Nudging – A promising tool for sustainable consumption behaviour?

Abstract

Success of strategies for solving problems of climate change, resource efficiency and environmental impacts increasingly depend on whether changes in public behaviour can and will supplement the technical solutions available to date. A renewed perspective on existing policy tools and potential strategies for behaviour change are entering public debate that have implications for behaviour of individuals, but that also raise critical questions about the role of the government in the society and transition to sustainability.

The guiding question is whether it is possible to help individuals make better decisions for themselves and society at large by overcoming limitations of human cognitive capacity and behavioural biases? In order to answer these questions, this article 1) analyses existing academic knowledge on nudging and choice architecture; 2) investigates lessons about effectiveness of applied nudging tools and approaches in consumption domains of energy use in the home, food and mobility; 3) discusses opportunities and limitations for devising more successful nudges in the three consumption domains; and 4) outlines critical issues concerning the legitimacy of nudging.

The article shows that lately applications of behavioural sciences and behavioural economics, such as nudge, have been helping policy makers in different countries and sectors to more systematically integrate behavioural insights into policy design and implementation. However, the size of the effects of policy interventions and the actual outcomes of interventions in different contexts are very diverse. Results from one experiment cannot be indiscriminately generalised to a different context or to a wider population. The problem is the complexity of human behaviour and the diversity of factors that influence it. Despite that, nudging is a useful strategy for inducing changes in context-specific behaviour. Nudge tools are seen as a complement to the traditional policy instruments rather than as a substitute for laws and regulations and economic tools. The article is based on the project funded by the Swedish EPA (Environmental Protection Agency) that resulted in a report “Nudging. Advancing Swedish policy making with academic insights and practical experiences of changing behaviour” (Mont et al., 2014), which served as an input to the Swedish EPA' recommendations to the Swedish Government on policy measures for sustainable consumption (Naturvårdsverket, 2014).

Introduction

There is a growing recognition that supply-side policies need to be complemented by demand side strategies that could help individuals make more sustainable decisions. Therefore, behavioural insights are being used increasingly in the design, implementation and evaluation of policy instruments (Heiskanen et al., 2009, Wolff and Schönherr, 2011).

Behavioural sciences, including psychology, marketing and behavioural economics, paint a picture of complex human behaviour that is influenced by a diversity of factors, such as desires and needs, social norms and values, infrastructural and institutional context, and economic and political climate (Mont and Power, 2013). There is also a growing knowledge on how human behaviour is influenced in practice, for example in the shopping context by retailers (Mont, 2013) or at the community level through social marketing (McKenzie-Mohr, 2011).

Insights from behavioural sciences help policy makers not only to better understand human behaviour and factors influencing behavioural change, but to also devise more effective and efficient policies for advancing welfare-enhancing and sustainable behaviour. Still, information provision is the most widely used policy tool to promote sustainable consumption (Berg, 2011, Schrader and Thøgersen, 2011). Informative policy instruments rely on the rational behaviour model (see Hansen and Schrader, 1997), according to which people are utility maximisers with perfect information processing capacity. These assumptions about human nature were questioned by cognitive and social psychologist and even economists already in the 1950s −1970s (Simon, 1957, Tversky and Kahneman, 1974). It was demonstrated that people have bounded rationality, are subject to behavioural biases and often do not make deliberate choices, but rely on mental shortcuts and habits.

These findings open up possibilities to design policies that recognise and utilise knowledge of human behaviour as it is, and not as projected in simplified economic models. However, it has been difficult for psychologists to bring the complexity of human behaviour into the policy making context and even more challenging to translate it into the language of policy recommendations and economic and administrative rationales. A book by behavioural economist Richard Thaler and law scholar Cass Sunstein Nudge: Improving decisions about health, wealth, and happiness (2008) has succeeded in popularising some of the findings from behavioural science and their applications in policy making. This spurred a renewed interest in employing behavioural sciences in devising policies that enhance individual and social welfare. It explores the role of choice architecture and nudges in shaping behaviour in a desired direction.

Nudge tools have been successfully applied by governments, for example in savings accounts (Thaler and Bernartzi, 2004) and public health campaigns (Oullier et al., 2010). Recently Cass Sunstein, 2014a, Sunstein, 2014b) claimed that nudges can also be promising tools for promoting a broad range of pro-environmental and sustainable consumption behaviours.

The present paper aims to review the existing evidence-base for this claim, focussing on the most environmentally relevant domains of consumption: housing, mobility and food. In addition, the intention is to not only collect available evidence as to whether nudges can be promising tools for promoting pro-environmental behaviours, but to also gather data to help us judge to what extent nudges are effective in changing behaviour. In order to evaluate the effectiveness of nudges, the literature review included searches for existing academic research, commissioned studies, large- and small-scale experiments and pilots employing nudge-based interventions that have reported quantitative results. Unlike previous reviews, we do not focus on the entire behavioural economics discipline (e.g.Avineri, 2012, Moseley and Stoker, 2013) or particular behavioural interventions (e.g., Frederiks et al., 2015, Kunreuther and Weber, 2014), but investigate the evidence pertaining to the range of tools advocated by Thaler and Sunstein (2008) in the selected environmentally relevant domains. Understanding the effectiveness of different types of nudges and the magnitude of effects is relevant both for policy making and for administrative feasibility of employing nudges.

The main sources of information were digital online databases, including SCOPUS, Web of Science, Lund University Online Library providing access to EBSCO, ABI, JSTOR and other databases. Also library catalogue of Lund University – Lovisa, individual full-text journal databases and online repositories were used. The initial keywords included: nudge and nudging, behaviour change, environment and consumption. Then the keywords were refined to search for information about application of different nudge tools in environmentally relevant domains. Further, the keywords were specified that allowed searching for sources reporting on effectiveness of the different nudge tools and specifically that presented quantitative results. Throughout the search process, where feasible, individual keywords were combined into complex search statements.

The bulk of the processed literature comprised not only peer-reviewed academic journal articles, but also books, official policy reports and commissioned research reports. Since nudging as a concept has been recently advanced in the USA and taken up in Europe, the majority of processed sources stem from European and North American countries.

The results of the traditional literature review were validated for completeness and policy relevance in expert interviews with three prominent nudge researchers.¹ The main contribution of this study is to sustainable consumption policy answering the question: what are the promises and pitfalls of nudging for policy makers?

The present article starts by presenting the concept of nudging in Section 2. Then the article analyses the existing evidence with regard to the efficiency of nudges in the three environmentally relevant domains of consumption: energy, food and transport (Section 3). After that it describes the opportunities and limitations for policy making based on nudging in the three domains of relevance for the environment (Section 4). We cap this with a discussion on the legitimacy of nudging in influencing behaviour (Section 5).