COVID-19 has inflicted a major shock on the UK economy. Simultaneously, it has shone a spotlight on wider structural problems that were already serious but are now critical, such as the UK’s lacklustre productivity and the uneven distribution of prosperity across society.
We need to reshape economic policy with human behaviour at its heart. Doing this will help governments and regulators to design more effective policy, improve the way our economy works, and address issues of low productivity, exclusion and unfairness, benefiting citizens and businesses right across our society.
The recommendations are grouped into three areas of economic policy: micro, meso (ie market), and macro-level. The 10 recommendations are:
1. Saving: Help people save for the future through restructuring tax incentives to build on the dramatic shift in personal savings that has occurred during the pandemic.
2. Jobs: Use behavioural and data science to open up new job opportunities and equip jobseekers with the support they need, focusing on job goals rather than compliance with benefit criteria.
3. Data: Measure whether markets are delivering for consumers and small businesses, collecting data on how complex it is to change suppliers and get the best deal.
4. Market transparency: Make it easier to see the best performers in professional services such as accountancy and law as well as with all government suppliers. Make it easier to see the best employers for job quality.
5. Switching costs: Design and test Smart Data initiatives to attack switching costs and help consumers compare and change energy, telecoms and financial providers.
6. Disruption: Kick-start market disruptors using challenge funds and shared facilities and equipment that reduce the cost of investing in innovation.
7. Plan ahead: Prepare for the next economic shock by building data, infrastructure and know-how on how to get stimulus spending to where it’s most needed – and fast.
8. Promote investment: Restructure business tax reliefs to target key moments when business leaders are making crucial investment decisions.
9. Social trust: Measure it and make it an integral part of economic policy making.
10. Challenge: Test, measure and learn by using pre-mortems and encouraging oppositional thinking to established norms (so called ‘red teams’) to minimise biases that result in bad decisions such as optimism bias, confirmation bias and group reinforcement. Then reinforce this approach with rapid online testing before rolling out new policies.