The fact that nudges are so non-intrusive means that they are also very cost-effective—and policymakers quickly took notice of this approach to changing behavior.6 Unlike many of the traditional strategies, such as government-imposed bans or taxes, nudges, unobtrusive as they are, are unlikely to ruffle too many consumer feathers, making it easier to effect policy change.
In 2010, the UK became the first country to set up a “nudge unit,” formally known as the Behavioral Insights Team (BIT). Initially a team of just 9 people, BIT was tasked with applying the insights of the behavioral sciences and behavioral economics to a huge range of problems, from convincing more people to install government-subsidized loft insulation7 to helping young people engage more with pension plans.8
In one famous project led by BIT, the team experimented with leveraging social norms as a way to get people to pay their taxes on time. Ordinarily, the government’s tax department, HM Revenue and Customs, would send a simple letter that reminded the recipients that their taxes were past due. In the BIT intervention, the letters were changed ever so slightly, to include one of the following sentences:
- Nine out of ten people pay their tax on time.
- Nine out of ten people in your local area pay their tax on time.
- Nine out of ten people with a debt like yours pay their tax on time.
- Nine out of ten people with a debt like yours, in your area, pay their tax on time.
Just for extra emphasis, each of these options was followed by “You are in the minority that does not pay their tax on time.”
BIT found that the last option was most effective: it increased the number of letter recipients who paid their taxes by 6%, amounting to millions of people and more than £200 million in extra revenue for HM Revenue and Customs within the first year of the project.15
In 2014, the US government followed in BIT’s footsteps by starting the Social and Behavioral Sciences Team, with the aim of doing similar work. Unfortunately, that group was dissolved in 2017.9 (BIT is still active but is now a semi-privatized company.) Numerous other governments have also started up nudge units, including Canada, Singapore, France, and Germany.10
For all of its usefulness for policymakers and despite the fact that Thaler and Sunstein had public policy in mind when they wrote their book,9 nudges have probably had the warmest reception in the private sector. Businesses across many different industries have taken up nudging as a tool to achieve everything from improving customer satisfaction to increasing employees’ sense of loyalty to their employer.11 The simplicity of nudges, and the ease of implementing them, has made them a hot topic in virtually any context where the ultimate goal is behavior change.