Corporations embraced nudge theory — and pushed the blame for society’s ills onto the individual, write Nick Chater and George Loewenstein
Authors:
Nick Chater, Behavioural Science Group, Warwick Business School
George Loewenstein, Social and Decision Sciences, Carnegie Mellon University
This Q&A was taken from the January 2026 edition of the RES Quarterly Newsletter.
When behavioural economics first emerged in the 1980s, it was viewed (including by its founders) as a challenge to the Chicago school of economics, which was constructed on the foundation of an all-knowing, self-interested “homo-economicus”. Behavioural economics sought to provide a more psychologically realistic foundation for economics — a decision-maker who is boundedly rational, exhibits loss aversion, nonlinear probability weighting, present bias, social preferences and so on.
Behavioural economics, like the larger field of economics from which it emerged, was imperialistic, and rapidly spawned subfields such as behavioural law and economics, behavioural finance and behavioural game theory. In 2003, the field collectively turned its attention to public policy. Two papers, one titled Libertarian Paternalism and the other, Asymmetric Paternalism: Regulation for Conservatives, launched the movement that, with the publication of Richard Thaler and Cass Sunstein’s best-selling book, came to be known as Nudge. Insofar as people fail to conform to the dictates of the perfectly rational actor — being driven instead by quirks of human nature, and by capricious, inconsistent and sometimes downright self-defeating preferences and beliefs — the reasoning of nudge went, public policy should work with the grain of human nature rather than simply ignore it.
As we outline in our new book, It’s On You: How the Rich and Powerful Have Convinced Us That We’re to Blame for Society’s Deepest Problems, we both started out as enthusiastic nudgers. Indeed, both of us were also members of the academic advisory board of the Behavioural Insights Team (BIT), created by the Cameron government in the wake of Nudge (but, from the outset, with a much broader agenda). Indeed, we first met at a BIT London holiday retreat in 2013. But after many years of struggle, we have come to doubt that there are many nudge-style policies that can really move the dial on society’s deepest problems, or do so at scale.
There is by now considerable evidence that individual-level interventions of all kinds have at best modest impacts: calorie labelling appears to have remarkably little effect on food choices; attempts at short-term financial education have only weak impacts on investment and savings decisions; and most prominently, the large number of nudges — changes in how choices are framed to help people do the “right” thing — have mostly turned out to produce small or null effects, and have rarely if ever made a dent in challenging societal problems. This is not to say that these interventions are futile or not worth pursuing further. But taken together, the evidence strongly suggests that intervening at the individual level is not a credible pathway for addressing major and persistent social challenges — such as drastically cutting carbon emissions, confronting rising obesity or improving public health.
“The evidence strongly suggests that intervening at the individual level is not a credible pathway for addressing major and persistent social challenges”
There is also concerning evidence that, in part because they are popularly seen as working so well, support for nudges tends to “crowd out” — i.e. diminish — support for more substantive policies. Here, the emphasis on individualist interventions has inadvertently become not opposed to, but aligned with, the Chicago school, the traditional enemy of regulation.
The Chicago school has, of course, historically been opposed to rules, taxes and subsidies of almost all kinds. For example, Milton Friedman, perhaps the most famous Chicago economist, advocated for laissez-faire policies and shrinking government, and against public aid to the poor, public housing, Medicaid, Medicare and Social Security, and wanted to abolish the Food and Drug Administration, the Consumer Product Safety Commission, Amtrak and the Environmental Protection Agency.
It would have been natural for behavioural economics to take the opposite stance. For example, given that people aren’t infinitely intelligent, does it make sense to ask them to decide between health insurance plans they don’t understand? And, given that people aren’t infinitely farsighted and know close to nothing about investing, does it make sense to ask them to save and invest their own retirement “nest egg”? In It’s On You, we describe how we gradually came to see that nudges, which steer clear of substantive policies such as bans and taxes, were playing into the Chicago school’s antipathy toward government intervention. Indeed, to our dismay, we have come to believe that by helping to promote an individualised perspective on social problems — one focused on fixing people instead of fixing systems and policies — the nudge movement may have inadvertently helped powerful interests, particularly in business, through what sociologists have called “responsibilisation”: pushing the blame for society’s ills onto the individual — and thus weakening the pressure for social change.
A central theme of the book is what we see as a widespread “sleight of hand”: that corporations and the ultra-wealthy have come to publicly embrace nudge and other individualist “solutions” to social and environmental problems, while lobbying for rules and regulations that benefit their interests and ensure that policy problems continue. The “carbon footprint”, for example, encourages each of us to do our part to combat climate change, while the oil industry lobbies against carbon taxes or restrictions on drilling. The long-running Make America Beautiful campaign, with its motto “People start pollution, people can stop it”, was funded by the beverage and bottling companies who lobbied and campaigned assiduously against, for example, bottle return bills and plastic bag taxes. As It’s On You reveals, these powerful interests are well aware that targeting systems, not individuals, is where the real leverage lies.
Nick Chater and George Loewenstein’s book, It’s On You: How the Rich and Powerful Have Convinced Us That We’re to Blame for Society’s Deepest Problems (WH Allen), was published in January 2026.