Why nudging is better than the fat tax and other tools of the trade

By Andreas Maaløe Jespersen & Pelle Guldborg Hansen

"We do not first see, then define,
we define first and then we see."
              - Walter Lippmann (cited in Plous 1993)

Taxation and regulation are the traditional tools of the trade in policy-making. Thus, we've just seen here in Denmark how policy-makers have tried to prevent people from eating unhealthy foods: the fat tax. 


But honestly, in the months that have past we are yet to actually observe someone saying "ooohh, my Danish pastry costs 9 cents more than a couple of months ago. I better cut down!" Is someone actually expecting this tax to change behavior? We doubt it, but let's play along.  


Tools of the trade
What the fat tax seems to confirm is the old saying: "If all you have is a hammer, everything looks like a nail." (and additionally: if everyone expect you to use a hammer, they'll accept it, no matter how stupid the idea). 

credit to africa

In our jurney outside of Academia we've started to learn that this not only holds true in research, but also in the worlds of policy-making, marketing and advertisement as well. Seeking to influence behavior, policy-makers readilly opt for taxation and regulation, doctores opt for medicine, intellectuals opt for talking and teaching, and the advertising and marketing industry opt for hillariously expensive campaigns featuring material or events with half-naked women or celebreties (and often cutting expenses by finding someone who is both). 


We've also been confirmed in our belief that when policy-makers learn that their attempts to influence behavior by taxation and regulation fails, or when they find these meaures to be too invasive, they have for a long time turned to the advertisement and marketing industry - perhaps because it seems to be the most fun alternative. 


Measuring success
Yet, how is success usually measured in these branches? Well, the success of a new tax often seems to be measured by the tax collected, talk and teaching by the number of people who listens, and advertisements by the number of people who remembers to have seen the half-naked celebrety. 


The most recent plague in this business seems to the success meassured by the number of people signing up to a facebook group, or the number of people that have clicked a video on youtube - after all, numbers are objective, right?


However, notice that none of these approaches actually measures behaviour change! 


Self-fulfilling prophecies
When the rare occassion do happen and impact is actually measured on behavior or parameters closely associated with this, the tools of the trade are often given a biased evaluation. When these tools are seen to work (even the slightest), it is usually taken to confirm that we are using the right tools, but when they don't, it is just taken to confirm that we have not applied them with enough force. In sum: raise the taxes, harsher punishment, more information, more education, and more... well, half-naked celebreties.


Depending on one's point of view, this may be seen as (1) a reaction to sunk costs based on loss-aversion, (2) a reaction to the cognitive dissonance arising from being wrong, while at the same time believing oneself to be flawless, or (3) confirmation bias.

However, the most interesting reaction are the rare occasion where the tools of the trade are recognized to fail. In these cases, the people responsible for the behavior targeted are blamed.  Had they just been super-rational economic beings - as we all would like to be - they would have reacted in the way intended and according to their own interests. They're to blame! Not us!


Nudge
Readers of this blog will know that Nudge offers a different set of tools aimed at influencing the same behavior as usually targeted by the tools of the trade. However, it is important that we remember not to make the same mistake as the more "experienced players" in the game of behavioral change. 

Thus, it is important to remember that the nudge-doctrine is not a catch-all strategy that completely wipes out the need for more traditional policy measures (a). Nor does signs of success imply with necessity that we should always be restricted to keeping within the nudge-doctrine. There might be cases where stronger interventions are needed.

Instead Nudge should be seen as an addition to the already existing toolbox.

Still, the nudge-doctrine does possess one strict advantage over other tools of the trade. It expands the perception of what is constitutive of the behavior targeted and requires a good account of this behavior.

When we fail, we're to blame - not them.