Rationally irrational

The British Conservative party has shown a lot of interest in the work of behavioural economists Richard Thaler and Cass Sunstein. In their book Nudge the authors argue that the choices people make are often influenced by unseen biases which cause them to choose less than optimally. For a variety of different reasons, because they are incapable of thinking for the longer term, because they are impelled by emotion, because they are lazy, people don’t always do what they ought or what they could. The authors recommend what they term paternalistic libertarianism, which they describe as a weak, relatively gentle form of paternalism to encourage people to make the right choices. This involves choice architects, that is to say those who have an interest in people saving for a pension, or choosing healthy food, creating the right choice environment so that citizens are ‘nudged’ rather than threatened or frightened into making better choices for them and for the state. Most theories of social change, the authors argue, are based on the idea of homo economicus so beloved of economics textbooks: that is an autonomous, rational individual who  analyses the facts and draws the correct conclusion. They point out that experience tells us differently. But their own thinking rests on a similar rational fallacy, particularly as it is taken up by politicians in the Conservative party.In an article entitled ‘We can make you behave’  jointly written by the shadow Chancellor George Osborne and Richard Thaler, the authors critique the Labour government’s over-reliance on the myth of the rational actor. This has led them to draw up policy which has led to the waste of millions of pounds of tax payers money. The Conservative response, the authors argue, would be to use the best scientific evidence available and design interventions that encourage people to do what the government wants, thus saving money and time. They would embed behavioural thinking throughout government. One way of doing this would be to require all public bodies that wanted to launch marketing campaigns to state precisely what behaviour change they are trying to bring about in advance, and an element of the advertising fee would be contingent on bringing this change about. this they claim, would cut waste, lead to better value for money as well as allowing the public to scrutinise the goals and effectiveness of government advertising.

Whilst one might share the Conservative analysis that the Labour government has tied itself up in a bureaucracy of directives in fulfilment of social policy based on linear thinking and targets, which then breeds a burgeoning apparatus for hyper-scrutiny, the Conservative alternative rests on similarly fallacious thinking.

With the Conservative proposals we are straight away into a contradiction – the Conservative government, if elected, would coerce public bodies into not coercing anyone else. This hardly demonstrates the principle that they hope to encourage and is likely to bring about exactly the kinds of evasive, subversive and oppositional behaviour on the part of managers in public bodies that they say they are seeking to avoid. The second difficulty lies in the idea that ministers or managers can design programmes which will result in large numbers of people behaving in a predictable way. If we accept that people do not always act rationally, in Bourdieu’s terms they act reasonably in the contexts in which they find themselves, any programme of intervention no matter how subtle, will call out a variety of responses in those it seeks to influence. One of these responses will be resistance and opposition. Thirdly there is an assumption that Conservative ministers can act rationally and will therefore use the best scientific evidence to nudge people into what they would like them to do, even though most others do not act rationally. This, presumably, is why they intend coercing public bodies to do what they are told. This sort of dualistic thinking is very prevalent in orthodox management discourse. The manager is presumed to be able to step outside the ‘system’ to see what is wrong with it, identify a leverage point, and then step back inside the ‘system’ to make the necessary changes. How can we be sure that ministers are not themselves working sub-optimally and operating according to their own hidden biases in calling for particular behaviour changes. This is a problem of infinite regress – who nudges the nudgers?

So a rough synopsis of what Osborne and Thaler seem to be proposing is that rational government ministers will force managers in public bodies not to force but encourage everyone else into behaving in predictable ways, even though those same people have a tendency to act irrationally.

Far from paternalistic libertarianism this appears to be just another form of manipulation based on familiar assumptions of the rational, choosing manager who uses tools and techniques to bring about the behaviour they desire. It is no more or less transparent than the current techniques employed by the Labour government, and may even be slightly more sinister on the grounds that it pretends to be weakly interventionist. This is not to argue against the idea that governments are elected to bring about improvements in the lives of the citizens who elected them.


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