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… and to non-economists, too.

A few weeks ago I attended a launch for the book Behavioural Public Policy. The book, a collection of academic papers with considered responses from other academics, is edited by Adam Oliver, and is born out of the suite of seminars he ran at the LSE (London School of Economics) in 2011.

BPP book

The book launch, held in the LSE’s impressive Shaw library (similarly inspiring as the RSA’s Great Room), comprised an introduction from Adam and some short reflections from Julian Le Grand, Lord Gus O’DonnellDrazen Prelec, and George Loewenstein. The RSA’s Social Brain Centre explores how a better understanding of human nature can be used to help address some of the challenges of our time, so a book about behaviour and policy sits nicely within our reference library. Here are some highlights of the evening:

Understanding behaviour is key to effective government policy

Kicking off the reflections, Lord Gus O’Donnell began with overwhelmingly positive praise for behavioural economics, explaining that in his view it is the biggest thing to happen to public policy in 30 years.  (Despite all this positivity, Lord O’Donnell said he is working with Angus Deaton to investigate the question “when does an RCT go wrong?”).

In a very entertaining way of bringing theory to life, O’Donnell went through each of the components of MINDSPACE to demonstrate how the environment and situation were working to subtly influence our decision about whether to buy the book. For example, looking at the messenger effect, if Adam were to praise the book we would know that he has a vested interest, whereas since Lord O’Donnell was praising the book we can trust his endorsement. Incentives were of the standard economic type: the book was on sale at a special discounted price for the event. But our drive to avoid anticipated regret makes the limited-time discount all the more powerful. In terms of commitment, we had all already chosen to attend the event and made the effort to get there; remaining consistent with this commitment by buying the book would be a natural next step. And in my favourite example, for the affect component Lord O’Donnell pointed out that we had all been served wine.

Nanny state

Julian le Grand continued by summarising some of the key concerns about using behavioural science in policy, namely, that it could be seen to infantilise people, and, referring to the famous Titmuss paper about blood donation, that it is not always obvious how people will respond to incentives.

Better than psychology or just a tempest in a teapot?

Drazen Prelec continued the conversation with a very balanced view of the impact of behavioural economics. On the one hand, “behavioural economics is a tempest in the economics teapot”, in that it is (simply) a deviation from a point of view (the point of view of neoclassical economic theory). He explained that some of the insights from BE are really just a restoration of common sense. But on the other hand, some important findings have emerged and these insights would not have been available if the researchers were not “already marinated in the economics way of thinking”. In this sense, behavioural economics has something different to offer than does psychology.

Prelec offered three aspects of a Nudge approach that should be carefully taken into consideration as it becomes more widespread: transparency (of the nudgers’ interests), accountability for the outcome (is the nudger or the nudgee to blame for a failed intervention?), and neutrality (i.e. what values underpin the ‘neutral’ default option?).

No substitution

George Loewenstein finished off the evening with his forecast about what will happen now that behavioural economics is becoming less niche and more mainstream, extending beyond academia and now into policy making and elsewhere. Echoing an earlier op-ed piece in the New York Times, Loewenstein asserted that the role of BE is to augment or increase the power of traditional economics. There is a risk that some people have seen it to be a substitute, rather than a complement, to standard econ theory.

Here he quoted Colin Camerer about neuroeconomics with an absolutely brilliant line, and applied the sentiment to behavioural economics: “the problem isn’t that we are overselling it; the problem is that it’s being over bought”. Loewenstein praised the Behavioural Public Policy book for avoiding the over-selling and offering instead a balanced view, and ended by stating his optimism that the field will work together with – not in opposition to - traditional economics.

Even-handed discussion

What was great about the event is also what seems to be refreshing about the book: even-handed and thoughtful discussion about both the benefits and the limitations of behavioural economics, instead of an all-out love-fest. Although I readily admit to being one BE’s loudest cheerleaders, I appreciate that to understand its strengths, one must also understand its weaknesses.

Having attended nearly all of the Behavioural Public Policy seminars that Adam Oliver hosted, the chapter headings are no surprise to me. But the book includes responses to the papers and I expect will be more developed than the seminars, so I am glad that I was there to get a copy and to chat with fellow BE-enthusiasts. And in any case, recalling Lord O’Donnell’s comments, the launch provided entertaining insight into how behavioural science is used in practice – to flog books!


A version of this blog was originally posted here on 5th November 2013.

A discount code for the book Behavioural Public Policy is available here.

Nathalie Spencer is a Senior Researcher in the RSA’s Social Brain Centre.


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