jamesz

A cash payment is not a ‘nudge’

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There’s controversy in the UK over trials of a £200 payment to mothers for breastfeeding their children. Bizarrely, the payment is being described as a ‘nudge’ when it is nothing of the sort. A nudge is a change in the framing of a choice that doesn’t change the choice itself. Interventions that make one option far cheaper than the other through a cash payment are not nudges. The breastfeeding payment is a pure incentive scheme and has nothing to do with behavioural research.

This point probably didn’t need an entire blog post but it is relevant to a discussion that Eric and I had in a comment thread a while ago (that I can no longer find). He suggested that Government nudges are just a friendly face for paternalistic interventions. I thought that very uncharitable at the time. So how does this latest episode of misuse fit in to the discussion? I don’t know who started calling the payment a nudge so I can’t pin the blame on anyone in particular. What it does show is that the terminology has entered regular use without the accompanying concept becoming familiar. That could lead to the abuse that Eric fears. Alternatively, abuse could empty the term of meaning to the point that it is no longer used because of the negative connotations.

The outcome probably doesn’t matter too much; the idea is far more important than the term and can live on without it. The real crux of Thaler and Sunstein’s idea is that framing matters. That realisation is unlikely to disappear, whatever happens to the catchy phrase they coined to describe it.

5 replies
  1. Eric Crampton
    Eric Crampton says:

    The original Sunstein and Thaler piece is brilliant. I’ve loved it since it came out as a working paper more than a decade ago. But it was very very likely that, put into practice, the idea would morph. It would turn into something used to justify far far more than Thaler would like. When a pile of people told him this, he called them “bathmophobes” – people with fear of slopes, slippery in this case. Now he spends a bit of time in his twitter feed complaining that {UK porn filter, NYC soda ban, etc} aren’t nudges.

    I think my Mont Pelerin talk from a few years back holds up well. Thesis: where government covers most health care expenditures, pecuniary effects become policy relevant. Even in the case where your behaviour doesn’t change because of the cost externalisation, those bearing the cost resent it. Social cost figures get used to inflate the perceived pecuniary effects, labeling costs borne by users as costs to “society”, with the authors and commissioning agencies knowing full well that people hearing the soundbite will translate these into fiscal incidence rather than mostly being costs borne by users. Next, “nudge” makes paternalistic interventions seem less costly than they otherwise would. Social cost studies boost demand for paternalism; “nudge” pushes the supply curve out. And we’re getting to the new equilibrium.

    • jamesz
      jamesz says:

      That’s an interesting hypothesis. I do wonder how much these justifications, however poor, actually matter for the public debate. Unless they re-frame policies such that it changes people’s intuitive reaction to them, there shouldn’t be much change in the ‘demand for paternalism’. The idea of nudges is a powerful framing mechanism but only for people who are already deeply engaged in the policy debate. For everyone else it may just be another euphemistic label in a newspaper headline.

    • jamesz
      jamesz says:

      That’s sad. I like the smoking cessation nudges that relate to time inconsistency but calling a cash payment a nudge is just silly.

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