Nudge, Nudge ／2017-10-31／Nick Sallnow-Smith

I am not a fan of “awards”, where a committee selects what they think is the best movie, novel, song etc. Typically, the choice tells me more about the prejudices and tastes of the members of the awarding committee than it does about the award winner’s work. I feel the same about most Noble Prize choices too. The selection of Dr Richard Thaler as the winner of the 2017 Nobel Prize for Economics is a case in point. I am not able to judge the quality of his economics, although the idea that his work on human beings not being perfectly rational automatons in their economic choices does not seem as new as some claim. Austrian economists have argued just this for decades. But his fame as the co-author of the popular economics book “Nudge: Improving Decisions about Health, Wealth, and Happiness” suggests to me that his ideas chime well with a popular meme in public policy these days. (I should say here that I know that the authors acknowledge the importance of individual being able to choose. May concern here is the policy direction that may ensue.)

This idea is that because the average Joe (or Jane) is “irrational” in making choices that affect their lives, Governments should work on how to “nudge” them in the direction of making better choices. To many, I suspect this will not seem at all controversial. (I really should not have had that third martini last night….maybe some help in avoiding it next time might not be bad?) More commonly, people will not think they need any help themselves but will support the idea that other folks make bad choices and “society” would benefit from their being “persuaded” to make better ones. I want to examine whether this conclusion makes sense for a free society.

It seems to me there are fundamental problems with the “nudge” idea. The first is at the heart of many public policy errors. The proposition is that human beings usually do not make rational choices. But if this is the case, why would we expect the group of policymakers who are addressing the problem to be any more rational themselves in intervening of citizens’ choices? Wouldn’t we be substituting one set of irrational choices for another set?

The idea seems to imply the existence of an elite group of policymakers in government and academics who (as Plato believed) are superior in their judgments to ordinary people. Now while there may be technical areas where this is true (you wouldn’t want the passengers of an aeroplane to vote on how it should be flown), these usually have little to do with government policies. Look at the proposition in relation to the typical lifestyle choices Thaler and his co-author are considering. A person’s choice to drink alcohol, or to engage in dangerous sports, to take two examples are just that; choices. For it to be argued that those free choices should be substituted by the choices of policymakers is, for me, very disturbing. Even apparently sensible health “nudges”, where the proponent might argue that all that is being done is drawing to the individual’s attention some important facts (like smoking is bad for your health), are fraught with danger. When Western Governments advised everyone that butter, and fat more generally, was bad for you, it had a profound effect because it was “government” advice and therefore presumed correct. More carbohydrates were eaten instead of meat and a health crisis, that the “advice” was supposed to avoid, was created by unintended consequences.

But the problem that the state may not have access to better information than the rest of us is not the biggest issue for me. It is that even if the health advice is correct, it is not the business of government to try to guide me to different choices. (That would truly lead to a “nanny state”!)

My view is a clearly a minority one here, since “sin taxes” are widely supported in the community. Why wouldn’t we want the state to try to help us be “better”? For me the threat is not erroneous advice (although the latest research on the risks of “secondary smoking” suggests that that risk may be insignificant, governments may have massively limited the freedoms of smokers all over the world for no good reason), it is the implied acceptance of a massively expanded role for government. Government’s role in funding transfers from one section of the community to another is already so established is it almost impossible to find people who oppose it (they forget that Robin Hood – the mythical hero of those who support taking from the rich to give to the poor – was actually stealing back the taxes the Government had taken, to give them back to the taxpayers). Government’s role in providing “public services” funded with taxation is also rarely opposed. But these policy areas, significant as they are in the lives of citizens, still leave broad areas where we can get on with our private lives without interference from the state. But imagine for a minute if in the future, armies of civil servants are set the task of how to “nudge” our private choices in the “right” direction, as selected by policymakers? It is hard to see any limit to where this policy direction might lead.

My final concern about this policy direction, which I fear Dr. Thaler’s Nobel Prize will further legitimate, is an even more subtle one. To date (as far as we know!), the state’s attempts to pressure individuals to make different decisions – “sin taxes” being an obvious example – are in our faces! We can see them clearly enough; those labels on cigarette packets for example. The idea of policy “nudges” is however quite different. At the mildest level, it might involve supermarkets being required to place sugary drinks at the back of the shop, not by the checkout, in the hope shoppers won’t find them too easily. But the fundamental idea is that the “nudge” is unseen. I have no doubt that Government psychologists would devise ever more subtle nudges to affect behaviour (maybe even voting predilections?). The threat here is very disturbing. There might be little resistance from civil servants to this approach (it’s all to keep citizens “safe” isn’t it?). While the subtlety would now be such we could not easily detect its influence on ordinary citizens. “1984” would have arrived without the need for a visible police state at all. Goethe’s phrase was prescient indeed; “none are more hopelessly enslaved than those who falsely believe they are free”.

Nick Sallnow-Smith (Chairman)

October 2017

The Lion Rock Institute