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NEWS3 September 2015

Economic policy based on behaviour assumptions

“The edifice of economic policy was built on an assumption of how people behave. It became a description of how policy-makers thought people ought to behave rather than how they actually do behave,” said Matthew Hancock, Minister for the Cabinet Office and Paymaster General, at the opening of the Behavioural Exchange London 2015 conference yesterday.

“The truth is life is hard and turning theory into practice is difficult,” he added, as he went on to explain that this was one of the reasons why the Behavioural Insights Team (BIT) was set up.

“It shouldn’t be controversial to say we should base policy on how people actually behave but sadly it is. When money is tight there’s a new urgency that the interventions we make in government should actually work.

“The point of the team wasn’t to tell parts of government what to do – it’s the nudge unit, not the shove unit – it was by showing them, not telling them how to improve services,” said Hancock.

Citing the much-quoted improvements achieved in getting people going through self-assessment to pay their tax on time with subtle rewording of the letters sent to them, he said “people were more likely to respond if you simplify the message – and across the world these insights have been taken on”.

“We need to be honest with ourselves and admit that sometimes we try things that will fail. It’s about applying the rigour of science to the art of government. We must try things and learn from failure, as only then can we learn from successes too.”