Have big corporations nudged us in the wrong direction?

The notion that one person, however small, can change the world is a powerful one.

It was captured beautifully by Dr Seuss in the children’s story Horton Hears A Who!

As a tiny civilisation on a dust speck struggles to prove its existence to avoid annihilation, it is the voice of one small child which, when added to the rest, finally makes them heard.

That sentiment has been echoed by numerous political leaders. As John F. Kennedy supposedly said: “One person can make a difference, and everyone should try.”

It’s inspiring stuff, but as a strategy for addressing the 'wicked' problems we face as a society – such as climate change and the obesity epidemic – it is sadly lacking.

This raises a difficult question for behavioural scientists. The aim of nudging individuals to make positive changes to help us achieve a collective goal is a laudable one.

But has it been misappropriated by governments, multinational corporations, and lobbyists to blame individuals for systemic problems?

The slogan, “guns don’t kill people; people kill people”, used by the US National Rifle Association to resist tighter gun laws in the US, is an extreme example.

The implication is clear: there is no need to reduce gun sales because dangerous individuals are the problem, not the firearms industry.

“This tactic of blaming the individual, rather than the system is remarkably widespread,” says Nick Chater, Professor of Behavioural Science.

“This is alarming for those of us in the behavioural sciences who approach social and political problems from the individual perspective.

“We set out to make the world a better place by helping people with problems to live better lives, but we have inadvertently become associated with this kind of individual framing that is very helpful for organisations who like the system as it is and don’t want change.”

Take carbon emissions. Oil and gas giant BP spent hundreds of millions of pounds on a vast media campaign, urging individuals to track their carbon footprint using a personal calculator it created.

The idea of ‘personal carbon footprints’ quickly won support from governments, the media, and even environmental campaigners.

But are they really a tool to save the planet? Or an attempt by fossil fuel companies to sidestep responsibility for global warming by blaming individuals for a lack of restraint?

And what about plastic pollution? Are our countryside and oceans awash with plastic because individuals have become increasingly careless about how we dispose of litter, ignoring all the messages encouraging us to recycle our waste?

Or is the system really to blame for the explosion in plastic packaging in recent decades?

Professor Chater says: “Placing too much emphasis on individual responsibility and how we ‘nudge’ individuals to make better decisions ignores the bigger picture: that the problems we are trying to address are invariably caused by systems that need to be reformed.”

Why individual responsibility should not replace system change

He explores the issue with his colleague George Lowenstein, of Carnegie Mellon University, in their paper, How Focusing on Individual-Level Solutions Has Led Behavioural Public Policy Astray.

The authors have been enthusiastic supporters of “nudging” individuals to make better choices for their health, finances, and the environment. However, they have reached the conclusion that trying to “fix” the individual can be disappointingly ineffective.

“A lot of nudges don’t substantially change behaviour,” says Professor Chater.

“And most changes that are made quickly fade. Smart meters are put in drawers, gym memberships lapse, and many dieters regain weight that they have lost.

“When there is a lasting shift, it doesn’t always address the underlying problem.

“For example, nudging people onto a more expensive green energy tariff may sound promising, but it doesn’t increase the supply of clean energy. The main impact is that is shifts the existing supply from one set of consumers to another.

“Worse still, signing up can convince individuals they’ve done their bit for climate change and reduce the appetite for more painful – and effective – choices, such as a carbon tax.

“What we really need is systemic change. Houses must be insulated, gas boilers replaced by heat pumps, electric vehicles subsidised, and the charging infrastructure improved.”

That conclusion is in stark contrast to Prime Minister Rishi Sunak’s recent decision to dilute many of his Government’s key green commitments.

News that the UK Prime Minister will delay the ban on new petrol and diesel cars from 2030 to 2035 drew heavy criticism from car manufacturers and environmental campaigners alike.

Postponing targets to phase out gas boiler installations and ruling out fines for landlords whose properties did not meet energy efficiency standards also caused controversy.

In doing so, the Prime Minister sent a message that the UK was ahead of the curve on climate change and, with the cost-of-living crisis hitting many families, he was giving individuals more choice on when they made environmental switches.

“Recent government policies tend to shy away from regulation and pass responsibility to the consumer – an approach that is very unlikely to work,” says Professor Chater.

“The fact is that most problems are created by systems rather than individuals and much of our behaviour is shaped by the systems we live within.

“Real change requires difficult and complex policy choices.”

Policymakers should nudge, but not fudge

That does not mean that policymakers and business leaders should abandon behavioural science. It remains a useful tool to drive progress.

But Professor Chater argues that it should complement systemic change, not replace it.

The key is to ensure we use behavioural science effectively. One such use is to identify how existing systems are creating problems and encouraging damaging behaviours.

The minimum repayments set by credit card companies are a prime example.

An experiment led by Neil Stewart, Professor of Behavioural Science, found volunteers who received a credit card statement with no minimum repayment chose to pay off significantly more of their debt.

This proved to be more effective than including a warning about the cost of repaying only the minimum amount.

Professor Stewart says: “Showing people the minimum repayment option appears to have an anchoring effect. Removing that ‘bad nudge’ could have a huge impact on consumer debt.

“People would be prepared to pay their bills off quicker, reducing the amount of interest they pay and reducing their debt.

“It would also help firms, as people would be less likely to fall behind on their payments, end up in financial distress, and need their debt written off.”

Behavioural science can also be used to design more effective policy changes that enjoy public support.

One success story is the plastic bag tax. For decades campaigners failed to persuade people to use fewer bags. Yet a tiny tax made a dramatic difference.

Shoppers feel they are losing five pence when they pay for a bag – and people hate losing money. But more important is the symbolic significance.

Professor Chater says: “Nobody looks at a table full of plastic bags after going shopping and thinks, this is great. Most of us want to play our part in reducing plastic waste.

“The charge works as an embarrassing reminder that we have done the wrong thing when we forget to take a bag with us and have to pay for one.”

One reason the tax was so successful is that there was widespread public support for reducing plastic waste, built over time.

“If you try to nudge people – through legislation or other means – without that consensus, there will be a natural reaction against that,” says Professor Chater.

“People don’t like being coerced.”

That resulted in a backlash against the extension of Ultra Low Emission Zones (ULEZ) in London, which introduced daily charges for motorists to improve air quality.

“The thing that was missing there was a general public agreement that this was the way we wanted to go,” says Professor Chater.

“Many people thought, I didn’t sign up for this. Whereas we’ve had years of David Attenborough documentaries to show us how damaging plastic waste can be.”

Canadian province British Columbia used clever design to win public support for an even more significant piece of legislation – the carbon tax – in 2014.

This might have been widely rejected if it had been billed as raising Government funds. Instead, the money is distributed to the population. As a result, people accepted the tax, knowing there would be winners and losers financially.

Another area where behavioural science is being used to inform and optimise public policy is healthcare. This was widely seen during the COVID-19 pandemic to encourage people to adhere to lockdown regulations and increase vaccination rates.

It is also being used to help combat antimicrobial resistance.

The NHS conducted trials, sending letters to GPs who prescribed more antibiotic drugs than their peers. Simply pointing out that they were behaving differently was enough to convince many to significantly reduce their over-prescribing.

As a result, all GP practices received a letter in November 2022 asking them to ensure they offered the shortest effective course of antibiotics in line with NICE clinical guidelines.

How businesses can use behavioural science more effectively

It is not just policymakers who can benefit from using behavioural science in a more considered way. Business leaders must also understand how to use it effectively to reap the benefits and avoid the potential pitfalls.

Tim Mullet, Associate Professor of Behavioural Science, says: “Interventions aimed at increasing people’s motivation at work and improving performance can backfire, particularly if they place too much emphasis on competition, such as bonus schemes or incentives for individual employees.

“In some cases, it might be wiser to offer collaborative teamwork incentives that encourage employees to perform well as a group.”

Nudging customers requires equally careful thought, especially if companies stand to profit from an intervention that is positioned as a benefit for consumers or society more generally.

There are other ways that businesses can apply behavioural science to improve employee wellbeing, retention, and productivity.

For example, a better understanding of the so-called ‘midlife crisis’ can help bosses to better support employees in their 40s and 50s who are moving into more senior roles that involve greater stress and responsibility.

Behavioural science can also reveal evidence-based improvements to processes and working conditions that managers might otherwise ignore.

For example, many firms remain reluctant to embrace short, day-time naps for employees.

However, research by Mattie Toma, Assistant Professor of Behavioural Science, and colleagues at Harvard Business School revealed that workers who had a midday ‘power nap’ were 2.3 per cent more productive over the course of the day.

To put it another way, it increased productivity as much as a 50 per cent wage rise would.

Workplace naps improved physical wellbeing, mental health, task cognition, and attention levels more than a better night’s sleep.

Dr Toma said: “It may seem counterintuitive to reduce the time that individuals spend working, particularly when budgets are squeezed and the cost of living is rising.

“But in the long term, educating employees on the value of high-quality sleep and encouraging them to carve out time in their daily schedule for a nap could pay off.”

Understanding how people behave remains a powerful tool for leaders in politics and business. But understanding how to use that information effectively is equally important.

That is where institutions like Warwick Business School can make a vital difference, providing evidence-based insights to nudge those in positions of power to make better informed decisions, as well as nudging individuals to behave better.

Further reading:

Chater, N. and Loewenstein, G. 2023. The i-frame and the s-frame : how focusing on the individual-level solutions has led behavioral public policy astray. Behavioral and Brain Sciences, 46, e147.

Chater, N. and Loewenstein, G. 2023. Where next for behavioral public policy? [response to commentaries]. Behavioral and Brain Sciences, 46, e181.

Stewart, N. 2018. Is your credit card statement nudging you into more debt? Core Insights. 

Toma, M. 2023. Can power naps boost your productivity? Core Insights.

Learn more about Behavioural Science on the four-day Executive Education course Behavioural Science in Consumers and Markets at WBS London at The Shard.

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