The nudge game

I’m not an expert on behavioural science, but I have an opinion on ‘nudging’ nonetheless.

Similarly, I’m not an expert on Greenock Morton but I like to go and see them play and, like everyone else, I’ll always have an ill-informed view of what they could have done better. We nudge (shout inanely) from the terraces. Ineffectively. It’s what one does.

Nudging is relevant in helping people make decisions. No doubt about it. I’ve mentioned before that automatic enrolment is a classic experiment in nudging people towards a better retirement. Not every employer will champion it and not every employee will stay in. But so far, thousands of employers have embraced it and millions of people are saving – many of whom weren’t saving before.

Difficult to argue with. The question is what happens next?

The soothsayers gunning for SMEs are saying opt out rates will increase, employers won’t comply, the Regulator will be fining small businesses to the point of extinction. I’m not so sure. I’m not complacent, but I think we should give people a bit more credit.

I get that there won’t be pension managers with the enthusiasm of Tigger running around making life difficult for the FD. But there’s a difference. It’s easy to forget we’re now into the third calendar year of automatic enrolment. People have heard about it. Karen Brady’s done her bit (another tenuous football and nudging link).

I recently heard of a small firm where the owner wanted to get his scheme set up over a year ahead of their staging date because he was trying to recruit people and they were asking questions about the ‘company pension.’ It might not have been a deal breaker, but they were asking. Perhaps because people are talking about it, beginning to value it, and even expect it. Just beginning.

Imagine a firm takes non-supportive view but employees are challenging that and want to be members – which of course, they will ultimately have a right to.

That changes everything.

In this particular example, prospective employees were nudging their prospective employer to auto-enrol them on the basis of a nudge campaign from government that they’d heard about.

Or at least I’m willing to offer that hypothesise.

Others are understandably saying contribution rates are too low and people will be disappointed.  Some will, undoubtedly, but the nudge doesn’t stop at getting people in. We already have a plan to get contributions up to 8% of band earnings. If we started at, say, 15%, I suspect the opt out rates would be very different from the sub-10% we’ve seen so far.

The nudge game is long term.

At the Money Marketing ‘Invitational’ events earlier this month, nudging was mentioned in almost every presentation on automatic enrolment. Again, no experts on behavioural economics, but plenty of believers.

It made me think. In the last week or so, I’ve been involved in a few nudges:

  1. On Monday, a man from the council suggested I add a red bin to my recycling armoury. So I now recycle cardboard and plastic bottles (properly).

  2. On Tuesday, an electronic road sign reminded me that ‘flat tyres are dangerous,’ so I succumbed to my off-side front tyre’s desire for twice the pressure it was currently operating on, as I wobbled into the nearest garage.

  3. On Wednesday, my girlfriend left a home made vegetable juice out in the morning before I left for my flight at ridiculous o’clock. So I had a healthier start to my journey and could subsequently eat my ham and cheese melt, safe in the knowledge my five a day limit was already under threat.

Thursday was my favourite, though. Just after we landed, a man on the plane was complaining bitterly to the pilot that we were 5 minutes late and that the pilot should have told all the passengers earlier when air traffic control had first limited the landing slots due to fog. I’m not entirely sure what he would have done with this knowledge, had he received it 10 minutes earlier.

I overheard the pilot saying something about the ”requirement to focus his attention on avoiding other planes when adjusting circling patterns over the aiport.”

Difficult to argue with. The complainant disembarked, having taken the nudge on board.

I’d be very interested to hear about other people’s nudges. Or your expert view on behavioural science/Greenock Morton, if either happens to be your field.