Consumer Behavior

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Ban Government Before You Ban Nudges

A response to Ban Nudges, Not Soda by Mark D. White PhD

In a recent post entitled Ban Nudges, Not Soda Mark D. White argues that people should be free to choose what to drink, '...without being nudged away from larger drinks by their city government.'  He argues that people should be allowed to make their own choices, and factor in the consequences of their own behaviour as they see fit.  He is very much against the paternalism of regulators that is a component of such 'nudges'.

I take a very different view on the merits of nudges, or what I would characterise as behaviourally-informed interventions.

Once you have reached a point where you have some form of social welfare system, be it for health or education or anything else, you have a need for policy.  Such policy will, in a democratic system, always be, in part, paternalistic. 

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So-called 'nudge' theory (and more broadly behavioural economics) brings a framework that advocates an approach based on the real nature of human behaviour. Given that the role of government is to implement policy (in theory based on a mandate from electorate), doing so in more impactful and therefore more cost-effective ways is to be applauded.

I haven't read his book yet, but on the basis of the argument put forward in his article, I presume it argues either for all-out libertarianism or else for less effective government.

The article's challenge to influencing the consumption of soft drinks seems to me to be flawed when considered in the context of the real world (as opposed to the utopian ideal of complete freedom of choice for all).  Where there is a social welfare system in place, I as a tax payer will bear the cost of other people being influenced by soda companies' manipulation of their unconscious desires to buy a product that, if consumed excessively, will damage their health.   The scenario is no different from that for smoking: a product that delivers no nutritional benefit and is consumed only for gratification has the potential to damage health.   

The fundamental flaw in the argument is to presuppose that people are conscious agents.  The decision to buy a soda isn't rational, nor is it arrived at without unconscious influence.

In an ideal world people would take responsibility for making good, forward-thinking decisions; but that isn't how we've evolved.

Inevitably, policy decisions, 'nudge-based' or otherwise, will sometimes turn out to be misjudged; but this isn't, it strikes me, a basis for suggesting that they shouldn't be made at all.  Appealing to people's conscious mind is frequently a futile endeavour, because it is not the part of their brain that drives the vast majority of their behaviour.

If we must have democratic government, and as others have said before, it's probably the least bad system of social organisation, surely it is better that policy interventions cost as little as possible to bring about the change that, rightly or wrongly, is deemed desirable by those our electoral system has put in charge.

In the UK nudge-style interventions have already proven themselves capable of getting more people to pay court-imposed fines, insulate their homes effectively and pay their taxes on time.  My recent visit to the US makes me think that anything anyone can do to tackle obesity should be applauded. 

 

Philip Graves is the author of Consumer.ology and a consumer behavior consultant to numerous international businesses.

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