Last year I wrote a critical article about the government’s Nudge Unit. The ideas of libertarian paternalism were popularised around five years ago by the legal theorist Cass Sunstein and the behavioral economist Richard Thaler, in their bestselling book Nudge. Sunstein and Thaler argue that we are fundamentally “irrational” and that many of our choices are influenced negatively by “cognitive bias.” They go on to propose that policymakers can and ought to nudge citizens towards making choices that are supposedly in their best interests and in the best interests of society.
But who nudges the nudgers? Who decides what is in our “best interests”?
And how can our interests be so narrowly defined and measured in terms of economic outcomes, within a highly competitive, “survival of the fittest” neoliberal framework? The Nudge Unit is concerned with behaviouraleconomics, not human happiness and wellbeing.
The welfare reforms, especially the increased application of stringent conditionality and the extended use of benefit sanctions are based on a principle borrowed from behavioural economics theory – the cognitive bias called “loss aversion.” It refers to the idea that people’s tendency is to strongly prefer avoiding losses to acquiring gains. The idea is embedded in the use of sanctions to “nudge” people towards compliance with welfare rules of conditionality, by using a threat of punitive financial loss, since the longstanding, underpinning Conservative assumption is that people are unemployed because of behavioural deficits.
I’ve argued elsewhere, however, that benefit sanctions are more closely aligned with operant conditioning (behaviourism) than “libertarian paternalism,” since sanctions are a severe punishment intended to modify behaviour and restrict choices to that of compliance and conformity or destitution. But nudge was always going to be an attractive presentation at the top of a very slippery slope all the way down to open state coercion. Most people think that nudge is just about helping men to pee on the right spot on urinals, getting us to pay our taxes on time, or to save for our old age. It isn’t.
Libertarian paternalists claim that whilst it is legitimate for government, private and public institutions to affect behaviour the aims should be to ensure that“people should be free to opt out of specified arrangements if they choose to do so.”The nudges favoured by libertarian paternalists are also supposed to be “unobtrusive.” That clearly is not the case with the application of coercive, draconian Conservative welfare sanctions. (See Nudging conformity and benefit sanctions.)
I have previously criticised nudge because of its fundamental incompatibility with traditional democratic principles, and human rights frameworks amongst other things. Democracy is based on a process of dialogue between the public and government, ensuring that the public are represented: that governments are responsive, shaping policies that address identified social needs. However, policies are no longer about representing and reflecting citizen’s needs: they are all about telling us how to be.
I’ve also pointed out that nudge operates to manipulate at a much broader level, too. The intentional political construction of folk devils and purposeful culturally amplified references to a stereotype embodying fecklessness, idlenessand irresponsibility, utilising moral panic and manufactured public outrage as an effective platform for punitive welfare reform legislation, is one example of the value-laden application of pseudoscientific “behavioural insights” theory. The new paternalists have drawn on our psychosocial inclinations towards conformity, which is evident in the increasing political use of manipulative normative messaging. (For example, see: The Behavioral Insights Team in the U.K. used social normative messages to increase tax compliance in 2011.)
The paternalist’s behavioural theories have been used to increasingly normalise a moral narrative based on a crude underpinning “deserving” and “undeserving” dichotomy, that justifies state interventions imposing conditions of extreme deprivation amongst some social groups – especially those previously considered legally protected. Public rational and moral boundaries have been and continue to be nudged and shifted, incrementally. Gordon Allport outlined a remarkably similar process in his classic political psychology text, The Nature of Prejudice, which describes the psychosocial processes involved in the construction of categorical others, and the subsequent escalating scale of prejudice and discrimination.
So we really do need to ask exactly in whose “best interests” the new paternalist economologists are acting.
I have seen very little criticism of nudge in the mainstream media until very recently. On Monday the Independent published an article about how the Chancellor exploited our cognitive biases to secure his cuts to welfare, drawing particularly on the loss aversion theory. In economics decision theory, loss aversion refers to people’s tendency to strongly prefer avoiding losses to acquiring gains.
From the Independent article:
Researchers have also found that people do not treat possible forgone gains resulting from a decision in the same way as equivalent potential out-of-pocket losses from that same decision. The forgone gains are much less psychologically painful to contemplate than the losses. Indeed, the gains are sometimes ignored altogether.
There was an apparent attempt to harness this particular psychological bias in George Osborne’s Autumn Statement. Of course the Chancellor was forced into a memorable U-turn on his wildly unpopular tax credit cuts. Millions of poor working families will now not see their benefits cut in cash terms next April. Yet the Chancellor still gets virtually all his previously targeted savings from the welfare bill by 2020.
How? Because the working age welfare system will still become much less generous in five years’ time. As research from the Institute for Fiscal Studies and the Resolution Foundation has shown, the typical low-income working family in 2020 will be hit just as hard as they were going to be before the Autumn Statement U-turn. The Chancellor seems to be calculating that the pain of future forgone gains will be less politically toxic than immediate cash losses.
It’s hardly a revelation that the Conservative government are manipulating public opinion in order to dismantle the welfare state incrementally. As I’ve pointed out previously, this has been going on since 2010, hidden in plain view.
In the article, Ben Chu also goes on to say:
Experiments by Daniel Kahneman, Jack Knetsch and Richard Thaler also suggest that this stealth approach fits with people’s sense of fairness. They found that in a time of recession and high unemployment most people they surveyed thought a hypothetical company that cut pay in cash terms was acting unfairly, while one that merely raised it by less than inflation was behaving fairly.
There was another exploitation of our psychological biases in the Autumn Statement. The Chancellor announced an increase in stamp duty for people buying residential properties to let. That underscored the fact that the Chancellor remains wedded to the stamp duty tax, despite pressure from public finance experts to shift to a more progressive and efficient annual property tax (perhaps an overhauled council tax).
But Mr Osborne, like all his recent predecessors, realises that stamp duty, for all its deficiencies, tends to be less resented as a form of taxing property. Why? Because of “anchoring”. When people buy a house they are mentally prepared to part with a huge sum, usually far bigger than any other transaction they will make in their lives. The additional stamp duty payable to the Treasury on top of this massive sum, large though it is, seems less offensive. People resent it less than they would if the tax were collected annually in the form of a property tax – even if, for most, it would actually make little difference over the longer term. Sticking with stamp duty is the path of least resistance.
Here is another economologist “experiment” – in this case, it’s anexperiment to nudge sick and disabled people into work, attempting to utilise GPs in this blatant over-extention of the intrusive and coercive arm of the state.
I don’t agree with the conclusions that Ben Chu draws in his article. Whilst he acknowledges that: “The Government has a Behavioural Insights Team (or “Nudge Unit”) whose objective is to exploit the public’s psychological biases,” he goes on to say that it’s merely “to push progressive policies, such as getting us to save more for retirement and helping us make “better choices”, perhaps by counteracting the negative impact of loss aversion. But, as we’ve seen, the Chancellor is not above exploiting our biases in a cynical fashion too.”
Progressive policies? The draconian welfare “reforms” aren’t remotely “progressive.” In the UK, the growth and institutionalisation of prejudice and discrimination is reflected in the increasing tendency towards the transgression of international legal human rights frameworks at the level of public policy-making. Policies that target protected social groups with moralising, stereotypical (and nudge-driven) normative messages, accompanied with operant disciplinary measures, have led to extremely negative and harmful outcomes for the poorest and most vulnerable citizens, but there is a marked political and social indifference to the serious implications and consequences of the impacts of such policies.
There is a relationship between the world that a person inhabits and that person’s actions. Any theory of behaviour and cognition that ignores context can at best be regarded as very limited and partial. Yet the libertarian paternalists overstep their narrow conceptual bounds, with the difficulty of reconciling individual and social interests somewhat glossed over. They conflate “social interests” with neoliberal outcomes.
The asymmetrical, class-contingent application of paternalistic libertarian “insights” establishes a hierarchy of decision-making “competence” and autonomy, which unsurprisingly corresponds with the hierarchy of wealth distribution.
So nudge inevitably will deepen and perpetuate existing inequality and prejudice, adding a dimension of patronising psycho-moral suprematism to add further insult to politically inflicted injury. Nudge is a fashionable fad that is overhyped, trivial, unreliable; a smokescreen, a prop for neoliberalism and monstrously unfair, bad policy-making.
Libertarian paternalists are narrowly and uncritically concerned only with the economic consequences of decisions within a neoliberal context, and therefore, their “interventions” will invariably encompass enforcing behavioural modifiers and ensuring adaptations to the context, rather than being genuinely and more broadly in our “best interests.” Defining human agency and rationality in terms of economic outcomes is extremely problematic. And despite the alleged value-neutrality of the new behavioural economics research it is invariably biased towards the status quo and social preservation rather than progressive social change.
At best, the new “behavioural theories” are merely theoretical, at a broadly experimental stage, and therefore profoundly limited in terms of scope and academic rigour as a mechanism of explanation, and in terms of capacity for generating comprehensive and coherent accounts and understanding of human motivation and behaviour.
At worst, the rise of this new form of psychopolitical behaviourism reflects, and aims at perpetuating, the hegemonic nature of neoliberalism.
But for the record, when a government attempts to micromanage and manipulate the behaviour of citizens, we call that “totalitarianism” not “nudge.”
Kitty Sue also addresses many other aspects of political analysis. Another excellent post which must be read is explored in her essay on cognitive dissonance. Get her blog in your news box for fascinating analysis of human and political behaviour.