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A common sight on the streets of Cape Town, South Africa, are people selling The Big Issue to drivers waiting at traffic lights. The magazine was set up to help the unemployed and those suffering from poverty, as sellers keep their earnings.
One problem for vendors, however, is that they must buy magazines wholesale and hope they can sell them on. Often they made a loss — but that was before a 2014 intervention based on the principles of behavioural economics.
David Perrott, cofounder of Cape Town-based behaviour change firm Gravity Ideas which gives pro-bono support to The Big Issue, created ‘nudge’ incentives to raise local Big Issue sales. The first goal, he says, was to target drivers’ empathy and overcome the “automatic disengagement” brought on by them seeing numerous Big Issue sellers every day.
The team got the sellers to wear bibs on which they wrote short statements explaining why they were selling the magazine under the heading “My Big Issue”. A couple of examples read: “Staying positive” and “Making a living”. The sellers were asked to write these by hand.
“There’s a lot of psychology around how handwriting is more engaging than just print,” Perrott adds.
Next, the team asked vendors to use stickers on the bibs to show how many magazines they still had to sell to reach their daily target, for example “8 more”. The idea was to give the drivers a sense that they were making a difference to the sellers’ lives, explains Perrott.
“The make or break for any nudge policy is how well it is designed. ”
Dalmeet Singh Chawla
Lastly, the team added QR barcodes to the bibs, and collaborated with local tech firm SnapScan to allow people to pay using a smartphone application. It was important to make transactions easier for buyers, Perrott says. Simplifying processes for consumers has “absolutely enormous potential” to make nudges effective, agrees Stewart Kettle, a researcher in the international development department of UK firm the Behavioural Insights Team (BIT).
The campaign significantly increased sales and The Big Issue sold out for the first time that year, according to Perrott.
The Big Issue project is different from traditional marketing strategies, because it affects to the customer subconsciously, rather than directly telling him or her what to do. This is just one of many nudge policies designed to subtly influence behaviour.
From dancing pedestrian lights that encourage safer road crossing to painting babies’ faces on shop shutters to discourage robbery, implementing insights from the behavioural sciences for social benefit has become a global trend. The objective of such policies is often simply to nudge people into acting in the government’s interest, by paying taxes on time, for example, eating more healthily or giving up smoking.
The make or break for any nudge policy is how well it is designed. BIT, the world’s first government ‘nudge unit’, was set up in 2010 to change people’s behaviour without the need for complex or radical legislation. It aims to create policies based on four main principles: making procedures easy, attractive, social and timely.
Nudging is “even more useful for developing countries”, says Simon Ruda, who leads the international development work at BIT. Knowledge of behavioural sciences can improve policy delivery without requiring exhaustive resources or huge expense, he says.
“In the countries that we’ve worked in so far, we’ve managed to design interventions at zero marginal costs,” says Ruda. The only cost has been inexpensive procedures like administration, but the main investment has been the time devoted to trial these policies, he adds.
Last year, SciDev.Net reported on a BIT-run trial designed to increase tax payments in Guatemala. It tested various payment reminder letters to see what worked best at getting recipients to pay their taxes, such as pointing out how most people paid tax, appealing to their patriotic spirit or raising legal threats.The team is involved in a similar trial in Costa Rica. It also ran one in the United Kingdom. Although this intervention led to faster tax payments, it did not increase the amount paid, as tax compliance in the country is already around 99 per cent, Kettle says, meaning there is less scope for improvement than in countries with a less advanced tax system. “That’s a good example of how things can potentially work better in developing countries.”
The team’s other upcoming trials include one in Mexico that aims to encourage pregnant mothers to take nutritional supplements and attend preventative healthcare workshops, and another in Peru, in partnership with the country’s ministry of education, designed to improve school attendance rates.
Drawbacks of nudge
Nudge economics has, however, faced a backlash. Indeed, altering peoples’ behaviour by tapping into their subconscious without their knowledge can be considered unethical.
Gerd Gigerenzer, director of the Center for Adaptive Behavior and Cognition at the Max Planck Institute for Human Development in Germany, believes that nudging incorrectly assumes that people are incapable of making wise decisions. He says people should be educated to weigh up the associated risks of their behaviour, rather than being manipulated into doing things differently.
Furthermore, many companies use nudge-like measures in advertising to sell products and services that often directly oppose government messages about health and lifestyle. And they have more money. “Nudging people into healthy behaviour has limited chances of success when competing commercial firms with larger budgets use the same methods to nudge people into unhealthy behaviour,” Gigerenzer wrote in a paper on the downsides of nudge. 
Perrott says his company classifies nudges into two groups: ‘patches’ and ‘hacks’. A patch is an intervention designed to benefit its recipients and society, whereas a hack is not intended to be in the best interests of its recipients.
“So far, fortunately, we’ve only had to deal with patches,” Perrott says.
Of course, it’s not as clear-cut as that. Patches for one party may serve as a hack for another. For example, one may see The Big Issue intervention as a patch for the magazine vendors, but as a hack for the buyers, who are handing over money they would not previously have spent.
But Owain Service, BIT’s managing director, says his organisation is a “social purpose company” and thus will never work on a hack.
Another problem with nudges is that they don’t always work, but nevertheless require a lot of time and effort, says Lauren Willis, a law professor at the Loyola Law School in the United States.
"[Nudges] can end up being not very effective, and yet at the same time, make us think we have solved a problem,” she says. "It is human nature to stick with the status quo until one sees that another option is palpable.”
Hype or powerful tool?
Poorer people often lack the time or space to ensure their decisions benefit them, says Varun Gauri, a senior economist at the World Bank who jointly led the team behind a 2014 report on behavioural insights.  “We can design policies to help poor individuals make those decisions,” he says.
Some countries already have nudge-like programmes, yet many people still fail to use them, Gauri adds. “That might have to do with low [personal] aspirations, the hassle factor of signing up to programmes or just remembering to take advantage of them.”
Therefore, a lot of nudges, he says, including development-related ones, would only push people to do something they’ve already expressed a desire to do in the first place.
But, Gauri warns, personal decision-making is a complex and “deeply contextual” process that depends on multiple factors such as how something is worded, whether it triggers happy or sad memories and the unique thought processes it generates in each individual.
Nevertheless, says Perrott, policies based on behaviour change can be effective and are worth exploring further rather than strictly adhering to traditional economic strategies based on financial incentives.
“Understanding psychology should be a core focus within governments,” he says.
Watch the video below on The Big Issue Smart Bib by Gravity Ideas: