The limits of behavioural economics: What brands can learn from the public sector's experience

Colin Strong
GfK NOP Business & Technology

Behavioural economics as a discipline has generated enormous interest in academia, the commercial world and in public policy – not least in the British government. But there are limitations that need to be understood and the public sector experience can provide useful lessons for brands.

The British government has had a love affair with behavioural economics for some time, primarily as a means of closing the 'jaws of doom' – the gap between the predicted demand for public services and the monies available to deliver them. If people can be nudged in the right direction of healthy lifestyles, paying their taxes on time and so on, it costs the government (and the tax payer) less, and everyone is happy. The government famously set up its Behavioural Insights Team for the purpose of helping to craft policies. The unit has now been part-privatised with the intention of advising governments worldwide. Indeed, the White House launched its own behavioural insights team last year.