Why paying people to fix their lives doesn’t work
Janice Dudley had discovered a happy formula: Do the right thing, then get paid for it. “You’d get $50 to go to the library,” she recalls. “You got $300 every two months if you showed them a pay stub that showed you’d been working.” Her two children were already doing well in school, but now they were getting paid for it. Milestones like passing the SATs or graduating high school were especially rewarding. “Sometimes they’d give you $700, $900, even $1,500 one time,” she said.
All that is a distant memory now, though: Dudley was one of the beneficiaries of the Opportunity NYC Family Rewards program dreamed up by then-Mayor Mike Bloomberg. Funded with private money, the 2007 program aimed to break down poverty by giving low-income New Yorkers like Dudley’s family cash incentives. Bloomberg hoped the experiment would lead to a permanent, publicly funded program. Instead he pulled the plug in 2010 after data showed disappointingly small gains.
Such well-meaning social engineering came to be called “nudging,” but 10 years after it took off, it’s proving to be a dud. Inspired by the 2008 book“Nudge: Improving Decisions About Health, Wealth, and Happiness,” various programs deployed little adjustments and incentives to encourage smart things like saving and discourage bad things like overeating. “Nudge” co-author Cass Sunstein even parlayed the book into a high-level government job — the Nabob of Nudge.
A classic Bloomberg-era nudge from 2008 was plastering calorie counts on menus. The theory went that instead of restricting what people eat, if you instead silently reminded them that the Outback Steakhouse Bloomin’ Onion was a 1,954 calorie side dish, they’d run to the nearest farmstand for kale and beets. But people gradually stopped noticing the calorie counts. Moreover, “at no time did the labels lead to a reduction in the calories of what diners ordered,” reported The New York Times in 2015.
Now Sunstein has publicly dialed back on his hopes for nudge power and moved on to writing a book about “Star Wars.” “Twilight of the Nudges,” ran the headline in one magazine piece. Needless to say, the salad of pop psychology, nerdy behavioral science and nice intentions is of zero interest to the red-meat Trump administration.
If people are told that they are being nudged, they will react adversely and resist
Nudging is less strict than more traditional levers of government force such as the massive tax hikes on cigarettes that, along with a relentless public-health campaign, did indeed reduce smoking. But it suffered attacks on all fronts: on the grounds of ethics, unintended consequences, classism. Aren’t city soda taxes such as the one in Philadelphia just surtaxes on poor people who a) like soda but b) can’t get out to the suburbs to buy cheap, non-taxed soda? In Philadelphia sugary sodas, which are taxed at 1.5 cents per ounce, are now more expensive than beer, and a 2012 survey suggested people do indeed switch from Pepsi to Pabst if the latter is cheaper.
Moreover, there is this worrying fact: “If people are told that they are being nudged, they will react adversely and resist,” Sunstein has written. Do we really want government using subterfuge to get people to do the (supposedly) right thing?
What about open, positive nudging such as Opportunity New York City? Nothing tricky there: It simply rewarded parents for making smart decisions. Yet “elementary and middle school students who participated made no educational or attendance gains,” wrote the Times. Some high-school students saw an uptick in attendance and scores, but not the kids most at risk — those failing to meet proficiency standards. The main effect of the program, which steered an average of $6,000 a year to the families who participated, was that it reduced poverty.
Dudley, who lives in public housing in East New York, says her kids would have turned out fine even without Opportunity New York. “I already steered my children to do the right thing,” she says, noting that her son Quashaun and daughter Quaneshia both obtained college degrees and are now successful adults. She misses the money, though: “It did help me financially. My children were able to wear the nice shoes and the nice coats. We went on vacation.”
Efforts to lift people out of poverty by giving them incentives aren’t necessarily doomed, but changing behavior is rarely as easy as academics seem to suppose. And poverty is strongly linked to behavior. “No feasible amount of income redistribution can make up for the fact that the rich are working and marrying as much or more than ever while the poor are doing just the reverse,” Isabel Sawhill wrote in a paper for the left-leaning Brookings Institution.
The prospect of exiting poverty already provides a major incentive to making the right life choices. Making the rewards more immediate and direct may turn out to be a winning strategy. But it may also be the case that a flawed character can’t be fixed by government checks.
Kyle Smith is critic-at-large for National Review.
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