Yielding to temptation

An introduction to behavioural economics.

One human weakness that we are all familiar with is that we are forever making plans for the future that involve some kind of self-improvement, but later on we renege on these plans and yield to temptation, taking an "easy way out". For example, we plan on going for a run this evening, but then decide to lay back on the couch and watch TV instead; we may go to bed planning to rise at 6am, but when the alarm rings we rapidly hit the snooze button and end up oversleeping. On a more long-term basis, we plan to make regular savings for retirement, but then decide we should spend our money on new furniture for the living room, a new set of golf clubs, and so it goes on. In general we make plans to achieve a larger benefit later, but then change our minds and settle for a smaller benefit sooner.

For a long time, economists have abstracted from such complexities of human decision making. The standard model of economic rationality suggests that we should only change our minds if and when appropriate new information is received. But often the change of mind is not caused by new information. Why humans tend to behave in this way is still a subject of controversy. However, rather than continuing to regard them as an anomaly, economists have begun treating these variations in our behaviour more seriously. Under the label of behavioural economics, new approaches to the study of decision making have been emerging which are catching the imagination of politicians.

Saving for retirement for example is a serious problem for many. Much evidence from the UK and US suggests that a large proportion of people do not save sufficiently for retirement. Various measures that have become known as ‘nudge’ policies are being suggested to address this as an issue of public policy. Unlike traditional regulation by government, nudge policies do not seek to compel us to behave in certain ways, but change what is called the ‘choice architecture’ of the situation, providing incentives for us to act in certain ways. A common nudge policy is to change the default option in a choice situation. Thus, if employers’ pension plans require employees to opt in, there will be a tendency for many to go with the default of remaining outside the scheme. Evidence from the US suggests that the simple measure of reversing this option can substantially increase the number of employees contributing to retirement plans. Furthermore, options can be framed in a way to encourage greater contributions than employees might otherwise make. For example, if people are given 3 options in terms of size of contribution, say £100, £120, and £140 per month, many will choose the middle option. Simply changing the options to £160, £180, and £200 per month automatically increases people’s willingness to contribute, as once again people tend to go for the middle option.

The UK government has taken some of these findings of behavioural economists on board. The 2011 Pensions Act has established default enrollment options which will be implemented in the UK economy over the next six years. A Behavioural Insights Team attached to the Cabinet Office is exploring further applications of nudge policies in other areas such as eating habits or organ donation. However, their effectiveness remains controversial. Many doctors doubt that nudge policies are sufficient to encourage people to change their dietary or smoking habits, and believe that more radical intervention is necessary. Wider debates have focused on the merit and scope of the underlying 'benevolent paternalism' and its implied call for the large scale engineering of choice architectures across the economy. But this does not detract from the fact that the behavioural turn in economics is proving to have a lasting impact on public policy and is rapidly reshaping the economics curriculum taught at universities today.

Nick Wilkinson and Matthias Klaes are the authors of An Introduction to Behavioral Economics, 2nd ed, (Palgrave Macmillan) which will be published in April. A companion blog to the book can be found at

Decisions, decisions, Getty images.

Nick Wilkinson and Matthias Klaes are the authors of An Introduction to Behavioral Economics, 2nd ed, (Palgrave Macmillan) which will be published in April. A companion blog to the book can be found at

Daniel Berehulak/Getty Images
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Commons confidential: Away in Pret a Manger

Corbyn's lunch, a Keith "Vazz" hunch and the New Left Book club.

Comrade Corbyn, despite the pressures of leadership, remains the Anne of Green Gables of British politics, maintaining an almost childlike joy in everything he does. Pride of place in Jezza’s Westminster office is a Lorraine Kelly mug. Corbyn asked for the memento after appearing on the popular telly host’s ITV show – where the pair discussed his interest
in manhole covers.

There’s no record, as far as I can ascertain, of Kelly requesting a Corbyn mug. And yet the sustained abuse Corbyn receives from Labour critics, Conservative enemies and the Tory press isn’t generating hostility on the streets. People still clamour for selfies with the bearded lefty. My snout sat in awe in a Pret a Manger (Comrade Corbyn likes to pop out for his own sarnies, rather than dispatch a flunky) as the queue disintegrated, with punters hungry for snaps.

The Corbyn apparatchik and London City Hall escapee Neale Coleman said: “The one thing I learned from Boris Johnson was never say no to a selfie.” Corbyn must hope he absorbed more than that.

Perhaps the unlikeliest odd couple in parliament is Labour’s Warley Warrior John Spellar and the purple shirt Nigel Farage. Both went to the private Dulwich College in south London. Spellar, who spearheaded his party’s anti-Ukip campaign before the election, won a free scholarship and likes to remind Farage that the Kipper’s fees would now be £18,000 a year. “I passed the exam, too,” sniffs Farage, “but my father earned too much, so we had to pay.” One school, two backgrounds.

Trade unionists no longer regard attacks by the Tory press as just a badge of honour. Aslef’s president, Tosh McDonald, a train driver, wears a black T-shirt with the slogan “Hated by the Daily Mail” on it, after being denounced by Paul Dacre’s organ. I suspect Labour’s Keith Vaz is unlikely to revel in a message sprayed on the side of a van in Leicester. The fastidious chair of the home affairs committee is entitled to challenge at least one inaccuracy in the statement: “KEITH VAZZ IS A KNOB.”

“Any idiot in opposition who argues that government legislation can somehow be got through without programme motions should be taken out to the nearest lunatic asylum.” Who said that? Ken Livingstone? No, Kevan Jones. In June 2010. How times, and language, change.

To the launch of the new Left Book Club, where a director of the Corbynista reading circle, Anna Minton, waved a personalised glossy invitation to join the Institute of Directors. The Pall Mall bosses’ club’s direct mailing system is way off target.

I wonder: what could expelled Tory trickster Mark Clarke have on Grant Shapps?

Kevin Maguire is the associate editor (politics) of the Daily Mirror

Kevin Maguire is Associate Editor (Politics) on the Daily Mirror and author of our Commons Confidential column on the high politics and low life in Westminster. An award-winning journalist, he is in frequent demand on television and radio and co-authored a book on great parliamentary scandals. He was formerly Chief Reporter on the Guardian and Labour Correspondent on the Daily Telegraph.

This article first appeared in the 26 November 2015 issue of the New Statesman, Terror vs the State