On Nudge Theory

Tim Harford argues that referendums are bad for democracies:

1)      Voters don’t think through complex issues end to end. Instead, they vote by doing what Daniel Kahneman described in his bestseller, Thinking, Fast and Slow:

“When faced with a difficult question, we often answer an easier one instead, usually without noticing the substitution.”

As an example of that, Harford says:

“The difficult question in a referendum might be, “Should the UK remain in the EU?”; the easier substitution is, “Do I like the way this country is going?”

2)     Political parties serve as a proxy for certain ideologies. But during a referendum, that doesn’t apply. So voters should think harder. But, as we saw in #1, they don’t do that.

3)     Referendums are binding. That means the people we elect “to make considered choices on our behalf” have no choice but to execute the outcome of the referendum. Whether or not they agree with it.

4)     There’s no accountability for a bad choice. If, as happened in Brexit, most MP’s voted against Brexit, and yet get forced to implement it, who’s to blame if things end badly?

“Not them — and we’re certainly not going to blame ourselves. The buck stops nowhere.”

If voters are too dumb or unwilling to think, then the “nudge theory” of policy making would appear to be a necessity. Simply put:

“(Nudge theory is a system that) encourages people to make decisions that are in their broad self-interest.”

An example would make it clearer:

“Spain operates an opt-out system, whereby all citizens are automatically registered for organ donation unless they choose to state otherwise. This is different from the UK where donors have to opt in. The Spanish opt-out system is one of the reasons Spain is a world leader in organ donation.”

The key aspect of nudge theory is that it allows people to do something other than the default option. And yet, as Harford and innumerable examples from everyday life show, people don’t think. They usually go with the default option. So is this or is this not a form of “manipulation”? In the organ donation example, it’s hard to argue with the Spanish default of opt-in. But what’s to stop the next scenario from making the default option a bad one? Is nudge theory placing too much trust on the state to know what’s best for us, and to not abuse that position?

The way I see it there’s no running away from taking the effort to think things through. It’s easy to blame the politicians and whine that the “system hai kharaab”, but while that’s undoubtedly true, the common man is to blame too.