Independence day turned out to be pay day for nearly 17 million public sector employees. Not to their uniform satisfaction however, as they had asked for substantially more than the 21% average increase announced. After all in the private corporate sector managerial salary increases often exceed 50% annually. Yet the public at large appear profoundly unenthusiastic about public sector pay increase, given the quality of delivered government services – poor to the point of aggravation in many front-line government offices. Able and incorruptible government officers concede readily that the quality of public service delivery needs substantial improvement.

The way power is exercised in governance flows from the institutional environment in which citizens interact with government agencies and officials. Many aspects of this environment are difficult to reform. There are no obvious miracle cures, however there is a new approach (forcefully articulated only recently) for achieving better governance with less coercion and constraint, that is attracting attention around the world. Barak Obama has built its guiding principle into his administrative policy. In Britain, David Cameron the conservative leader, placed the book articulating the strategy ( Nudge , by Richard Thaler and Cass Sunstein) in the summer reading list for his party. In a novel experiment, the conservative local council of Barnet in England is to receive government funds to test Nudge economics, to reduce litter, increase recycling and lower carbon emissions.

To a large extent public services will be more efficiently delivered if it is possible to guide people to specific outcomes that are in accord with the common cause without having to use direct regulation. The basic argument in Nudge is that using findings from behavioural economics, it should be possible in many instances to shrewdly persuade people to do the right thing without outright bans or requirements. So how can we be encouraged to make better choices for ourselves and for the society we live in? For example, how can I be persuaded to save enough, or to conserve energy, or to pay my taxes in time? How might our neighbours be influenced to make choices that are better for the neighbourhood – for example, picking up their litter, not honking?

Nudges are persuaders that influence our choices, and include default rules, feedback mechanisms and social cues. The simplest nudges are merely forceful reminders. For example, a simple energy meter that tells you the monetary value of the energy you use at home in real time, might prompt you to switch electric devices off more readily. A more subtle nudge could enlist comparison with a peer group. Knowing (at the bottom of the bill, for example) how much less electricity the energy-efficient households in the neighbourhood consumed per-capita might focus consumer attention on conservation.

A fundamental nudge design works by making the desired condition the default. In Spain everyone is assumed to have donated organs unless they choose to opt out. Think of any desired participation plan, for example, a savings scheme. When people are enrolled into the scheme as a matter of course but with the option to opt out, participation rate will be seen to rise dramatically relative to the case where they are left free to opt in to the scheme.

One behavioural bias we all suffer from takes the form of forming judgement from very small samples of our personal experiences. For example, if you see a traffic accident, you tend to overestimate the probability of dying from a crash. If you see a couple of motor-cyclists not wearing helmets you tend to think most people do not conform to rules. Conversely, a survey that showed that over 90% of drivers in town wore seatbelts persuaded a friend to belt up. When there is a desired norm (seatbelts, helmets etc.), publicising the proportion of people conforming to it may help to convert all but the terminally recalcitrant ? if of course, a large proportion do actually conform. There will of course always be areas where direct regulation is necessary, but complementing these, nudges can economise on bureaucracy and costs. Nudges can swap large bureaucracies for smart ones.

A most interesting nudge variant consists of implicit but compelling instructions: a home-grown example takes the form of painting images of diverse Gods on surfaces that are subject to the risk of men taking a quick if public leak! In a very effective inverse of this mechanism, the designers of Amsterdam?s Schiphol airport (and others, since) have had a fly painted at the centre of the receiving porcelain surface of each of the urinals in their men?s rooms to improve aim accuracy, and reduce cleaning bills!

The scope for nudges is of course, not limited to Governance. Whether in Government or in business, or within the family, those in a position to affect our choices can make mistakes. So a nudge should only change the design of the choice context, and not force anyone to do anything. Eschewing regulation, nudges only encourage people to make decisions that they would if they had the information, deep cognitive abilities and willpower, and had some concern for their neighbours. All of us, parents, business managers, civil servants, legislators, ministers, should be devising nudges in aid of civil society.

The author is reader in economics at the Judge Business School, University of Cambridge, and fellow of Corpus Christi College