In 2010, the United Kingdom created the Behavioural Insights Team, known as the Nudge Unit, within the Cabinet Office. Its purpose was to improve government policy and services in a cost-efficient manner by experimenting with behavioral economic techniques so that, according to the Team, people could “make better choices for themselves.” The Team experiments with psychological insights to try to change people’s and institutions’ behavior. For example, the Team increased payment rates of the vehicle excise duty from 40 to 49 percent by adding a picture of the vehicle for which the tax was still owed to letters sent to non-payers. They also found significant increases in on-time tax payments when notices sent to payers mentioned that most people pay their taxes on time. This confirms insights drawn from behavioral economics and psychology, and seen in the literature on compliance and enforcement, that people are more likely to comply if they believe their peers are complying and will be detected and punished if they do not comply. Despite the success, however, it is also clear that such “nudges” alone are an insufficient motivator, and that traditional compliance and enforcement techniques remain necessary.
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United Kingdom of Great Britain and Northern Ireland