Kicking off the event, Martin Parkinson, the secretary of the Department of Prime Minister and Cabinet, reflected on the failure of the NeoNurture, which Time Magazine rated the number one invention in 2010. An incubator designed from leftover car parts for use in developing countries without adequate medical facilities, the NeoNurture was only ever used by one baby after its invention (who modelled it for Time Magazine) – because the developers failed to consider how prospective choosers might respond to the invention. Parkinson recalled that Ralf Speth, Jaguar’s CEO, once quipped, “If you think the cost of good design is expensive, you should look at the cost of bad design.” Here at CPRC we agree.
In our Five Preconditions of Effective Consumer Engagement report, we strongly recommend regulators and policymakers adopt customer journey-mapping exercises to ensure interventions intended to improve consumer choice address the barriers people face when making decisions. Refining information fact sheets for example, is unlikely to improve consumer choice where individuals are unaware they exist, or if they remain incomprehensible for the purpose of comparison.
Parkinson also emphasised the need for the APS to ‘get to know the public we serve – in all the breadth and depth that encompasses’. It is essential that policymakers develop interventions that address the range of circumstances individuals find themselves in. We think this a good guiding approach for all sectors – industry, academia, policymakers and regulators – this is especially the case when attempting to remove barriers for vulnerable consumers.
In opening the second day’s proceedings Professor John A. List spoke to the importance of not just trialling interventions before widespread adoption but for a need to replicate results to provide policymakers to avoid ‘voltage drop’ when taking behavioural interventions to scale. This makes an awful lot of sense, especially sharing the results so that others can also learn from these trials before designing a new intervention.
Some examples of this were outlined in following presentations from the Australian Energy Regulator, Behavioural Insights Team and Behavioural Economics Team Australia exploring a range of trials completed, both in the UK and in Australia to improve consumer comprehension of retail energy information, a sector that remains particularly fraught for consumers.
Professor Rick Larrick spoke to the importance of providing consumers with comprehensible information, especially information that signposts key aspects or features of a product or service. Here, Larrick outlined how consumers have historically been provided with limited and flawed energy metrics, such as miles per gallon, to quantify energy use. His research proposes four principles informed by behavioural insights for designing comprehensible consumer facing measures to help consumers make more informed decisions. This has direct relevance to CPRC’s second precondition – ensuring consumers have access to key information that is clear, comparable and comprehensible.
Arguably the big drawcard of the event, Professor Cass Sunstein’s plenary session explored and addressed a number of misconceptions about nudges, and provided rejoinders, along with a preliminary outline for a “Bill of Rights for Nudging”.
Professor Sunstein highlighted that nudges can be a particularly useful tool for policymakers and regulators to help individuals make better choices, and are generally more popular than mandates or bans. He also noted a key aim of nudges is to improve the navigability of life’s difficult choices, particularly for those with limited attention or capacity to do so. His example of a GPS is apt – calculating the quickest, easiest way home as a guide, which retains freedom of choice for the user.
CPRC’s Five Preconditions report drew heavily on behavioural insights, and this concept of navigability permeates much of our conceptual framework. Our fifth precondition in particular requires policymakers and regulators ensure consumers are aware where they can seek help, are aware of key product and service information, are aware where to compare products and services, and are aware how to switch between providers where this suits their preferences. The issue of navigability is particularly pertinent for those already encountering disadvantage.
Watch Sunstein deliver his Holberg Prize address:
Notably, in the address, he cited MIT scholar Ester Duflo:
“We tend to be patronising about the poor in a very specific sense, which is that we tend to think ‘why don’t they take more responsibility for their lives?’ And what we are forgetting, is the richer you are the less responsibility you need to take for your own life, because everything is taken care of for you. And the poorer you are, the more you have to be responsible for everything about your life… Stop berating people for not being responsible and provide the poor with the luxury the rest of us have, that a lot of decisions are made for us.”
CPRC considers improving the navigability of complex products and services is paramount, especially where policymakers have determined that markets should deliver these services. We’ll be doing more work on these concepts over the coming year.