Changing behaviour: A public policy perspective

3. The Rational Choice Model

The behavioural change theory that underlies much public policy is the rational choice model which assumes people rationally seek to maximise their welfare. People assess the choices before them in terms of costs and benefits and then select the choice that maximises their net benefits. The traditional policy tools follow from this model—sanctions (fines and other penalties), price signals (taxes, financial incentives), regulations and the provision of information.

These traditional tools often work very effectively in achieving behavioural change. In 2001, for example, the Irish Government imposed a levy on plastic bags of €0.15 (A$0.25) per bag. The levy is imposed at point of sale and retailers are legally obliged to pass it directly to the consumer. The tax has been extremely successful, leading to a 90% reduction in the consumption of plastic bags.⁵ Similarly, evidence from the World Bank indicates that raising tobacco taxes is the single most important step governments can take in reducing smoking.⁶

Governments regularly provide information to attempt to influence behaviour using the underlying assumption of the rational choice model, that is, if people know that some behaviour and/or activity has adverse consequences they will reduce its incidence or eliminate it. Examples include tackling drink driving, HIV, drugs, child safety and smoking. It is clear, however, that in some cases information campaigns, while necessary, are not sufficient by themselves to change the behaviour of large numbers of people on a sustained basis.

While the model of rational choice will and should continue to be the fundamental building block model for policy making, it has limitations from a behavioural change perspective.

For many social policy problems, human behaviour is very complex. People continue to choose unhealthy lifestyles, for example, despite knowing that such lifestyles will cause them long-term harm. The model of rational choice tends to ignore the wider environmental influences on human behaviour, such as the power of peer pressure and family expectations, and key motivators other than self-interest. It can also be difficult for individuals to accurately estimate future costs and benefits, particularly if there are relatively high levels of uncertainty around them.

There are now many theories of human behaviour that policy makers need to be aware of that can be used to supplement or refine the rational choice model. These draw on a large body of empirical research and observation. The following sections outline the key findings from these theories and empirical research at the individual, interpersonal and community levels, and draw out the policy relevance of these findings. They are based on a range of sources but particularly on a 2004 discussion paper published in the UK: Personal Responsibility and Changing Behaviour: The State of Knowledge and Its Implications for Public Policy.⁷

5 J. Collins et al 2003, Carrots, Sticks and Sermons: Influencing Public Behaviour for Environmental Goals (A Report by the Demos/ Green Alliance for the UK Department for Environment, Food and Rural Affairs), p. 37.

6 The World Bank 1999, Curbing the Epidemic: Governments and the Economics of Tobacco Control,The Bank, Washington, D.C., p. 10.

7 D. Halpern et al, Personal Responsibility and Changing Behaviour.

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Changing behaviour: A public policy perspective

3. The Rational Choice Model