Entrepreneurs and businesses that are focused on innovation often do a good job understanding and designing around “behavioral economics” – the study of how human behavior drives economic decisions and actions in non-rational ways. After all, they have a financial stake in the matter, and benefit from having reliable predictions about how products and services will do in the real world. Whether through intuition, experience, or hard research, these companies need to understand that much of human behavior is not that of purely rational actors described in standard economic theory.
The ones who could benefit the most from an improved understanding of behavioral economics are those large institutions where performance is not tied to most, or any, employee’s compensation. This is true of some large corporations, but it is especially true of the public-sector. Government employees often face no clear incentive to design and execute their programs in such a way that they will be successful. Hence, programs get designed to technically satisfy requirements passed down from electeds or regulations. In many cases no one particularly cares if the program is well-used and in fact it would create more work and possibly require more budget allocation it if were.
This is what I was thinking about as I was reading Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard H. Thaler and Cass R. Sunstein. Specifically I was thinking about work I did a year and a half ago as Community Outreach and Engagement Coordinator for the City of Burien. It was a glorified internship with too broad a mission and not nearly enough budget allocation – but it did allow me wide latitude to think about why civic participation was so minimal and so unrepresentative in that city, and gave me a color-printer, business cards, a desk, and a few other civic resources to try and do something about it.
One of the things I zeroed in on was the way information about city services and participation opportunities was technically available, but rarely intuitive or easy to find. I worked on ways of making this important information easier to find, and to think about what kinds of information would be most useful for residents. This kind of work is key in building civic participation and community organization. Each level of difficulty encountered by the user is going to reduce participation by a degree and often the ones that will be excluded are those who have the least technical literacy, most demands on their time, and greatest number of pressing distractions from the dull work of local government – in a few words: immigrants and the working poor.
In designing new programs and improving existing ones, civil servants need to understand key principles of behavioral economics – people move in herds, they make decisions based on gut-level associations but quickly develop “traditions” which can be based on random chance, they act on choices that are most pressing and visible, and they often follow the path of least resistance. Like the students advised on the importance of tetanus inoculation or the wisdom of financial planning – they often have desires or plans that they will not act upon if not given the right nudge. Governments that serve the public good should design programs with these factors in mind in order to be more successful – and perhaps compensate well the employees that design and operate them.