FWF: In your capacity as a business psychologist, you are one of the leading lights of the government’s nudging project Motivierender Staat (the motivating state). What does this involve? Erich Kirchler: A few years ago, in 2008, the 'Nudge’ concept became very popular in the US and the UK. At the time two US scientists, an economist and a law professor, published an eponymous book which became a bestseller. This revolves around knowledge about human behaviour which is not a completely new idea in social psychology. To my mind the title Motivierender Staat is very appropriate for what experts investigate under the heading of ‘behavioural insights’. The objective of this project is to motivate people to adopt a certain behaviour. Whenever a situation does not necessarily require the passing of a new law, nudges could be used to encourage desirable behaviour. This works well, for instance, when it comes to healthy eating, environmentally friendly behaviour or tax honesty. A nudge in the right direction is a low-cost tool for achieving something that the state considers advantageous. FWF: You are saying that policy-makers now opt for motivation instead of regulation. Why the change of heart? Kirchler: Nudging means regulation by motivation. In Austria, too, policy-makers have become more receptive to this idea and think about where regulation can function without the usual strict prohibitions or dictates. Human beings do not act in a purely rational manner. If we want to understand the reasons for human behaviour, we have to study how and why people take certain decisions, how they think, feel and act. The knowledge about motives and preferences can be used in order to design situations so that a lack of time, a lack of motivation or our ‘cognitive restraints’ induce us to spontaneously and automatically opt for the better course of action. If we want students to eat healthily, for instance, it serves a useful purpose to place vegetables and salads in the front row on the canteen’s food counter and to shift the less healthy products to the back. This works because many people tend to reach for the things that are closest. Nobody is forced, however, to eat healthily; everyone is free to have the French fries. So it is important to take an approach of ‘libertarian paternalism’ for designing choice contexts, in such a way that people are not prevented from doing the opposite of what is considered to be meaningful or desirable behaviour. FWF: So we really function in a very simple way? Kirchler: No, that’s just the point; we are not simple at all. ‘Homo oeconomicus’ would function very simply, like a precisely computing machine that works towards one single objective – maximum benefit. But we humans are complex beings. Sometimes we rack our brains before we decide, sometimes we decide spontaneously, sometimes a signal will guide us in a certain direction and we don't even look for all the information available. It is hard to predict how people are going to behave in a given situation. When you look around in behavioural science, you will find a great deal of knowledge about human motives and behaviour and about incentives that engender behaviour. But to be quite certain about the effectiveness of incentives, you need to test their impact empirically.
FWF: As scientific consultant to the ministries, what are your expectations for this project? Kirchler: The objective is to work in close cooperation with policy-makers to identify areas where the established behaviour is not really ideal, where a different choice would be desirable, and see how an architecture of choice could be designed so that people are induced to make better decisions. As someone working in applied psychology I consider it my task to be equally involved in practical matters and to prepare knowledge in a way that makes it applicable in practice. If the finance ministries in different countries want to learn about the psychology of tax-paying, I would see that as a success for research. Simple advice will often seem obvious only once it has been given: a great deal of progress could be made merely by designing government forms so that people can understand them easily. If you want to promote certain behaviour you have to start by eliminating all the obstacles to such behaviour. FWF: So this also involves policy-makers acting as role models? Kirchler: That’s right. Their attitude can't be that it doesn’t matter just how complex a law or procedure is, and that people simply have to come to terms with it. Understanding is not something that you can dictate! We have to become aware of what people can understand and take it from there. In politics we can't continue to ignore behavioural insights. FWF: Nudges instead of laws presuppose that the state trusts its population. Conversely, would the ‘motivating state’ like to re-gain people’s trust in politics? Kirchler: Only those who enjoy trust can wield the legitimate power given to them in a meaningful way. In this context it has to be clear, and this needs to be communicated, that those in power really care about the concerns of the people. The message must not be that the mere existence of the law is justification enough. ‘Nudging’ has a lot of potential but also many critics, and it is certainly open to misuse. But I think that it makes sense to find out where you can make do without laws but still guide people’s behaviour in a way that’s not manipulative but makes the aims of the ‘choice architect’ very distinct and concrete.
Kirchler: First of all, wherever we use the taxpayers’ money we have to provide feedback and make it quite clear what it is used for. There has to be a balanced exchange. And people need to consider it plausible that the money invested in knowledge and research generates an added value. The knowledge created by researchers needs to be applied in practice and contribute to improving the quality of life. Hence, what we need first of all is communication and useful application. Secondly, science is also connected to experience gathered at school and in universities. In many disciplines, our universities have much poorer student/teacher ratios than you will find in Switzerland or Germany, for instance. This means that students in Austria have a harder time getting access to science and teachers. As a result, there is a lack of understanding for the necessity of investing in research in order to improve the future in economic and social terms. Thirdly, we need more exchanges between science, politics and the business community, as commonly practised in other countries. You might find there a professor who goes into business and then returns to science again, or you may find people who are partly employed at a university, partly in a company or in politics. In Austria these areas tend to be relatively isolated from one another. FWF: Do you have the impression that scientists are also closing themselves off? Kirchler: If there were a shared conviction that exchanges and networking promote mutual understanding, you could ‘nudge’ scientists to go outside their field more and come back again or cooperate more intensively with practitioners. As a result, mutual understanding would improve, since in many cases people have negative opinions because they don’t know what the others are doing. And ignorance fosters scepticism. And finally it is necessary for the applied (behavioural) sciences to be regarded just as highly as basic research. FWF: In politics, science and research play only a subordinate role as well. And yet the target is to become an innovation leader. How does that gel?
Kirchler: We need innovation and creativity. New things will only develop if we allow for mistakes and accept some risks. Risk means that something can go wrong. And creativity needs time – you can't speed up the generation of ideas like piecework on a conveyor belt. Time, however, is something that we lack in our fully economised science. Particularly young colleagues who are just embarking on their careers cannot ‘afford’ to conduct risky research which might not lead to the desired results, as their imperative is to publish. In the political sphere I note that the technical experts are mainly lawyers and economists. Very often they are the only ones. Policy-makers need to recognise that the social and behavioural sciences have accumulated a large stock of knowledge, knowledge that over time has been verified, about the behaviour of individuals in a social context, about groups and strata in a state. FWF: At the 2015 European Forum Alpbach, researchers demonstrated how gaming methods can be used to address complex political questions and decision-making processes. – Can science act as a role model for politics in this context, for a creative approach to problem solving? Kirchler: Game theory studies decisions, and the results permit conclusions about incentives in choice architecture. It is unwise to rely on laws to regulate everything and on the classical model assumptions of economics. Especially the behavioural sciences offer a host of insights about why people act as they do both in business and in their daily lives. FWF: The FWF is the central support organisation for basic research in Austria. Numerous studies and experts have for years been calling for a significant increase in the FWF’s budget, also in order to prevent a brain drain. How do you see the situation?
Kirchler: During my time on the FWF Board I have seen that the endowments have not grown at the same pace as the applications, whose numbers and quality of writing are steadily rising. The pressure on research institutions and universities to raise third-party funds for financing research, and, thus, for human resources, has risen dramatically. This is why there is a growing number of applications for research funds. That is a problem, because it is getting more and more difficult to decide which projects are to be funded and which are not. There are many very good research applications that have to be refused because of a scarcity of funds. I believe that the business community needs to contribute to the financing of research. After all, many research results are useful and profitable for the economy. I see another problem in the fact that an enormous amount of time is invested in writing applications and in administering the funds, particularly in the case of EU projects. This precious time is lost for research, and often the research funds will not suffice to summarise and publish research results and make them available for application. FWF: Last year already, the FWF, with a funding budget of EUR 211.4 million, had to refuse projects worthy of support amounting to about EUR 70 million. And it is particularly young scientists who benefit from such funding. Are we not thereby destroying a large part of Austria's research potential? Kirchler: I am part of a doctoral programme, and I can see the great benefit of these programmes. There are so many rewarding things happening here that you could never offer in a one-on-one system. In such a programme, several disciplines contribute to one topic, supported by the best people from all over the world. This is how you advance both the discipline and the young people and their scientific careers. If something like that is no longer possible, I believe that Austria will lose an enormous part of its (innovation) potential, and the best young scientists are going to enrol in programmes in other countries.
Erich Kirchler is Vice Dean of the Faculty of Psychology at the University of Vienna. The business psychologist mainly focuses on the behaviour of people in the areas of tax honesty, money management and buying decisions in private households. From 2011 to 2014 Kirchler was member of the FWF Board.
The Motivierender Staat Project Together with the behavioural economists Matthias Sutter, Martin Kocher and Ernst Fehr, Erich Kirchler is one of the fathers of the nudging project Motivierender Staat, started by the Austrian Federal Government in 2015 in the context of the Reformdialog Verwaltungsvereinfachung (an initiative aiming at decreasing administrative hurdles). Modelled on the British Behavioural Insights Team headed by David Halpern, which successfully implemented projects in cooperation with the UK Government, the project will involve several pilot projects by individual Austrian ministries. The Government ultimately hopes to save millions of Euros by providing ‘nudges’.
Recommended reading The economist Richard Thaler from the University of Chicago and the Harvard Law School professor Cass Sunstein are the authors of the book Nudge: Improving Decisions about Health, Wealth, and Happiness. They present numerous examples from the young discipline of behavioural economy and demonstrate how people can be influenced positively in the choices they make. Yale University Press, 2008.