The National Institute for Health and Care Excellence (NICE) has been the butt of much ridicule over the past week. A pill designed to reduce alcohol consumption among problem drinkers will be made available across the NHS. But the concept of problem drinkers is so wide that it embraces people who enjoy a couple of modest glasses of wine a day. Indeed, the treatment is not really aimed at serious alcoholics who knock back litres of vodka with meths chasers.
There are now vast swathes of behaviour which Western governments attempt to modify. The government has its so-called ‘nudge’ unit dedicated to precisely this end. Obesity, smoking, the amount of exercise people take, voting registration, recycling, energy consumption are some of the examples. On the latter, it is not just the amount but the mix. Hectored for years that diesel fuel was morally superior to petrol, some unfortunates followed the advice and switched their cars to diesel. They now find themselves on the receiving end of a volte face on the matter by the bureaucracy.
There is a literature in top ranking economics journals on the impact of such interventions. In general, there is a short term effect which gives the policy makers what they want, but gradually, the reactions become muted and people revert to their old patterns. There are exceptions, but most of these attempts to change behaviour fail.
An interesting paper in the latest American Economic Review by Hunt Allcott and Todd Rogers shows the enormous efforts which are needed to alter the decisions which people make in the long term. In the United States, nearly 100 utilities hire a company called Opower to send home energy reports every month to millions of households. Households receive information on personal energy use, social comparisons and energy efficiency information.
The real interest in the Opower work is that some of the programmes were set up as controlled scientific experiments. Allcott and Rogers examine three of the longest running ones, which started in the late 2000s. Highly sophisticated metering devices were installed. Households, from a very large sample, were selected at random to receive the information. And after two years, some of those getting the reports were randomly assigned to have them stopped. This way, both post-intervention persistence and the incremental effects of continued treatment can be measured.
Unsurprisingly, there is an immediate reduction in energy consumption after receipt of the first report, though this impact decays rapidly. In households discontinued after two years, the subsequent decline is much lower. The sheer frequency of the reports does seem to alter behaviour. But there are further reductions in energy consumption in households who continue to receive the information, suggesting that people take a very long time to completely change their habits.
In the UK, attitudes towards wearing seat belts and drink driving did eventually change, but it took a very long time. Short-term trendy campaigns to ‘nudge’ behaviour are just not going to work. Governments have to be in it for the long haul.
As published in City AM on Tuesday 7th October
