In a recent Penn Program on Regulation webinar, Benjamin van Rooij talks about his new book The Behavioral Code: The Hidden Ways the Law Makes us Better . . . or Worse.
The Behavioral Code has been described as “Freakonomics for the law” – a great book and podcast if you haven’t heard of it – drawing on research Benjamin and co-author @Adam Fine have done to explore the root causes and hidden forces that drive human responses to rules. It investigates the science of human misconduct rather than relying on fear of punishment to regulate behaviour.
The webinar is a good reminder of the need to focus on what behaviour you are trying to encourage and either as a public or private regulator, trying to ensure you understand the motivations of the individuals involved.
If you’ve got an hour, it’s worth watching the webinar – you can access it below. If you don’t, here’s my key takeaways and a few insights from my own experience working with businesses and regulators trying to change employee or dutyholder behaviour.
Certainty of Punishment matters
The certainty of punishment, as a key extrinsic driver, matters. That sanction could be name and shaming, a fine, reduced access to a market or supply chain or a prosecution but the certainty of attracting a punishment for non-compliance was seen as more important than the size or scale of the sanction. The need to monitor, identify and act on non-compliance was therefore considered key. Examples of tax avoidance and traffic violations were used in the webinar to illustrate this point. For me, this goes to the importance of enforcement as one part of a considered regulatory approach and the need to publish enforcement action.
Understand intrinsic motivations when designing interventions
An understanding of intrinsic motivation is important to ensure your planned extrinsic motivation (e.g., observation, monitoring, inspections, auditing, sanctions etc) doesn’t make the problem worse. If people feel that the rule is not legitimate, it will impact their motivation to comply. Equally, if there is a belief that the acceptable social norm allows for non-compliance (i.e., everyone does it) then communicating the volume of wrongdoing may not be helpful. An example of communicating a high level of theft of firewood was provided where a land manager showed photos of groups of people taking wood on a ‘don’t take firewood’ sign. This was found to increase the behaviour rather than reduce it. For me, this goes to understanding dutyholder motivations and the need to articulate the actual harm you are trying to prevent when considering and designing interventions.
(Note – a slightly modified version of the diagram used in the webinar is provided below)
People need to be able to follow the law
Ignorance of the rules is not an excuse for non-compliance but if you want people to comply, making the rules easy to understand helps. The webinar stresses that due to the sheer volume of laws, people tend to have a limited knowledge of the rules and socio-economic factors understandably will influence this. Benjamin highlights that reducing non-compliance therefore does require a degree of education and support. For me, this goes to the importance of informing and educating dutyholders of their obligations and being able to articulate how their behaviour and actions can cause harm, or increase the likelihood of harm, against the thing you care about. This goes to concepts of supporting dutyholders to comply and providing practical examples of ways (‘a’ way, not ‘the’ way) they can remedy or prevent non-compliance.
Understand behaviours that contribute to non-compliance and disrupt one or more
Understanding the elements that enable an offence or non-compliance allows for more considered review on how you, or a co-regulator, could disrupt one or more of those. In the webinar Benjamin describes this as disabling ‘opportunities for criminal conduct’ and provides an example of laws that required the wearing of helmets for motorbike riders. Post implementation of the laws, opportunistic motorbike theft reduced despite overall vehicle theft remaining unchanged, the suggestion being that motorbike thieves needed to be more prepared, bringing their own helmet, to avoid attracting attention from police when riding the stolen bike away. For me, this goes to the concept of nudge, behavioural interventions and looking at the problem you are trying to solve rather than the solutions or regulatory tools you have at your disposal – after all, your co-regulator might be better placed to disrupt the behaviour with their tools.
Review your practices with a view to improving them
Having a focus on your practice and how effective your regulatory interventions are is key to you wanting to improve them. In the webinar Benjamin talks to the importance of reviewing the effectiveness of interventions in reducing non-compliance and actively looking at ways to improve practice. For me, this again puts a focus on being clear on what success looks like, your harms of concern and tracking your efforts in minimising harm. The ability to tell a performance story on how your organisation reduces the harms you care about is predicated on understanding your theory of change and tracking how your efforts contribute to harm reduction.
Pressure for quick fixes can result in ignoring the complexity of the law’s interaction with behaviour
The last takeaway from the webinar is one likely to be familiar to many professional regulators. The pressure on regulators from political institutions for ‘quick fixes’ to long running compliance issues can contribute to poor problem understand and solution design. The example given in the webinar relates to the want to increase penalties to target a cohort of dutyholders, in the example business leaders, where the increase might be perceived to be popularly ‘fair’ but not likely to change actual compliance behaviour. My experience working with and for regulators is that ambitious ‘quick fix’ interventions that are based on poorly defined problems, overtly genericise the regulated community and don’t match an organisations capability or culture to deliver them, seldom work.
Overall, a thought-provoking webinar and worth watching if you’ve got the time.
If you are interested in more on this topic and on behavioural economics or leveraging the value of markets check out my article on ‘Can we really drive impact through markets‘ where I speak with Daniel Katz Chair of the Rainforest Alliance and ‘Is Economic Regulation Just about markets‘ with Simon Corden.
If you are interested in the role of culture in changing individual behaviour, worth having a listen to the podcast or reading the article I did with Cheryl Batagol – ‘Culture as a defence against corruption‘.
