A successful compliance experiment by the UK government’s Behavioural Insights Team

This is another posting in our ongoing series on behavioral science, and what it could mean for compliance and ethics programs.  Prior posts can be found here.

In an article in today’s NY Times business section, Richard Thaler, professor of economics and behavioral science at the University of Chicago’s business school, describes how the British government  (led by a “Behavioural Insights Team“) has begun regularly to apply behavioral science in developing and deploying policies.   Because compliance and ethics officers are also in the policy business, this story should inspire them to try to do something similar in their respective companies.

Among other things, Thaler describes a successful experiment in which the government’s use of a behavioral insight – that ‘[p]eople are more likely to comply with a social norm if they know that most other people comply” – to significantly improve tax collection. “Letters using various messages were sent to 140,000 taxpayers in a randomized trial.  As the theory predicted, referring to the social norm of a particular area (perhaps, ‘9 out of 10 people in Exeter pay their taxes on time’) gave the best results: a 15-percentage-point increase in the number of people who paid before the six-week deadline, compared with results from the old-style letter, which was used as a control condition. The tax authorities estimate that this initiative, if rolled out across the country, could generate £30 million of extra revenue annually. And note that sending an effective letter doesn’t cost any more than sending a bad one.”

How could this insight help C&E practitioners?  Many are regularly faced with the task of trying to persuade busy employees to take part in various C&E program initiatives  and providing social norm information of this sort could be useful in such efforts.

Of course, when dealing with a truly mandatory requirement – e.g., signing an anti-corruption compliance certification – one would not take this approach. But for many other initiatives it could help make the sale.

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