Six principles to advance behavioural economics in government

18
Oct 18
Author:Tim Tran
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It’s one thing to understand the theory behind behavioural insights, but knowing how to design a behavioural intervention and then test and apply that intervention in a meaningful way to a specific policy problem is where more advanced knowledge and practice is still developing.

Behavioural insights is being broadly applied across government but the skill set around its application and evaluation continues to develop as more and more real examples can be examined and reviewed.

Applications and case studies

Behavioural insights have now been applied by governments to improve policy design across a range of issues in many countries. In order to advance our applications, the key is a close examination of a variety of behavioural interventions and an assessment of the evidence on whether they have been effective. Case studies are now available on a selection of nudges addressing:

  • Health – smoking cessation, immunisation, prescriptions of antibiotics, organ donation
  • Finance – retirement savings, consumer credit
  • Welfare – claiming of benefits, compliance with eligibility requirements
  • Education – school attendance and performance, college application
  • Environment – household energy consumption, pollution
  • Taxes – payment of overdue taxes, accurate filing of returns
  • Crime – participation in youth gangs, domestic violence

In 2017 the OECD issued a report which discusses the use and reach of behavioural insights, drawing on a comprehensive collection of over 100 applications across the world and policy sectors, including consumer protection, education, energy, environment, finance, health and safety, labour market policies, public service delivery, taxes and telecommunications. It suggests ways to ensure that this experimental approach can be successfully and sustainably used as a public policy tool.

Six principles to advance behavioural insights

The OECD report boils down the lessons from these cases into six principles for the use of behavioural insights in public policy.

  1. Strategy: engage in a multi-staged strategy for implementing behavioural insights with a menu of types of assistance for all appetites.
  2. Data and evidence: undertake robust calculations before engaging in testing and experimentation to ensure the use of sufficiently large sample sizes, so that effects can be detected. Use of data should be based on the recognition that good and reliable data is key to applying behavioural insights and upholding its integrity. It should also build on the recognition that data are not the same as evidence; it is also necessary to understand the limitations of data for public policy.
  3. Validity of results: replicate to ensure the observed results are correct in the same context and setting (internal validity) and also test the application of the same approach to other contexts and settings (external validity).
  4. Segmentation: consider applications that could work for a part of the population but not for the entire population and whether these applications can implemented given the legal and cultural context.
  5. Evaluation: conduct ongoing monitoring to identify short-term and long-term effects: as with all policy interventions, results of behaviourally informed interventions should be monitored and evaluated over a period of time.
  6. Transparency and accountability: publish work (successful and unsuccessful trials) for transparency and accountability: a number of countries already publish in journals or produce annual reports of their activities. This level of transparency is good practice that should be adopted by all behavioural practitioners in public policy. Transparency should also inform the actual practice of applying behavioural insights by disclosing and understanding more about the actual costs (to be compared against the benefits) of applying behavioural insights to deploy it appropriately.

Professor Michael Hiscox of the Harvard School of Government will be examining case studies and evaluating their success at the Applying Behavioural Insights to Public Policy masterclass in Canberra in November. The course will result in a “design session” where attendees will choose and define a problem, diagnose the critical behavioural issues, and design one or more behavioural interventions aimed at addressing these issues and improving outcomes.

Don’t miss a valuable opportunity to advance your skills in behavioural insights and network with fellow policy practitioners in an important and growing field of policy design.

Click below for more info:

Submitted by Tim Tran

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