As the man who brought behavioural science to Whitehall, David Halpern is no stranger to controversy. But the results speak for themselves, he tells Colin Marrs
Fredrick the Great of Prussia was a massive fan of spuds. In 1774, worried by his kingdom’s reliance on another foodstuff – wheat – he ordered a national programme to grow potatoes. Sadly, the peasantry was less than impressed by the comparatively tasteless crop, leading Old Fritz to threaten to cut off the noses and ears of anyone refusing to grow it. However, it was only when soldiers were posted to guard royal potato fields – giving the impression the crop was highly prized – that potatoes started to gain popularity.
The story, illustrating the power of “nudge”, features in a new book about the Behavioural Insights Team (BIT) written by its director David Halpern – a former academic and founding director of the Institute for Government. The book, Inside the Nudge Unit, gives the inside story of the mutual company since its formation as a small Cabinet Office team during the early days of the coalition government. It also explores how behavioural science can help policymakers both in Whitehall and across the world.
Although BIT was only formed in 2010, Halpern has a longer history within Whitehall. In 2001, in the wake of Tony Blair’s second landslide election victory, he joined the new prime minister’s Forward Strategy Unit (later renamed Prime Minister’s Strategy Unit) with a remit to think big about policy. Joining initially on an 18-month secondment, he ended up staying for six years.
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The unit’s attempt to incorporate behavioural science into the policymaking process suffered an inauspicious start. In 2003, an internal report titled Personal Responsibility and Behaviour Change was leaked to The Times. A brief discussion of whether price differences between healthy and unhealthy foods could affect the nation’s wellbeing ended up in the tabloids as a story about a “fat tax” accompanied by pictures of the cabinet, alongside their weights.
“It’s an experience that is seared into my soul,” Halpern tells Civil Service World. Acutely aware of the danger of misinterpretation, he now ensures that as much of the team’s research is published regularly on its blog. “The prize is very great and it is important we keep the public with us and make our work available to a wider audience,” he says.
When Gordon Brown was anointed Labour leader, Halpern, already tired from his intensive workload, sensed the writing was on the wall for his team’s work, and stepped down. Shortly after, in 2008, Chicago economist Richard Thaler published the game-changing book Nudge (who knows how far the theory would have got if he had retained its original title, Liberal Paternalism?), and was swiftly installed as Barack Obama’s regulatory tsar.
When the coalition government came to power, the time was ripe for a return of behavioural economics within government. David Cameron’s adviser Steve Hilton was a convert following a visit to the US, and the Liberal Democrats were also keen on the idea. “The wheels of the civil service had already started to turn, seeking to interpret what it was that the new government wanted – or at least a compromise between what the new government wanted and what the civil service thought was a good idea,” Halpern says.
The team – which rejected the option of being called a “unit” due to worries about civil service sensitivities – got to work on tearing apart the wording of government communications with the public. Simplifying wording on letters increased effectiveness by up to 300%, Halpern says. “For example, correspondence about fines often uses the language of the court with words like ‘distraint’, which even my spell-check doesn’t recognise, let alone most people,” he says.
But embedding such approaches within Whitehall was far from easy, he says, citing one battle that lasted three years – to get the wording of a letter changed. “There are lots of very deep forces that work against the experimental approach,” Halpern says. “But once you have done a few trials it becomes obvious that we should try things out. Senior figures have been very supportive of this approach but it can sometimes still feel like a pretty brave thing to do.”
Fortunately, Halpern’s background enables him to rationalise such institutional resistance within the framework of behavioural science. In his book, he dubs it the “God Complex”. “It is not limited to Whitehall – human beings are inclined to be over confident,” he says. “We think some things are objectively true and don’t want to think about counterfactuals. It can be pretty tough to say in a submission that we don’t know what would be most effective.”
Whether coincidence or not, the rise of nudge within government has been accompanied by the increased use of digital technology. Halpern points out that indirect marketing – which he says could be considered a branch of behavioural science – has been around for a long time. But he adds: “With the digital revolution, you can do trials much quicker and work out what is effective much faster. You can run eight different variations of a trial and get results back within weeks. That would have been unthinkable before digital.”
Data transparency is also a key tool for those embedding “nudge” within the policymaking process, he says. “Information transparency is a closely allied agenda,” he says. “It is impossible to understand behaviour if you don’t have the information. But it is a fine art. It is not enough just to put out your information – that doesn’t mean people will look at or understand it.”
In February last year, the government spun the team out of government to create a mutually-run company. A third of the new company is owned by government, a third by employees and the final third by innovation charity Nesta. Halpern says that the mutual structure was complicated to set up but has helped continue the innovative approach that it pioneered within government. “The fact is the guys here can go to a private sector consultancy and earn a lot more money. The fact they have stayed does reflect a certain style of mentality,” he says.
Although it is now independent, the team retains a special relationship with the Cabinet Office, through a contract which guarantees the government receives continuity of service. This means that Whitehall is always at the front of the queue when demand for the team’s services is high. “There is a rate card that makes it easy for departments to commission us,” Halpern adds. “When they need help they get it at a lower rate than we charge to foreign governments.”
There are other financial benefits for the Cabinet Office. The company’s results, filed at the start of September, show a profit of £1.4m on revenue of £4.8m for the first 14 months of independent operation. From this, the company was able to make dividend payments to the government of £205,000. However, a large chunk of the company’s income came from a £1.7m payment from the Department of Business, Innovation and Skills to establish its Behavioural Research Centre for Adult Skills and Knowledge.
Far from all of the company’s profits have come from fees charged to the UK government, however. The financial results show that BIT earned £800,000 from providing services to governments in Australia and Singapore. The team has now set up offices in Australia and New York. The latter has signed a £5m contract with charity Bloomberg Philanthropies to bring behavioural insights to US cities.
Halpern says that working across the world is helping to draw wider conclusions about what works – something he says would have been impossible from within the narrow confines of Whitehall. “What it means is we can grow and build our capacity so back home we have expert people who know what we are talking about.” In addition, he points out that this in-depth knowledge is retained for longer than it would be on the normal Whitehall merry-go-round. “The civil service is great at creating generalists but often they move onto a different department as soon as they have got to grips with a subject,” he says.
It hasn’t all been plain sailing for the unit, however. In May, the national press was thrown into apoplexy after it emerged that the London Borough of Walthamstow was working with BIT to circulate a questionnaire to 10 and 11-year-olds, aimed at detecting the first signs of radicalisation. Halpern says it was not necessarily wrong to proceed. “There will sometimes be a sensitivity but that is not to say it is wrong. That is one of the reason to do trials – to learn from things that don’t work,” he says.
A series of recent Private Eye articles have criticised BIT for charging government departments "eye-watering rates for work it used to do itself”. Halpern says: “BIT can only charge a public body who buys its services the rates that are specified under the framework agreement awarded to BIT in February 2014, which was awarded through a rigorous EU-negotiated procurement process run by the Cabinet Office. It is also worth noting that a proportion of the overall profits made by BIT flow back to the Cabinet Office via the dividend payments and, until 2017, it is the only shareholder to receive a dividend.”
The company results also show that Halpern earnt £205,000 for his services during the initial 14-month period. Private Eye has raised an eyebrow over the level of his fees, which it claims are as high as £3,800 a day. Halpern does not comment on exact figures, but says: “The salaries are set by BIT’s non-executive directors, including an independent chairman. BIT is very transparent about the salaries paid to its directors and this information is clearly set out in its published accounts, which are available online.”
As the “fat tax” and extremism questionnaire episodes demonstrate, behavioural insights are also particularly vulnerable to accusations of being a cover for government propaganda. “Who nudges the nudgers?” as Halpern puts it. He admits this is a particular problem in areas relating to public health, but says that the BIT team is always careful not to claim anything that cannot be proved to be true. He also says that the independent panel, chaired by former civil service head Lord O’Donnell, provides a valuable check. Its feedback has led to a number of initiatives being altered.
Despite the controversies, Halpern reels off a long list of BIT's success in turning behavioural science theory into practice. Many of these are already well documented, but Halpern’s book explores a number of these in some depth. It also provides a number of interesting gems, such as the trials carried out with the Department of Energy, which discovered that offering a loft clearance service was more effective than the offer of a discount in persuading people to install loft insulation.
Overall, Halpern is happy with progress. The BIT team has now grown to 70 across its three offices. But he also says it is “wonderful” that HMRC now has more of its own behavioural insight staff than his original 2010 team. “The point is not for us to build some giant company at all,” he says. “It is to have social impact.” And the fact that his company is winning work abroad proves that “people are interested in a Whitehall winner”, he says.