Conservative party leader David Cameron has been getting a fair amount of play in the financial press recently for his proposals on enacting a Chapter 11-style bankruptcy code for the UK. Not much,though, has been heard from the Tories’ supposed economic front man, the shadow chancellor, George Osborne.
Except this:
Why are Conservatives hooked on these new economic-psychological ideas? Because they work.
- a comment piece which appeared in The Guardian earlier this week.
Once the party of classical economic cruelty, the Tories had a reputation as being – in the words of their own chairwoman – a bit nasty. Nasty no longer.
Forget Friedman, for the Tories – or at least George Osborne and his policy team, it seems – have turned to freakonomics.
What then, are some of the flagship policies of the (possible) future Treasury? Osborne adumbrates three:
A Conservative government will require household energy bills to contain information enabling families to compare their energy consumption with that of similar homes. As we have seen from pilots in America, this information can have a massive impact on energy consumption, as households who are using more than the average reduce their energy use to come into line with the norm. And as long as households that are using less than the average are given some sort of positive recognition – for example a special mark on their energy bill – they don’t increase their energy use to fit in with the average.
Smiley faces on energy bills.
Evidence shows that people respond much better to incentives than punishments. Look at America, where waste companies such as RecycleBank pay households in more than 500 cities and towns about £20 a month for recycling.
Paying people money to throw things away.
As part of a set of policies to tackle problems with personal debt, we will introduce new rules that mean people are given a cooling off period of at least seven days between signing up for a store card and being able to use it.
Stopping people spending money on their John Lewis card for a week.
We’re not challenging at all the idea that a lot can be learned from incentives, psychology and social economics. But it’s surely going to take rather a bit more, George, than the above, to right the difficulties facing the world’s fifth largest economy.
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