isn’t large compared to the serious cost of unhealthy eating.

Asymmetric Paternalism

The Application And Limits Of Nudging

Rather than freaking out too much about nudges I like to think of them as a way we can be helped to be better. We might want to be environmentally conscious but we aren’t because we are lazy. Why not design policy with lazy well-meaning people in mind? (This describes a lot of people). We often want to be better citizens, consumers, people — why not help us? For more on environmental policy and nudges see here.

One of the strangest criticisms of behaviorally informed policy and nudges is that it isn’t magical, see here. Someone will say something like: ‘But you won’t solve poverty with just a few nudges’. The obvious point is that they are 100% correct. Still who said this would happen? Nudges may help but you are going to need to put some resources behind big projects you want to achieve. Similarly we can’t get rid of taxes and just nudge people to pay for the military. This criticism creates a silly strawman and then defeats it. Again these people have little to do with their time.

I would agree that we even need to outright ban many things despite nudges being effective. Hopefully you can use subtle clues to reduce the number of people drinking and driving. Good for you if you can make progress with nudges. Reducing drunk driving, even if just a little, is still progress. Still that doesn’t mean that I’m not for prosecuting people who still ignore the subtle nudges and drive under the influence of alcohol. Nudges can’t replace many other types of interventions and nudges aren’t magical. Still are subtle and have low costs so where they have large benefits why not do them?

Nudge Units

The creation of ‘Nudge Units’ across the world was a fascinating feature of the first half of the 2010’s. Conservatives in the UK embraced Nudges as did the Obama White House and Justin Trudeau’s Privy Council in Canada. (For details in Canada see here). The UK team was even aided by Richard Thaler, see here.

The OECD even got in on the act, detailing actions worldwide see here. Politically the second half of the 2010s seemed to spin out of control, Brexit anyone? Other things than improving government became a priority. That said, the potential for policy to be improved — both to be more effective and efficient — excited many and still does.

These behavioral units can also bring more rigor to policy. For example, by supporting widespread testing, see here. The units have potential for a great impact across government, see here.

“With better data and improved ability to test, behavioural insights will play an increased role in improving policy and services to ensure a better life for every global citizen.” 

Chen, Bendle and Soman, 2017, page 20.

Taking In Public Input

Policy should be informed by the public interest. How is this done? This is surprisingly tricky. We discussed the problem of engaging a wide range of stakeholders to create effective and fair policy in a Journal of Business Ethics article, see here for more. The key thing we emphasized was that public involvement must be broad, deep and continual. One of the ways to establish the sort of trust in government that will help create the conditions for effective behaviorally informed public policy is by being serious about engagement. For example, the public are likely to be much more appreciative of attempts to nudge us towards more effective retirements plans if the government is seen to be responding to genuine puiblic concerns.

Engagement Should Be Broad, Deep And Continual


The intersection of public policy, behavioral economics and marketing is a fascinating area. Marketers have much to contribute to making the world better, even if progess will never be magical. I look forward to adding more to this website over time on the subject.

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