Last year the British government sent 800 doctors a letter stating that ‘80 percent of practices in (the recipient’s local area) prescribe fewer antibiotics per head than yours’. The letter then suggested three alternatives to immediate prescriptions. The trial led to 73,406 fewer antibiotic prescriptions.
Had it been sent to all general practitioners it would have led to a 0.85 percent decline in the prescription of antibiotics. An important effort in the fight against the growth health challenge of AMR – antimicrobial resistance.
In 2015, Louisville, USA doubled the collection of outstanding parking fee and fines when it sent drivers a letter that said ‘the majority of drivers who receive a parking fine in Louisville pay it within 13 days’.
This is the work of The Behavioural Insights Team, founded by the UK government in 2010. It’s also known as ‘the Nudge Unit’ (after the work of Professor Richard Thaler, co-author of Nudge and academic advisor to the team).
The Team uses behavioural science to make public policies and services more effective. Among its more successful experiments is the use of peer pressure to improve tax collections, explains Luke Ravenscroft, principal advisor at the Team.
Ravenscroft recounts early experiments by the Nudge Unit.
The Tax Arrears Experiment
Ordinarily the UK tax department (HM Revenue and Customs) sends a standard letter to those who have not paid their taxes on time, reminding them to do so. With the help of The Behavioural Insights Team modified letters were prepared and sent to a trial group. The first said:
“Nine out of ten people pay their tax on time. You are in the minority that does not pay their tax on time.”
Another letter played on the ‘neighbour effect’.
“Nine out of ten people in your local area pay their tax on time. You are in the minority...”
Another letter said:
“Nine out of ten people with a debt like yours pay their tax on time. You are in the minority...”
The final letter said:
“Nine out of ten people with a debt like yours, in your area, pay their tax on time. You are in the minority...”
This last one was the most effective.
Originally people receiving the letter (standard one) – 33 percent, or about a third, go on to pay their taxes, and this (experiment) increased it to 39 percent. Now you could say it’s only a 6 percent increase. But think about that going to millions of people across the country and think how much money this can bring in. Indeed, this trial and a host of others in our first batch of work with the tax office brought more than 200 million pounds in the first twelve months.
The experiment’s success prompted its application in other countries too.
In Costa Rica, it’s helped treble tax declarations rates. Similar interventions in Poland helped increase payments by 17 percent.
The Pensions Experiment
Ravencroft says one of the most dramatic findings through the application of behavioral science was the work done within pensions, in the UK, US and elsewhere.
The Problem
Often people, when faced with having to pick a pension scheme at work, don’t have the time or procrastinate.
The Solution
Auto enrollment
Employees were told that the company would decide a good, default pension for them. They would be automatically enrolled in this pension scheme. They could choose a different scheme or opt out of pension altogether. But if they didn’t exercise the choice then the system would assume they’d signed up to the default scheme.
This led to more than 5 million new savers in the UK.
This has had profound effects in the UK. I think in the first two years it led to more than five million new savers. And by and large people don’t opt out. Not only that, but when you ask people, they prefer the system. And when you ask the people who opted out they still say that they prefer the system. So you have got this amazing frictionless way of entering. And we know that with pensions the key is to get you in early. This has dramatic effects on the total saving and I think this has been one of the most landmark effects.
In India
When asked how his work could be applied to India, Ravenscroft uses the Swachh Bharat scheme to illustrate the potential use of behavioural science.
Think about the current Swachch Bharat scheme which is very well intentioned – to build all of these toilets and then go to find all these villages are open-defecation free. Well, you might be creating one of the biggest last mile problems ever. Because you’re then going to create all these toilets and you haven’t gone into enough detail about how you actually get people to use them. And so, now people have got the infrastructure, they have a latrine on the edge of their small plot of land. You just need to encourage people to actually use it. Because it will be a very scary thing if you’ve not used the latrine before. There’s going to be a lot of explaining to do. There’s a lot of behavioural messaging interventions which might work.
(This article was first published on BloombergQuint. This interview was conducted at the IDFC Institute Dialogues 2017. )
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