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David Halpern
David Halpern of BIT: ‘It’s no longer just about a single prompt … getting chocolate away from supermarket checkouts.’ Photograph: Felix Clay/for the Observer
David Halpern of BIT: ‘It’s no longer just about a single prompt … getting chocolate away from supermarket checkouts.’ Photograph: Felix Clay/for the Observer

The ‘nudge unit’: the experts that became a prime UK export

This article is more than 5 years old

A team of former civil servants specialising in behavioural psychology now pulls in revenues of £14m a year

David Halpern pauses at the mention of a quote from one of the government’s senior Brexiters – that “people in this country have had enough of experts” – and briefly gazes out of a window in the Westminster offices of the Behavioural Insights Team (BIT).

“Empirically, it doesn’t appear to be true,” replies the chief executive of the business that was once the Cabinet Office team nicknamed the “nudge unit”. It was spun off in 2014 as a “social purpose company” and is now co-owned by its employees, the Cabinet Office and the innovation charity Nesta.

“Michael Gove made that remark, and he was talking about a very particular context, but if you actually look at the data, trust in experts has gone up over the last 10-15 years,” says Halpern. “I know everyone likes to say, ‘We’re sick of experts’, but it doesn’t appear to be the case.”

The financial performance of BIT – which uses behavioural psychology to change habits and actions – certainly suggests expertise, as a commodity, is valuable.

Ten years ago, BIT was a small unit of civil servants established with the remit to apply lessons from behavioural economics and psychology to public policy. But it has now grown into the type of British export success story that Gove and fellow Brexiters might want to celebrate.

The group’s revenues last year climbed by a third to £14m and nearly 40% of that income came from overseas. BIT now has a New York office bringing in clients across the US and Canada, and subsidiaries in Australia, New Zealand and Singapore. The unit’s successes include sending letters to British GPs who were prescribing more than their peers, cutting unnecessary prescriptions by 3.3%. There have also been successful projects in the fields of education and road safety.

BIT’s clients range from governments and public bodies to the World Bank, and its work spans traditional “nudge” territory – such as using behavioural psychology to prompt people to pay their taxes or make better use of public services – to involvement with Colombia’s peace process.

But back in London there are some particularly interesting questions looming for an organisation that seems a curious cross between a Silicon Roundabout startup and a Whitehall department, and where young staff on sofas tap away on Macbooks in the same building as Conservative Central Office.

What now for nudge in the age of Brexit? Also, for an outfit created under David Cameron to find ways of doing “more with less” under austerity, what might happen in the event of a Corbyn government committed to high public spending? “I worked for Tony Blair for six years, so I did live through a period where there was a lot of money … but it seems that governments always struggle,” replies Halpern, a psychologist who lectured at Cambridge, Oxford and Harvard before entering government. “The most important thing is that if the taps do get turned on again – like in health and elsewhere – will we really spend it wisely and well?”

By now, he says, BIT, he says, has now run hundreds of trials and “reached the point where it’s no longer a matter of supposition, as it was in 2010”.

“We can now say with a high degree of confidence these models give you best policy,” adds Halpern, who has plenty to say that might interest not just business, but conceivably a Labour Treasury team headed by John McDonnell.

Halpern’s ideas for altering the labour market, for example, take an approach that transcends classical left and right views. “Take someone trying to decide where to work. They can get info about what they might earn, but not much else. Will you be happy? Do you have progression opportunities? Is the boss an asshole?” he says. “There are things like [the workplace review site] Glassdoor, but imagine you had something more like TripAdvisor that was filled out and really rich in information about firms.

“What then happens is that good firms get the best candidates because they go there, and the worst firms have to start paying the market premium because you have ‘de-shrouded’ their attributes.”

It’s just example of what Halpern regards as some of the newer, more cutting-edge areas of behavioural science and nudge theory, focusing on market design. “It’s no longer just about a single prompt … getting chocolate away from supermarket checkouts because people find it irresistible. It’s about careful design – the sugar levy – in ways so that enough marginal consumers drive producers to reformulate their products.”

BIT is active, too, on the financial front. Work in partnership with the Money Advice Service has been developing ways of helping squeezed families to tackle debt and encourage “rainy day savings”.

“In India it has been found that if you give workers their money in two tranches they are more likely to save. It’s even more effective if you give them the envelopes with pictures of their kids on it, or if they have to tear that picture in order to get the money,” he says.

Best of BIT

Education A 34% increase in acceptances of pupils from underrepresented schools to top universities, following a letter to the pupils from a top-tier student with a similar background.

NHS waiting times A 38% reduction in patient referrals to overbooked hospitals, resulting from installing a pop-up prompt in the GP referral system.

Public finances A 37% rise in tax declaration rates following text-message reminders to 750,000 businesses in Mexico. This built on early work in the UK, where reminders about self-assessment brought forward £200m in tax revenue in a year.

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