Behavioural Insights and Public Policy Lessons from Around the World.

408 Pages·2017·3.2 MB·English

by  OECD

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Behavioural Insights
and Public Policy
LESSONS FROM AROUND THE WORLD
This work is published under the responsibility of the Secretary-General of the OECD. The
opinions expressed and arguments employed herein do not necessarily reflect the official
views of OECD member countries.
This document and any map included herein are without prejudice to the status of or
sovereignty over any territory, to the delimitation of international frontiers and boundaries
and to the name of any territory, city or area.
Please cite this publication as:
OECD (2017), Behavioural Insights and Public Policy: Lessons from Around the World, OECD Publishing,
Paris.
http://dx.doi.org/10.1787/9789264270480-en
ISBN 978-92-64-26907-1 (print)
ISBN 978-92-64-27048-0 (PDF)
The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use
of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli
settlements in the West Bank under the terms of international law.
Photo credits: Cover © GlebStock / Shutterstock.com; © Macrovector / Shutterstock.com.
Corrigenda to OECD publications may be found on line at: www.oecd.org/about/publishing/corrigenda.htm.
© OECD 2017
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(CFC) at [email protected].
3
FOREWORD –

Foreword
“Behavioural insights” ‒ lessons derived from the behavioural and social sciences,
including decision making, psychology, cognitive science, neuroscience, organisational
and group behaviour ‒ are being applied by governments with the aim of making public
policies work better. As behavioural insights increasingly contribute to shaping and
implementing public policies, questions are being raised about the effectiveness as well as
the philosophical underpinnings of some of these applications. Can small-scale
experiments be scaled up and applied widely? Can policies based on the use of
behavioural insights stand the test of time? How can unethical uses of behavioural
insights be avoided? Can behavioural insights make inroads into policy areas beyond
consumer policy, which has so far witnessed the largest application of behavioural
insights?
The report opens up this debate on the use and reach of behavioural insights through
the first comprehensive international overview of their application. It draws on responses
to a survey conducted among 60 public bodies in 23 OECD and partner countries and two
international organisations. The survey addresses questions related to the applications,
institutions, barriers and methods related to the use of behavioural insights. One hundred
and twelve case studies are included in this report and were collected in the survey
responses as well as additional cases provided to the OECD. The case studies cover a
wide range of sectors and policy areas, including consumer protection, education, energy,
environment, finance, health and safety, labour market policies, public service delivery,
taxes and telecommunications. The case studies are for the benefit of public officials and
practitioners when applying behavioural insights. The case studies are also made
available through online platforms working on behavioural insights, including the
European Nudge Network (TEN) and ideas42’s B-Hub. Case studies will also contribute
to enriching the OECD’s Observatory on Public Sector Innovation (OPSI).
The report finds that the use of behavioural insights has moved beyond a trend.
Leaders of public bodies support the use of behavioural insights, and there is limited
resistance within government to applying behavioural insights. Where some opposition or
criticism emerges, this is mostly related to organisational resistance to change rather than
to the behavioural insight approach itself. Neither the lack of resources for conducting
tests and experiments nor ethical concerns are perceived as significant barriers for the use
of behavioural insights within public bodies. In a number of countries, ethical principles
have been integrated into the design and development of behaviourally informed
approaches, which must conform to criteria pertaining to both the public interest and the
preservation of choice.
Behavioural insights are still mostly applied to the areas where they were first
introduced, namely consumer protection and choice in diverse areas. There is great
potential for applying behavioural insights more broadly, for example to decisions by
regulated organisations and behavioural change by public and private organisations.
BEHAVIOURAL INSIGHTS AND PUBLIC POLICY: LESSONS FROM AROUND THE WORLD © OECD 2017
4
– FOREWORD

If behavioural insights are to realise their full potential, guiding principles and
standards must be set to guide future applications and maintain the trust of public bodies
and citizens. Good or reliable data is also required if behavioural insights are to become a
robust policy tool, and results should be published and shared. Experimentation and the
use of academic findings are fundamental to behavioural practitioners in public policy.
This report is part of the OECD work programme on regulatory policy led by the
OECD Regulatory Policy Committee and the OECD Network of Economic Regulators
with the support of the Regulatory Policy Division of the OECD Public Governance and
Territorial Development Directorate. The Directorate’s mission is to help government at
all levels design and implement strategic, evidence-based and innovative policies. The
goal is to support countries in building better government systems and implementing
policies at both national and regional level that lead to sustainable economic and social
development.

BEHAVIOURAL INSIGHTS AND PUBLIC POLICY: LESSONS FROM AROUND THE WORLD © OECD 2017 © OECD 2017
5
ACKNOWLEDGEMENTS –

ACKNOWLEDGEMENTS
The work underlying this report was led by Faisal Naru and co-ordinated by Filippo
Cavassini. Professor Martin Lodge (London School of Economic and Political Science)
was a key partner and made significant contributions throughout to complete this report.
The report was prepared by Faisal Naru, Filippo Cavassini, Fatima Anwar, Winona
Bolislis and James Drummond with the encouragement and support of Rolf Alter,
Director, Luiz de Mello, Deputy Director and Nick Malyshev, Head of the Regulatory
Policy Division, Public Governance and Territorial Development. The report benefitted
from the inputs and support of a number of other OECD Directorates who helped collect
a number of case studies and provided feedback and inputs throughout the preparation of
the report. Special thanks are extended to Michael Chapman and Sean Ennis (Directorate
for Financial and Enterprise Affairs), Michael Donohue and Rieko Tamefuji (Directorate
for Science, Technology and Innovation), Walid Oueslati, Elisabetta Cornago and
Alexandros Dimitropoulos (Environment Directorate). Jennifer Stein co-ordinated the
editorial process. Kate Lancaster and Andrea Uhrhammer provided editorial support.
The report builds on a close partnership with research and practitioner organisations
working on behavioural insights. Feedback and support was provided by Dr Pelle Hansen
and Asbjørn Flyger Lauwersen (TEN – The European Nudging Network), Josh Wright,
Josh Martin and Faraz Haqqi (ideas42). Overall support and encouragement for the report
from practitioners was overwhelming. There are too many people to mention everyone
but you know who you are.
Thanks are also extended to the members of the OECD Regulatory Policy Committee
as well as academics and practitioners who provided detailed feedback and comments on
the report. Special thanks go to Dr Sabrina Artinger, Staff of Policy Planning, Federal
Chancellery, Germany, Daniel Curtis, Adviser, Regulatory Reform Division, Department
of the Prime Minister and Cabinet, Australia, Stephan Naundorf, Counsellor of Minister
of State Helge Braun and Representative of the Better Regulation Office, Federal
Chancellery, Germany, Dr Joana Sousa-Lourenço, Foresight and Behavioural Insights,
DG Joint Research Centre, European Commission, as well as to Dana Guichon, Vice
President, ideas42, Dr Ralph Hertwig, Director, Centre for Adaptive Rationality, Max
Planck Institute for Human Development, Dr Pete Lunn, Senior Research Officer,
Economic and Social Research Institute, Owain Service, Managing Director, Behavioural
Insights Team, Professor Dilip Soman, Rotman School of Management, University of
Toronto.
A draft of the report was discussed at the OECD Regulatory Policy Committee and
the OECD Network of Economic Regulators in November 2016.

BEHAVIOURAL INSIGHTS AND PUBLIC POLICY: LESSONS FROM AROUND THE WORLD © OECD 2017

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TABLE OF CONTENTS –

Table of contents
Acronyms and abbreviations .............................................................................................................. 11
Executive summary .............................................................................................................................. 13
Chapter 1. Why bother? Context and approach ................................................................................ 15
What are behavioural insights, economics and science? .................................................................... 16
What’s happening with behavioural insights within and outside Organisations ................................ 17
The reality: Collecting case studies on applying behavioural insights ............................................... 25
References .......................................................................................................................................... 29
Chapter 2. What’s going on? Insights from the behavioural insight case studies .......................... 31
Institutions .......................................................................................................................................... 32
Interventions ....................................................................................................................................... 37
Results and impact ............................................................................................................................. 42
References .......................................................................................................................................... 45
Chapter 3. Where to go next? Shaping a policy and research agenda ............................................. 47
Where to apply behavioural insights? ................................................................................................ 48
Who applies behavioural insights? ..................................................................................................... 51
When to apply behavioural insights? ................................................................................................. 53
Setting standards for behavioural insights? ........................................................................................ 55
References .......................................................................................................................................... 57
Chapter 4. Behavioural insights case studies: Consumer protection ............................................... 59
Supermarket shopper dockets: keeping fuel competitive ................................................................... 60
Disrupting scams ................................................................................................................................ 62
Clearer, simpler and more transparent bills ........................................................................................ 64
Personal loan choices ......................................................................................................................... 66
Price transparency in residential electricity ........................................................................................ 70
Misrepresentation in advertising ........................................................................................................ 73
Package size reduction ....................................................................................................................... 76
Information Sheets and Guides for Investors ..................................................................................... 79
Drip pricing in e-commerce ............................................................................................................... 82
How much? Designing optimal price comparison websites in the payday lending market ............... 86
Shop and save: Designing an annuity comparison tool ...................................................................... 89
Senior water discount enrolment ........................................................................................................ 92
Chapter 5. Behavioural insights case studies: Education .................................................................. 95
After school project ............................................................................................................................ 96
Improving adult literacy ................................................................................................................... 102

BEHAVIOURAL INSIGHTS AND PUBLIC POLICY: LESSONS FROM AROUND THE WORLD © OECD 2017
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– TABLE OF CONTENTS

Chapter 6. Behavioural insights case studies: Energy ..................................................................... 105
Better consumption data for more efficient energy use .................................................................... 106
Consumer adoption of renewable energy ......................................................................................... 108
Transparency in energy contracts ..................................................................................................... 110
Energy efficiency project ................................................................................................................. 112
An electricity market in transition .................................................................................................... 116
Smart meters ..................................................................................................................................... 118
Chapter 7. Behavioural insights case studies: Environment ........................................................... 121
Testing social norms and feedback provisions for water savings .................................................... 122
From replacement to repair: changing default options to decrease electronic waste ....................... 126
Framing energy efficiency information to encourage uptake of energy
efficient electric appliances .............................................................................................................. 129
Framing of fuel efficiency, emissions and running cost information ............................................... 133
Consumer use of sustainability information to reduce food waste ................................................... 137
Food waste and best-before / production dates ................................................................................ 141
Framing durability and authenticity information to reduce food waste ........................................... 144
Perception of cost savings related to the use of energy-efficient major appliances ......................... 147
Water abstraction reform .................................................................................................................. 150
Chapter 8. Behavioural insights case studies: Financial products ................................................. 153
Investing in hybrid securities ........................................................................................................... 154
Improving communication with directors of firms in liquidation .................................................... 157
Improving transparency and information disclosure about financial products in Ghana ................. 159
Complaints resolution in Ghana ....................................................................................................... 162
Investor education initiatives............................................................................................................ 165
Crowdfunding regulation ................................................................................................................. 169
Digital cash transfer for food aid in Kenya ...................................................................................... 172
Taking up nano-loans responsibly in Kenya .................................................................................... 176
National survey on financial education ............................................................................................ 179
Financial education for school students ........................................................................................... 181
Preventing over-indebtedness of borrowers ..................................................................................... 184
Message received? The impact of annual summaries, text alerts and mobile apps
on consumer banking behaviour....................................................................................................... 186
Does the framing of retirement income options matter? .................................................................. 189
Switching savings accounts .............................................................................................................. 192
Insurance renewal: Are you paying too much? ................................................................................ 195
Selling insurance as an add-on ......................................................................................................... 197
Understanding structured deposits ................................................................................................... 201
Encouraging customers to claim redress .......................................................................................... 205
Building a letter: Engaging customers about their interest-only mortgages .................................... 208
Please take your cash: Encouraging consumers to claim redress from incomplete
cash machine (ATM) transactions .................................................................................................... 211
Just for you: Using personalisation to attract attention .................................................................... 214
Attention, search and switching: Evidence on mandated disclosure from the savings market ........ 216
Promoting retirement security .......................................................................................................... 220

BEHAVIOURAL INSIGHTS AND PUBLIC POLICY: LESSONS FROM AROUND THE WORLD © OECD 2017 © OECD 2017