The taxpayers of Guatemala are the latest citizens to find they are being subtly 'nudged' into paying what they owe.
The UK’s Behavioural Insights Team – or ‘nudge unit’ – set up by David Cameron in 2010 and privatised this year has been asked to apply its methods in the Central American state.
The nudge unit uses insights from behavioural economics to find canny, cost-effective ways of encouraging people to make choices that are beneficial to them and society. It has worked with the HMRC to increase tax payments by, for example, tapping into peer group pressure and sending out reminder letters stating that most people in the area have paid their tax. This has apparently boosted payment rates significantly.
Simon Ruda, BIT’s head of home affairs and international development, has led the team working in Guatemala – a country where tax revenues make up only 12 per cent of GDP, one of the lowest rates in the world. "The kinds of things we did in the UK work there too," he says, though he adds that positive messages about national pride proved more effective in Guatemala than evidence suggests they would in the UK. "Our best performing intervention increased income tax declaration in Guatemala by 52 per cent," says Ruda.
Teaching the masters
The nudge unit is acknowledged to have saved the UK Government money in a variety of ways, and it claims to have helped shape society’s behaviour for the better.
Brands and agencies have been watching closely to see how they can apply the science of persuasion to their own challenges. But there are questions over whether the insights of behavioural economics are so earth-shattering.
After all, most businesses have been uncovering effective ways of getting people to part with their cash for decades. From supermarkets merchandising the most profitable products in optimum shelf positions to online giants testing their websites for maximum effectiveness, is there much the nudgers can teach business?
The PR world’s enthusiasm for the nudge approach has been muted, though a number of PR agencies are boning up on behavioural economics and experimentation and are promoting its use by clients.
Ogilvy has spent six years amassing 800 studies using behavioural economics, neuroscience and narrative theory to create a body of knowledge and insights that can be used by clients. Ogilvy PR global chief executive Chris Graves believes the PR industry needs to take greater heed of nudge theory. "We are at the very beginning of it," he says. "The industry started as a social science but long ago eliminated the science part."
The science bit
While the basics of behavioural economics have long been used in PR and marketing campaigns, Graves believes agencies have just been stumbling around. "The approaches are not scientifically evaluated and may or may not work. Only by applying the scientific rigour of testing can the best approaches be unearthed," he says.
#OgilvyChange, the agency’s own nudge unit, has applied the theory to a variety of challenges. It has worked with the Royal Borough of Greenwich to reduce street violence by putting pictures of the faces of local babies on shop shutters. It claims this led to an 18 per cent reduction in antisocial behaviour in the area. The agency has also worked with The Times to design new choice architecture that nudges people into buying higher priced subscriptions.
Graves believes Ogilvy has committed greater resources to researching behavioural economics than rivals. But other agencies are looking to get involved. Golin has a team of four working on nudge theory. Analyst Daniel Stauber says the typical methods of persuasion used by brands have been to appeal to people’s logic or emotions through the use of rhetoric. But he says: "Nudging is about orchestrating persuasion on a subconscious level by sidestepping arguments and leading people down the road."
He adds: "Human beings seem to have decision biases and they also have bad intuitions. The only way we can start to analyse those behaviours is by doing experiments."
The agency has worked with several Unilever brands including Magnum and Comfort to boost participation in branded competitions. Asking people to tick a box if they want to share a competition with their social media contacts gets a low response. But having the box pre-ticked so it is automatically shared leads to a 65 per cent increase in social sharing. This saves Unilever money by reducing the amount of paid advertising it needs to promote the competitions.
This is classic nudge territory, based on orchestrating the ‘choice architecture’. In the theory of choice, the ‘put option’ or default option is the easiest selection, for instance ticking the box. By making the desired behaviour the ‘put option’ – requiring them to untick the box – people are more likely to adopt that behaviour.
But some observers are uncomfortable with the idea of behavioural economics and experimenting on people’s behaviour.
As Neal Lawson, chair of left-wing pressure group Compass, says: "It is elitist and sinister. Change needs to be open and participatory." Meanwhile, right-wing critics in the US have lambasted the Obama administration’s attempts to set up a nudge unit as a product of the "nanny state".
According to Adam Mack, chief strategy officer for EMEA at Weber Shandwick, nudge theory can appear dark and mysterious, which is partly why brands have been slow on the uptake. "I’m not sure brands have embraced it fully. I do think there is a bit of nervousness about the potentially Orwellian implications. It has been knocking around for a while – Cameron gave a copy of Nudge to his new Government as summer reading just after the coalition was formed. It is being done, but subtly and under the radar."
Weber Shandwick has carried out work on behavioural psychology and has produced two reports – The Science of Engagement and The Science of Ingagement. Mack says the most engaging brands trigger a number of responses in the human brain. These include herd behaviour, a classic nudge strategy based on the fact our brain is hardwired to seek safety in numbers. Related to this is the desire to socially interact with a group.
Meanwhile, brands need to pay heed to aesthetics as humans are hardwired to engage with attractive things. Then there is access – removing the barriers to making a choice. The brain tends to seek the path of least resistance. "Brands that keep the message simple and make their call to action the default choice will nudge people quickly towards action," says Mack.
Another key area is social totems, "phenomena that unlock social interactions among consumers".
The nudge approach may help save money, but it requires significant upfront investment in testing and research to demonstrate its effectiveness. Sample groups of at least 30,000 are recommended.
The theory of nudge still has to prove its worth – many of its ‘discoveries’ sound like common sense. Of course, it claims it can prove this common sense through experimentation. Nudge is about making small changes to the way choices are framed. Slightly changing the wording on an HMRC tax reminder can bring in an extra £30m, although this is small beer compared with the £150bn in income tax revenue the UK takes each year.
Nudge does not claim to be a game changer. It will never replace PR’s promise of creativity and powerful, meaningful campaigns. But it may form a part of the comms arsenal that brands can use to nudge their strategies in the right direction.
Case Study: News UK and #OgilvyChange
For The Times and The Sunday Times, the sales call centre is the shop front; the one place they can communicate with customers person-to-person. However, phone calls were cut short and opportunities missed because call centre workers did not speak to people on the right psychological level; their inner Homer.