Do defaults save Labour?

I was surprised (and, at first, impressed) by Ed Miliband’s proposal on the Andrew Marr Show to limit individual donations to political parties at £5,000. He also suggested that the cap should apply to trade union funding of Labour.

Currently, trade union members can also opt out of the £3 annual contribution to the Labour party. When Andrew Marr asked whether Miliband would support changing this to an “opt-in” system (whereby the default option for trade union members would be to give nothing), Miliband insisted that this was not important and focussed his answer on the issue of transparency instead.

But the default option is not a trivial matter. In a famous article in Science, called “Do Defaults Save Lives?”, two decision scientists Eric J. Johnson and Daniel Goldstein looked at how willing Europeans are to become organ donors after death. They showed that in countries where opting out of organ donation was the default option, consent rates were significantly higher than in the countries where opting in was the default. The lowest consent rate in an opting-out country was 85.9% (Sweden) and the highest consent rate in an opting-in country was 27.5% (Netherlands). In the UK, I am one of the 17.17% who opt into organ donation.

Miliband is playing clever politics by undermining the importance of default options because he probably knows that an opt-in system would decimate individual donations by trade union members to his party. Behavioural economics makes politics a lot more interesting.