Julia Fetherston, a behavioral economist, is a project leader in the Public Sector practice of The Boston Consulting Group (BCG).
A recent executive order issued by President Barack Obama in September has the potential to significantly reshape the design and delivery of government services. Partisan politicians may resist these White House-mandated reforms, but a close analysis of the order shows it will be a win for liberals and conservatives alike.
The executive order also is not a subversive threat to American liberty, as some of its critics believe and this headline from The Daily Caller implies: "President Obama Orders Behavioral Experiments on American Public." But it will use what we know about behavioral science to help businesses and individuals better navigate the bureaucracy and improve the choices they make.
This is a promising development. Policy and program design has been dominated for too long by assumptions that citizens are always rational in the decisions they make, even as a growing body of research shows that they often are anything but.
Carefully considered, the executive order is an effort to combine common sense with social science for the purpose of improving the design, implementation and management of government programs – something all Americans should favor.
Specifically, Executive Order 13707 "encourages" federal departments and agencies to "identify policies, programs, and operations where applying behavioral science insights may yield substantial improvements in public welfare, program outcomes, and program cost effectiveness." The executive order is a management tool, not a policy instrument. Critics should not confuse the two.
For example, the executive order asks the heads of government agencies to help qualified individuals, families, communities and businesses access government programs and benefits by "streamlining processes that may otherwise limit or delay participation … removing administrative hurdles, shortening wait times, and simplifying forms." The Annual Report of the Social and Behavioral Sciences Team (SBST) of the President's National Science and Technology Council (released simultaneously with the executive order) highlighted some early successes in simplification. A simple text message reminding college-accepted high school graduates to complete pre-matriculation tasks (form-filling, taking required placement tests), led to 8.6 percent more low-income students successfully enrolling in college versus those who received no text reminders.
Indeed, taken at face value the executive order would seem to affirm an argument that conservative academics and policy experts have been making for decades: that businesses and individuals often alter their behavior when government increases or decreases taxes, issues new regulations, creates new paperwork burdens, or otherwise intervenes in the economy – and that traditional government revenue forecasts fail to recognize these behavioral changes. Tax increases, therefore, might actually reduce total tax revenue, while tax reductions might increase revenue.
While the president's executive order doesn't address this matter specifically, it is a tacit acknowledgment that this line of reasoning, based on behavioral insights, has merit.
The United Kingdom's Behavioral Insights Team, established by Conservative Prime Minister David Cameron, produced significant government savings, estimated in 2012 at some $464 million over five years. Tax compliance improved. Many people are now making healthier lifestyle choices. A partnership with the food industry to reduce salt levels in food is expected to save some 4,500 lives annually.
The U.K. team has been so successful that, after generating what amounted to billions of dollars in public value, it has now been part privatized and its services are in huge demand by governments worldwide – governments of all political stripes.