Is More Nudging to Achieve Government Policy Objectives a Good Idea?

We recently received a notice from our utility company containing information about our energy usage compared to our neighbors.  The news was good.  Colorful charts showed we had consumed less energy than the average household during the period examined.  This impressed me, but the news also prompted some guilt because I knew that part of that time we’d been out of town, during which we’d turned down the heat.  How would we have compared if we’d been home the whole time?   Were we really “better than average?”  I suspected not, and filed this thought away as a prod for improving our future behavior.

Of course, this is exactly what the utility company hoped I would do.  The company’s letter is an example of a “nudge”—a technique that encourages behavior to benefit not only individuals, but to collectively improve the lives of manypeople.   A nudge’s key feature is that it influences conductwhile maintaining freedom of choice; it doesn’t mandate or ban particular behavior.  I could ignore the utility’s notice, but I’m prompted to monitor my energy use to reduce my own power costs, which then contributes to overall energy conservation.

Private industries use nudges regularly, but they’resometimes manipulative.  Ever sign up for a magazinesubscription or a gym membership that automatically renewedunless canceled?  The assumption is you’re likely to forget about it, or not want to bother stopping it; good if you like the product, but maybe a hassle if you don’t.

Research clearly supports the effectiveness of nudges insteering behavior, resulting in their expanded use by governments worldwide to help achieve policy goals.  Examples include 1) caloric and nutritional information on food,and health warnings on cigarettes and alcohol to help improve citizen health and lower medical costs, and 2) comparative energy costs on appliances, and mpg labels on cars to promote efficient energy use.

Our tendencies to procrastinate and underestimate our vulnerabilities (e.g., I won’t get cancer from smoking) can often be overcome by nudges that encourage improved decision-making.  Therefore, should governments employ them more frequently?  For example, to increase the supply of organs for transplant needs, what if states automatically registered voters asorgan donors, but gave them the freedom to opt-out?  Consider the following.

First, given their manipulative potential, ethicists emphasize that governments use nudges only if they clearly promote the general welfare, and cost-benefit projectionsdemonstrate they will result in net benefits. Second, being aware of how nudges work can improve our ability as citizens to guide their uses in ways that enhance quality of life.

Finally, governments will always issue mandates (e.g., requiring carmakers to calculate mpg so consumers are nudged to buy fuel-efficient cars) or ban some behaviors (e.g., prohibiting driving without seatbelts), to accomplish agreed-upon goals. However, in our system of self-government, nudges that can achieve policy objectives while preserving freedom of choiceoffer appealing alternatives to mandates and bans for promoting public interests.

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