Half of the biggest change in policy thinking this decade is the idea that people are rational, but that rationality is limited. I’ll explain.
Ministers tell civil servants to go and design a policy that achieves X, whatever X might be. You might think that X is a good thing or a bad thing, but that’s irrelevant here, we want a well-designed policy that delivers X. X could be:
Less people smoking
More insulated houses
Higher pension savings
More happy kittens
The problem is mostly a mis-match of timescales. From a government point of view, smoking kills lots of people; from a personal point of view, it feels good now. Fixing climate change is going to save us truly vast amounts of money in about fifty years time; people want cheap petrol now.
Policies need to reflect and understand peoples’ behaviour. Simply assuming that people will save for their pensions coz it is in their own interest to do so is an assumption that just fails in the real world, and it’s in the real world that policies live. So examples of policies that reflect that are opt-out pensions, not opt-in ones. In the imaginary perfectly rational world, opt-in and opt-out pensions have the same uptake. In reality, most people just aren’t fussed enough to bother opting-out. Same goes for presumed consent for organ donors.
(Actually, pretty much every political debate ever goes just like this:
Conversation with myself about obesity – from Dim Post, one of our national treasures)
(Oh, and Hot Topic on the Minister for Climate Change’s speech opening last week’s climate change conference. He’s much more polite than I’d have been…)