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Friday 4 November 2011

I'm not a liar. I'm a snake oil salesman.

Neither the news that applications to university have dropped off as the new tuition fees regime approaches, nor the boost in applications that occurred a few months ago as people got in early before the change, should come as a surprise to anyone who knows anything about behavioural economics.

For those who suspect that behavioural economics sounds like some wheeze dreamt up by a set of marketing whiz kids to pull the wool over consumer’s eyes – well, yes, you’d largely be right. It’s the art (I use the word advisedly) of positioning a product or service in a way to specifically change people’s behaviour, capitalizing on the fact that humans do not necessarily always act logically. A commonly quoted example is how to persuade people to take the full course of a medicine they have been prescribed. People tend to stop taking medicine as soon as they feel better, get ill again, and have to start the course from scratch. Give them a set of blue tablets and white tablets, and tell them that they are not allowed to take the white one’s until the blue have all gone – and hey presto, nearly everyone finishes the blue course, which is actually the full dose.

Such thinking has been popularised in the book ‘Nudge’, and is of course a favourite of and George Osborne in particular.

Where tuition fees are concerned, the laws of behavioural economics are acting against government policy, not in favour of it.

You can tell people until you are blue in the face that the new system is fairer, that they’ll pay back less each year, that more people are eligible for assistance and all the rest of it. They won’t be listening.

Because behavioural economics says that trebling fees can’t be a better or fairer deal than the current system, can it? Even if it actually is….

Now, this is the part for me where the sleepless nights kick in. Because I can solve the whole issue in a minute. I can encourage people from less well off backgrounds to go to university, genuinely give people a better and fairer deal, and secure funding for tertiary education going forward. And snake oil salesman that I am, I can do it without resorting to messy old legislation.

I’ll just stop calling them tuition fees. And call it a capped graduate tax. And instead of telling people they have a debt, I’ll give them a long-term tax commitment.

No promises broken. No upfront fees. A higher threshold for payments to start. Everyone happy?

I’ve been told Ministers received advice they couldn’t call the new system a graduate tax. So I submitted a Freedom of Information request to the Department of Business and Skills. No such guidance has been discovered. In fact, it seems the opposite is true. The advice I’ve seen says – ‘in some respects the loan repayment is equivalent to a capped graduate tax (and presentationally, there is an advantage in describing it as such).’

Actually everyone, it’s not presentation . It’s behavioural economics.

And you might all call me a slippery, manipulative, sleight-of-hand merchant of spin (go on, you’re already typing it, aren’t you…).

But at least people will stop shouting liar at me.


  1. I'd be thoroughly annoyed if tripled tuition fees work against government policy. It should be government policy to reduce the number of people who view three years funded by the taxpayer to attend an ex-poly as a right and as the new middle class rite of passage. The only useful thing about this is in reducing the unemployment figures and saving ministers' face.

    Roughly half of those who go to university undoubtedly obtain no benefit by it, and would be better off leaving school at 18 and taking up apprenticeships or vocational training, and the Government should be encouraging that. It's only because the British have developed, since the polys were turned into universities, a pathetic snobbery about qualifications that are not degrees, that no Government dare tell the middle class their children ought not be dicking around for three years contributing nothing to the economy.

  2. David Cameron believes in Behavioural Economics as well - he did a TED talk on it in February of 2010 - http://www.ted.com/talks/david_cameron.html

    Have you read Dan Ariely's books on the subject. First is called Predictably Irrational?

  3. No, haven't read that but will take a look - read 'nudge' of course and Rory Sutherlands has talked a lot of sense about this stuff. Didn't know about CameronTed talk.Here's Rory's http://www.ted.com/talks/rory_sutherland_life_lessons_from_an_ad_man.html