The nudge game

I’m not an expert on behavioural science, but I have an opinion on ‘nudging’ nonetheless.

Similarly, I’m not an expert on Greenock Morton but I like to go and see them play and, like everyone else, I’ll always have an ill-informed view of what they could have done better. We nudge (shout inanely) from the terraces. Ineffectively. It’s what one does.

Nudging is relevant in helping people make decisions. No doubt about it. I’ve mentioned before that automatic enrolment is a classic experiment in nudging people towards a better retirement. Not every employer will champion it and not every employee will stay in. But so far, thousands of employers have embraced it and millions of people are saving – many of whom weren’t saving before.

Difficult to argue with. The question is what happens next?

The soothsayers gunning for SMEs are saying opt out rates will increase, employers won’t comply, the Regulator will be fining small businesses to the point of extinction. I’m not so sure. I’m not complacent, but I think we should give people a bit more credit.

I get that there won’t be pension managers with the enthusiasm of Tigger running around making life difficult for the FD. But there’s a difference. It’s easy to forget we’re now into the third calendar year of automatic enrolment. People have heard about it. Karen Brady’s done her bit (another tenuous football and nudging link).

I recently heard of a small firm where the owner wanted to get his scheme set up over a year ahead of their staging date because he was trying to recruit people and they were asking questions about the ‘company pension.’ It might not have been a deal breaker, but they were asking. Perhaps because people are talking about it, beginning to value it, and even expect it. Just beginning.

Imagine a firm takes non-supportive view but employees are challenging that and want to be members – which of course, they will ultimately have a right to.

That changes everything.

In this particular example, prospective employees were nudging their prospective employer to auto-enrol them on the basis of a nudge campaign from government that they’d heard about.

Or at least I’m willing to offer that hypothesise.

Others are understandably saying contribution rates are too low and people will be disappointed.  Some will, undoubtedly, but the nudge doesn’t stop at getting people in. We already have a plan to get contributions up to 8% of band earnings. If we started at, say, 15%, I suspect the opt out rates would be very different from the sub-10% we’ve seen so far.

The nudge game is long term.

At the Money Marketing ‘Invitational’ events earlier this month, nudging was mentioned in almost every presentation on automatic enrolment. Again, no experts on behavioural economics, but plenty of believers.

It made me think. In the last week or so, I’ve been involved in a few nudges:

  • On Monday, a man from the council suggested I add a red bin to my recycling armoury. So I now recycle cardboard and plastic bottles (properly).
  • On Tuesday, an electronic road sign reminded me that ‘flat tyres are dangerous,’ so I succumbed to my off-side front tyre’s desire for twice the pressure it was currently operating on, as I wobbled into the nearest garage.
  • On Wednesday, my girlfriend left a home made vegetable juice out in the morning before I left for my flight at ridiculous o’clock. So I had a healthier start to my journey and could subsequently eat my ham and cheese melt, safe in the knowledge my five a day limit was already under threat.

Thursday was my favourite, though. Just after we landed, a man on the plane was complaining bitterly to the pilot that we were 5 minutes late and that the pilot should have told all the passengers earlier when air traffic control had first limited the landing slots due to fog. I’m not entirely sure what he would have done with this knowledge, had he received it 10 minutes earlier.

I overheard the pilot saying something about the ”requirement to focus his attention on avoiding other planes when adjusting circling patterns over the aiport.”

Difficult to argue with. The complainant disembarked, having taken the nudge on board.

I’d be very interested to hear about other people’s nudges. Or your expert view on behavioural science/Greenock Morton, if either happens to be your field.


4 thoughts on “The nudge game

  • Great article Jamie

    Sometimes we forget that most people do realise that to get security in later years they will need to save money; most people do realise that regular deductions from the pay packet are a relatively painless way of dong this and most seem to have worked out they are likely to get a better deal from a company pension than by doing this on their own.

    We used to call “most people” the silent majority, your article reminded me that while we worry about opt-outs, most people just want an easy life and to be looked after.

    Ah but being looked after… don’t lets get started on that one!!

  • Thanks Henry.

    ‘Most people just want an easy life and to be looked after.’ Very straightforward. I like it. In fact it’s difficult to put the sentiment any better.

  • Interesting subject Jamie and as you know, although I’m not an academic or an expert in the area but I understand the power of the nudge in a few ways (I might have used “Nudge” now and again too!).

    The problem is that as I read more about this subject I’ve turned into an amatuer nudge spotter and seem to see nudges everywhere I go (from the guy with the pile of ‘Free’ newspapers to the positioning of stock in shops)

    I reckon it’s got so bad I know see nudges where they don’t exist! 😉

    My favourite is a non financial ‘nudge’ and I think it’s one of the examples contained in the Richard Thaler book ‘nudge’ theory is based on.

    A school in the US wanted their kids to eat more vegetables during their lunch but didn’t want to remove chips from the menu (due to the uproar they perceived would happen from both Kids and parents).

    They did something subtle and simple.

    They moved the tray which contained vegetables to the front and the tray that contained chips to the back.

    Although plenty of kids still ate chips The consumption of simple steamed vegetables wen’t up 50%.

    I can’t think of a better example of a positive nudge towards a behaviour we know we should do but need a little nudge in the right direction…..apart from possibly one! 😉

    • Thanks Chris.

      Great example of the nudge at play.

      I remember we discussed another example in your podcast. People were being offered free loft insulation but not taking it up and no-one understood why. When they asked, it turned out they couldn’t face clearing their lofts, so the scheme was altered to focus on offering help with that instead, and take-up of insulation increased dramatically.

      There’s got to be something in that when we try and engage people in long term saving. It’s certainly not the word ‘pension’ that’s the hook!


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