Richard Thaler on Social Norm Compliance

In his latest column for The New York Times, Richard Thaler argues that behavioral science has an important role to play in policy design. To strengthen his case, he offers a recent example from the UK. The British had been struggling to get small businesses and individuals with significant non-payroll income to pay their taxes on time. The behavioral scientists were tasked with finding a way to improve on the initial letter that the government sends out to delinquent tax payers. Robert Cialdini offered the best suggestion:

A randomized trial confirmed Cialdini’s hunch — compared to the original letter, letters suggesting that most people paid their taxes on time saw an increase in the number of people who paid up before sterner (and more expensive) measures became necessary. An interesting and encouraging result, though as Matt Kahn and Dora Costa have pointed out, designing effective nudges can be tricky.

One thing that stood out in Thaler’s story is the notion that our adherence to a particular norm is influenced by our perception of whether it’s the predominant norm in the surrounding group. My sense of “What’s the right thing to do in this situation?” is partly influenced by the majority behavior of the people around me. If so, compliance with a norm will likely be stronger when the norm in question governs behavior that is more observable by the social group.

If most people in a city feel that littering (a relatively observable action) is wrong, then social sanctions can do a lot to reinforce the formal rules against littering, often without much need for formal enforcement. Of course, social norms can undermine formal rules as well. If most of the residents in a city feel that it’s okay to relieve yourself wherever you want, then the social norm works against the formal rules against peeing  in public. The British norms about paying taxes seem to complement the formal tax rules. But paying one’s taxes is not all that socially observable. Because of this adherence to the norm is probably less consistent than it would be if people could observe the compliance of others and/or sanction those who don’t comply — which may explain the value of a clever nudge in these situations.