Is fuel deregulation the Nudge people need to go green in the UAE?

The government's recent move is a great example of the hottest idea in public policymaking, Nudge Theory, which aims to spark positive changes in behaviour by tilting our opinions.

The UAE’s deregulation of fuel prices may be watched closely by advocates of Nudge Theory. Pawan Singh / The National

So how’s it been for you so far? On Day Two of the brave new world of deregulated fuel prices, are you still annoyed by the extra expense, or glad to be part of a nation ready to do right by the environment?

Whether the price hike will achieve its declared aims of supporting the long-term economic, social and environmental well-being of the UAE remains to be seen.

Some claim it’s not big enough to deter people from using their gas guzzlers. Others insist it’s so big it will hit those already struggling with the high cost of living.

Either way, its consequences will be closely monitored by advocates of the hottest idea in public policymaking right now: Nudge Theory.

Named and popularised by American academics Richard Thaler and Cass Sunstein, Nudge Theory aims to spark positive changes in behaviour by tilting our options, rather than restricting them.

To get us out of our cars, the obvious strategy is to ban the things. As this newspaper showed in its now-famous April Fool’s Day story about a government ban on 4x4s, such a move would be — to say the least — controversial.

So instead, our options have been tilted by an blanket increase in fuel price. No one is banned from anything — but if you insist on driving to see your neighbour 100 metres away, you’ll have to pay a bit more for the privilege.

There’s far more to Nudge Theory than just tweaking prices, however — and that’s what is sparking so much interest among policymakers from Germany to Guatemala.

Professors Thaler and Sunstein are pioneers of so-called behavioural psychology, which seeks to fathom how humans respond to specific situations, and why.

And many of Nudge Theory’s most spectacular successes stem from identifying our foibles and using them to nudge us into better decisions.

One all too familiar failing is simple inertia — especially when confronted with complex, long-term decisions such as pension plans.

During the 1990s, enrolment into US company pension plans was so low it was clear the nation would be plunged into a social care catastrophe unless people could be coaxed into making better provision for their old age.

It was easier said than done: pension enrolment was lengthy and complex, with some schemes offering dozens of options. Ironically, so much choice was a major problem, as those who overcame their inertia then fell prey to another behavioural foible: loss aversion. Behavioural psychologists have shown that we typically fret more about making bad decisions than focus on the joy of making the right one. Lots of choices then just look like lots of chances to pick the wrong one — and we typically respond by not making any choice at all.

In their 2008 best-seller Nudge: Improving Decisions About Health, Wealth and Happiness, Thaler and Sunstein describe how two simple “nudges” can make a huge difference.

First, the problem of inertia is flipped into an asset by turning pension enrolment from opt-in to opt-out. No one is forced to take part — but those wanting out have to fight their own inertia.

Having been nudged into enrolment, there’s the problem of choosing between all the options. One remedy would be simply to take away all but a few. Veteran “nudgers” like Thaler and Sunstein see such strategies as more shove than nudge, robbing us of too much autonomy. So they recommend auto-enrolment into one well-regarded scheme, while keeping all the others available for those keen enough to make their own choice.

Like many nudges, both these strategies cost virtually nothing to implement but have proved astonishingly successful. In one US study, participation rates soared from 20 per cent to 90 per cent.

Such impressive results are now being replicated by many others, in many different contexts.

In 2010, the UK government gave a team of nudge theorists five years to demonstrate their effectiveness in saving the nation money. Last month, the group — now called the Behavioural Insights Team (BIT) — reported a 20-fold return in investment, saving the UK at least £300 million (Dh1.7bn) over five years.

The BIT reported how simply sending encouraging texts to students on adult literacy classes slashed dropout rates by 36 per cent, while telling tax debtors that their money is vital for public services boosted payment rates from the biggest miscreants by 43 per cent.

The team was keen to stress its use of small but scientifically designed trials to pilot ideas, rather than the time-honoured method of just guessing what might work.

This evidence-based approach has sometimes paid big dividends.

For example, BIT was tasked with boosting registration for organ transplants but was barred by UK law from using the “opt-in/opt-out” switch that has proved hugely successful elsewhere.

Looking for alternatives, the team brainstormed “nudging” messages for a website, including “Every day thousands of people who see this page decide to register”, along with a picture of a large crowd.

Known as “social norm-ing”, this “everyone else is doing it” approach has proved effective in many areas, including energy-saving campaigns.

Yet in the pilot trials it proved literally worse than useless, cutting the number of registrants.

The most successful message turned out to be: “If you needed an organ transplant, would you have one? If so, please help others” — based on so-called reciprocity. This boosted the number of registrations by a staggering 100,000 a year — and proved the importance of testing out before going live.

Not surprisingly, many other governments are keen to emulate such successes. The UK BIT team recently helped Guatemala’s government to triple its tax receipts, and has now joined forces with Bloomberg Philanthropies in the US to tackle urban issues such as crime and unemployment. Next month it will host an international conference in London showcasing progress to date.

Naturally, nudging has its critics. Some see it as little more than marketing gimmickry, others as downright sinister. But as Thaler and Sunstein point out, nudges are nothing new: they’ve been used by everyone from teachers to tricksters for thousands of years. What is new is recognition that they can make a lot more of us Do The Right Thing a lot more often.

Robert Matthews is Visiting Professor of Science at Aston University, Birmingham.