Nudge vs. shove

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Nudge vs. shove

Kim Byung-yeon
The author is an economics professor at Seoul National University.



Coercive power seems to dominate Korean society today as it turns a blind eye to the values of restraint and softness. The Moon Jae-in administration and ruling Democratic Party (DP) are largely to blame as they are increasingly resorting to the “rule by law” to fix every problem. Coercive power restricts freedom — and destroys a community when it is abused.
 
Wise leaders know how to choose their best policy means to produce the best possible results. In the world of social sciences, there are three types of policy means other than law: nudging, autonomy and the market. All three are non-coercive methods — and often more effective than enforced policies.
 
The “K-quarantine” model — Korea’s measures to curb the spread of the coronavirus — is an example of nudging. The government nudged people to practice social distancing through the subtle pressure of publicly revealing their travel history in case they come down with the virus. An Italian professor who was impressed by the model asked for my opinion about Europe adopting the same system.
 
I replied that it won’t work in Europe primarily due to Westerners’ priority of individual freedom and self-determination, not to mention its difficulty in applying Korea’s swift “3T” system — testing, tracing and treatment.
 
Unlike Westerners, Koreans and most other Asians tend to prioritize their immediate gains and losses over freedom and easily give in to peer pressure. Under such cultures, the government can help curb the outbreaks by means of 3T and nudging even without resorting to an extensive lockdown. Studies show that the economic cost in that case is only one-fourth of that borne by the countries which underwent lockdowns.
 
There are many success stories of nudging, including the U.S. retirement pension system. To get more people to participate in retirement savings, American employers automatically enroll their employees in pension plans as soon as they are eligible — unlike in the past when employees had to fill out forms. As a result, pension participation rates nearly doubled to 86 percent.
 
Had companies forced their workers to enroll in a retirement plan by law — instead of taking advice from the 2008 best-selling book “Nudge,” co-authored by Richard H. Thaler and Cass R. Sunstein — people would have lost their freedom of choice. Authorities also could have hired more civil servants and collected more taxes to enforce the law.
 
A healthy society achieves public good through voluntary participation of its members, while minimizing physical force from the government. In the longer term, the most effective way to do this is by promoting and respecting the autonomy of various agencies and organization. In her research of the “tragedy of the commons,” Elinor Ostrom, who won the Nobel Prize in economic sciences, studied how communities end up with a depletion of common resource after individuals pursue personal gains over the common good of all users. It turned out that communities whose members autonomously established a mediating body to handle conflicting interests were able to address the situation without state interference.
 
Korea seems to go backwards. If the government had incorporated the market in its medical reform policies, doctors would not have gone on strike. The government wanted to establish a “public medical school” in an area with a lack of medical infrastructure and force new doctors to make a living there for some years. Would the plan really work? British economist Arthur Pigou once suggested a remedy for such issues. He said that if the general public agrees to improving medical accessibility for people living in such areas, the problem could be solved in a market-friendly manner without the use of any legal force.
 
For instance, the government can raise medical bills in certain areas with a lack of doctors so that doctors can earn more money there for each treatment they provide their patients. More doctors will naturally flock to such regions. There’s no reason for the government and DP to oppose this idea unless their purpose of building a public medical school is to score political points.
 
The Moon administration must refrain from brandishing policies of coercive power. One way to do that is respecting professionalism. To draw up a policy, politicians must study and search for various ways to seek a successful outcome without resorting to coercive methods. The government could set up a new research institute that studies non-forced policy interventions — something similar to Britain’s Nudge Unit.
 
A skilled leader intervenes gently — and under such gentle politics and policies, the public becomes happy.
 
Translation by the Korea JoongAng Daily staff.

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