Mental Capacities, Self-reliance and Policy

Society today makes heavy demands on people’s self-reliance and that is only expected to increase in the years ahead (Van den Broek et al. 2016). In this book, we have studied which mental capacities are needed to be self-reliant in our society. It is generally acknowledged that intelligence and the ability to read, write and understand maths are critical to self-reliance. A minimum capacity to think is a prerequisite for being able to function in modern-day society.

This book takes the next step in this fascinating line of research and policymaking. The capacity to think is only part of the story; after all, knowledge does not automatically lead to action. The capacity to act is at least as important for self-reliance in health, personal finance and the job market. People must be able to set goals, make a plan, take action, persevere and believe in their own abilities. We illustrate these capacities in Fig. 6.2.

Fig. 6.2 Mental capacities
As the figure shows, the two capacities overlap. After all, making a plan also requires information and understanding. In this book, however, we have focused primarily on the non-cognitive capacities, the right-hand circle in Fig. 6.2. Recent research shows how important such capacities are to surviving in modern society, but they receive very little attention in everyday life.

Traits and Mental Capacities
In Chap. 3, we explored the determinants of the capacity to act. Both the literature and our own research indicate that there is a close relationship between life outcomes and certain traits. People with an 'approach' temperament get relatively high scores on life outcomes and on coping with problems, whereas people with an 'avoidance' temperament have relatively low scores. People who have a large measure of selfcontrol get high scores, while people who have little self-control have low scores. Belief also plays an important role. The more a person believes in his or her ability to achieve desirable or avoid undesirable outcomes, the more likely he or she is to actually undertake the required actions. However, it is not always better to get very high scores on these beliefs. For example, a person who has too much faith in his or her own ability may grow overconfident and become reckless. It comes down to having the right combination of environment and traits ( Fig. 6.3). We have shown that these non-cognitive characteristics are in fact related to the mental capacities that we identified in Chap. 2. Knowledge alone is not enough. People furthermore differ in the extent to which they possess non-cognitive capacities. To some extent, those differences can be traced back to their educational backgroundbut not entirely. A substantial per centage of low-educated individuals get high scores on non-cognitive capacities, and a substantial per centage of high-educated individuals get low scores. The distribution of non-cognitive capacities is roughly in line with normal distribution. Some people get high scores, others very low scores, but most people score around average.
That observation leads to an important conclusion. Not all people have the same aptitude for self-reliance. After all, non-cognitive traits have a hereditary component, just like intelligence. Some people are therefore born with a relatively strong predisposition to develop traits useful in a society that emphasises self-reliance, whereas others come into the world with a relatively weak predisposition in that respect.
Chapter 4 showed us that life circumstances influence people's ability to apply their non-cognitive capacities. We know little about the underlying mechanisms, but what we do know is that self-control and executive functions can be put under pressure by acute stress and mental burden, for example having to carry out demanding cognitive tasks or being exposed to temptations for a long time. The effects are not necessarily immediate. People can, if they wish, draw on their reserves to extend their targeted level of performance, but they may be doing so at the expense of other physical or mental functions-and their reserves are not inexhaustive.
Mental capacities are always useful, but they are especially so when life is difficult, for example when people lose their job, get divorced or have problem debt. These are situations in which it crucial for them to spring into action, take the right decisions, and persevere. Unfortunately, these are precisely situations that are associated with stress, something that may have a negative effect on non-cognitive capacities. Various studies have shown that poverty and debt cause stress. Debtors are so distracted by their financial worries that they are less attentive to other matters. Just when selfreliance is most important, people run the greatest risk that the capacities they need will be temporarily impaired.

Don't Expect Too Much of Trainability
If non-cognitive capacities are so important for self-reliance, can we not train them? Chapter 5 revealed that we still know very little about this subject. Existing research is not very promising in that regard, however. It is difficult, if not impossible, to change a person's temperament. Beliefs are easier to change, but research has not yet shown whether training has a knock-on effect in other areas. If someone is convinced that he can find a job on his own, that does not automatically mean that he also believes he can quit smoking. In theory, self-control is the most efficient starting point for intervention and training, because it can compensate for an unfavourable temperament or attitude. Once again, however, research shows that training selfcontrol produces only modest results, and it is doubtful whether even those results are lasting.
One alternative is to employ cognitive strategies to compensate for limitations in self-control. For example, people can try to imagine the situation or goal that they are aiming to achieve and the obstacles that are preventing them from doing so. 'Mental contrasting' in this manner motivates people to undertake behavioural change and stresses the need for action. Another option is to set 'implementation intentions' for oneself. These are mini 'if-then' action plans ('if I come across situation x, then I will do y'). Such intentions can help a person deal with situations that cannot be avoided in everyday life, such as a colleague who treats the staff to cake when he is trying to lose weight. These techniques have been found to be quite effective. However, research in this area focuses primarily on specific challenges, such as maintaining a healthy lifestyle. There has been almost no research on whether these techniques are effective as cross-domain 'meta-cognitive strategies'. Although this is certainly a worthwhile area of research, here too, we must not have unrealistic expectations, since both techniques, mental contrasting and implementation intentions, call on the individual's capacity for self-control.
More favourable results have been achieved with skills training in specific domains. In health and personal finance, the emphasis so far has been on providing knowledge. The results have not been very encouraging. That is why training now increasingly emphasises not only on the capacity to think but also on the capacity to act, by addressing motivation or belief in one's own abilities. The most promising interventions focus on skills that require a combination of cognitive and non-cognitive characteristics. They also seek to leverage what the individual is capable of and the options available in his or her specific situation, for example learning to cope with a particular disease. Chapters 2 and 5 discuss some examples of this, such as the selfmanagement training for patients with rheumatoid arthritis, or the JOBS training for the unemployed. Based on current knowledge, governments should at least see to it that a wide and accessible range of training programmes of this kind is available. Even so, more research is needed, for example into whether enhanced skills are also transferable to situations in other domains.

Realistic Expectations About Trainability
We advise not having unrealistic expectations about the overall trainability of non-cognitive capacities. There are, in any event, no fast, easy, inexpensive solutions. The reality is that differences in mental capacities will always remain.
Until there is sufficient empirical evidence that general interventions focusing on traits actually work, it would be better to exercise caution when it comes to introducing such interventions in education, given the risk of children being negatively labelled, the costs involved and the additional burden on teachers and pupils. We advise experimenting more and doing more thorough research into the possibility of training non-cognitive capacities.
It is much easier to train skills in specific domains. What is important is to offer a broad and accessible range of training courses and programmes whose effectiveness has been demonstrated empirically. The courses and programmes should combine knowledge transfer with information on non-cognitive capacities. They can be provided by private parties, such as employers, banks, insurers and private institutions. Governments can play a role in promoting the accessibility and quality of such evidence-based training programmes.
In short, until it becomes possible to optimise each person's mental capacities through targeted intervention, differences in self-reliance are simply a fact of life. Governments should be aware that many people do not have the capacity to act that is essential for self-reliance, whether temporarily or permanently. What does this fact of life imply for government policy? That is the topic of the remainder of this chapter.

Implications for Policy: Knowing What to Do Is Not Enough
We sketch the implications for government policy by comparing two policy perspectives (see Fig. 6.4). The first perspective is the traditional one, which assumes that more knowledge automatically leads to more effective action. This idea, drawn from the rationalistic perspective, underpins many legal and economic approaches to policymaking. The second perspective is a reinterpretation of the findings of behavioural science that we described in previous chapters. This realistic perspective assumes that people do not always take action, despite their good intentions. Knowing does not always lead to action. On top of that, a decision which may be 'rash' in the longer term may well be 'sensible' in the shorter term, in the situation in which an individual finds himself. We compare these two perspectives because they are inspired by the same underlying aim: to boost people's autonomy. However, they differ in what they assume about mental capacities and the laws of psychology. They also differ in the way that they design policy with a view to achieving this underlying aim. We explain the differences below, one by one. Both perspectives are idealised constructs, of course. In many respects, the second is an enhanced version of the first. By contrasting them, however, we are better able to see how different assumptions about people's mental capacities can influence policymaking.
• Assumptions about mental capacities. The first perspective implicitly assumes that the mental capacity of almost all adults is adequate enough for them to be selfreliant. To the extent that people do differ in their mental capacities, the differences are minor and irrelevant to the structure of society. Only a small group of vulnerable people, for example people with intellectual disabilities or people with low literacy levels, permanently lack the mental capacities required for self-reliance. They are an exception to the rule, however. The second perspective assumes that adults vary in the extent to which they have the capacity to think and act required for self-reliance. Some are gifted in that regard, others have too little, and most fall in between and are 'average'. The small number of vulnerable persons who formed an exception to the rule in the first paradigm are more likely to be at the far end of the normal spectrum here. The group that has difficulty being self-reliant is much larger and more diverse.
• Assumptions about behaviour. The first perspective ignores the capacity to act.
Intelligence, knowledge and judgement are key, because the assumption is that knowing leads to action. Once people have identified their goal, they will do what is necessary to achieve it, and persevere and complete the necessary actions. If they do not, then the reason lies in a lack of knowledge or another rational calculation of opportunity costs, in other words that other actions are more appealing and rewarding. The effects of stress and strain are ignored in this perspective. The capacity to act does play a critical role in mental self-reliance in the second perspective. People differ in the extent to which they are predisposed towards 'approach' or 'avoidance', in their belief in their own abilities and in their capacity for self-control. Knowing therefore does not always lead to action. Once people have identified their goal, they put things off or lack mental energy or willpower, preventing them from taking or persevering with their action. Circumstances and life events also have an impact. Stress and strain affect the quality of decisionmaking and self-control.
• Policy design. In the first perspective, the role of government is limited and unequivocal. To facilitate autonomy, it must offer as much freedom of choice as possible. It need only influence behaviour by manipulating the determinants of assessments and choices, that is by providing information and offering financial incentives. Further public support is limited to facilities (often temporary ones) for people who have got into difficulties through no fault of their own (e.g. due to involuntary redundancy), or to permanent support for very vulnerable groups.
In the second perspective, the role of government is broader and less unequivocal. While the basic premise is still freedom of choice, there may be circumstances in which the government instead acts to reduce temptation. It may also be advisable to help people make choices, for example by offering one-on-one help, through education and training, by using well-chosen nudges, and by redesigning the environment. Public policy also takes into account people who (temporarily) lack the capacity to act. • Policy implementation. In the first perspective, administrative bodies will act at arm's length and impersonally because they assume that people are capable of taking informed decisions and then acting on them. Personal contact is thus unnecessary. People who do not respond to information and warnings have made a deliberate choice not to do so, and any sanctions are therefore justified. Those who fail to take advice must bear the consequences. In the second perspective, the authorities are more aware of differences in people's capacity to act. They acknowledge that the potential risk groups are broader than the known group of vulnerable people. Where necessary, they make active and personal contact with these groups. Processes are designed to limit the mental burden that they impose on persons. Far-reaching sanctions are only imposed after verification of culpable misbehaviour. In addition, the sanctions must be proportionate and must not add to problems.

What This Means for Policymaking
People are not always able to make sensible choices and act accordingly. They put off decisions, fail to make healthy lifestyle choices, leave late payment warnings unopened and do not always pay fines on time. They are only human, after all. Besides, at some point we all deal with life events that temporarily impair our capacity to act. The question is how tolerant the government and its institutions should be towards human behaviour of this kind.
From a pragmatic point of view, the question is: what works? How can we organise rules and institutions in such a way that people are as self-reliant as they can possibly be? That would be easy if everyone always understood and processed all the information they were given, acted on that information in good time, persevered for as long as necessary, and did not allow a setback to catch them off guard. Unfortunately, very few people fit that description. Most people make mistakes now and againand sometimes more often. That calls for the smart design of rules and institutions. Ideally, they should be designed in such a way that people who do not exhibit the desired behaviour straight away, for whatever reason, are not immediately penalised. Modern cars have a growing number of technical gadgets meant to prevent drivers whose attention is waning from immediately veering off the road. Rules and institutions should also possess a certain degree of 'robustness' or 'corrective capacity' in the face of human error.
The first principle of good design is to choose implicit or explicit defaults wisely. Policymakers and system developers should ask themselves what happens to people who do not immediately open and understand their correspondence, who do not immediately take action when necessary or raise the alarm when things go wrong. There is, of course, no need to protect people endlessly from repeated mistakes. However, rules and systems are not well designed if they are so complex that only specialists can find their way around them, and if the procedures are so strict and inflexible that any mistake is punished at once, making autonomy and self-reliance all the more difficult to achieve. That is the sort of system depicted in the film I, Daniel Blake, in which the main character is denied an unemployment benefit for not seeking a job, even though his doctor has forbidden him to work. 3 The second principle of good design is that there should always be scope for customisation. One way to promote this is to include hardship clauses and to deautomate the assessment of difficult cases so that special circumstances can be given due attention. When people fail to pay fines or to respond at all, a government agency should, as far as possible, first contact them personally and consider whether a payment arrangement is possible or whether it makes sense to refer them to debt assistance. Only when this fails should coercive measures be taken. 4 But why should government be so understanding of people's 'mistakes'? Why should we have to create costly institutional safety nets and stopgaps for citizens who simply do not pay attention and neglect to do the right thing at the right time? That brings us to the moral side of the matter. How much clemency should government and society show towards people who have run into problems because they have made irresponsible decisions, or because they have been inattentive or lax? Masses of people stubbornly persist in their unhealthy habits of overeating, smoking and drinking, even though everyone knows this is unwise. Many people spend more money than they earn, and use it to pay for phone subscriptions or holidays instead of saving for next month's rent or setting aside money for their retirement. If people act so irresponsibly, are they still morally entitled to support from society if things go wrong? Isn't it simply their own fault?
The first perspective does indeed quickly lead to this conclusion. One could argue that the people in question have acted irresponsibly and will therefore have to bear the consequences themselves. Of course, there are situations beyond anyone's control-a sudden debilitating illness, redundancy due to an economic downturn-but according to this line of reasoning, such circumstances are rare and could have and should have been anticipated to some extent. Everyone knows that life has setbacks in store for us, so sensible people save for a rainy day, try to live healthy lives, work on their employability, and so on. If people fail to do the right thing despite their knowing all this, then they have evidently consciously decided to do so. That is their prerogative, of course, but they will have to accept the consequences as well.
The second perspective may well lead to a different assessment. Wrong choices or passiveness do not necessarily indicate unwillingness, but can also be a sign of powerlessness or strain. Admittedly, there are people who lack the motivation to do the right thing and behave irresponsibly but still expect public support if things go wrong. It would be naïve to deny this. On the other hand, there are also people who are sincerely motivated to do the right thing but fail simply because they lack the mental capacities to do so (temporarily), even when they do their best. It would be cynical to deny this. Some people face more serious challenges than others when it comes to mental self-reliance, not only owing to differences in cognitive capacity but also because they have certain innate traits that are difficult to change and that make them relatively more vulnerable to problems, such as a predisposition towards avoidance and a low level of self-control. There are also people who are so overwhelmed by setbacks that they lose faith in their own abilities. Moreover, stress and strain can lead to a temporary decline in mental performance and self-control, which in turn results in poorer decisions, etc. This means that a small mistake can quickly lead to problems that are almost impossible for people to solve on their own.

Be Realistic About Mental Capacities
There are both pragmatic reasons and reasons of principle to design policy for the 'average' citizen and not in line with the rationalistic principle of utility maximisation that underpins economic models and many legal premises. Policymakers should take a realistic approach when appraising ordinary people's capacity to think and act.
A telling example of the importance of the realistic perspective on self-reliance can be found in the domain of problem debt. At the moment, there is a huge discrepancy between what society expects in terms of financial self-reliance and what many people can actually cope with in that regard. As a result, substantial numbers of people run the risk of problem debt and their problems tend to escalate rapidly. 5 When it comes to health, we recognise that our health system needs people to be able to make informed choices and find their way around the healthcare system 6 , but having a third of the population unable to function as active patients puts that outcome at risk. 7,8 Self-reliance Paradoxes The starting point for both perspectives is the same: taking responsibility for oneself. The goal is also the same: autonomy and self-reliance for every person. We must conclude that the first perspective will not always move society closer to achieving this goal. It expects too much of people's capacity to act and makes incorrect assumptions about behavioural mechanisms. In some cases, the result is actually the opposite of what is intended. Earlier, we referred to the self-reliance paradox: too much emphasis on self-reliance in the short term can diminish people's self-reliance in the long term.
The self-reliance paradox is a factor in the question of pension accrual, for example. In the Netherlands, the system makes it compulsory for employees to participate in a group pension scheme. If the system were to offer people more choice and freedom, it would be more likely to create problems than to offer solutions for the vast majority of the Dutch. 9 Greater freedom of choice can increase autonomy in the short term but impair it in the long term, notably if people make the wrong choices and do not accrue enough pension. By the time they are aware that they have made the wrong choices, it is too late to rectify them. Of course, it makes good sense to tell entry-level employees that they need to save for their retirement and how they can do so, but it is naive to think that doing so solves the problem. It is also naive to think that people do not care about their pension if they make choices that are bound to turn out badly in the long term. 10 The second perspective is more realistic. It corresponds more closely to de facto variation in mental capacities, including the individual limits of those capacities, and thus affords more opportunity to achieve autonomy and self-reliance in the longer term as well. Freedom of choice is still the starting point, but it takes into account that that freedom can also lead to choice anxiety, either because there is so much to choose from or because of the circumstances in which people are forced to choose. That is why guidance and support should be provided to people facing difficult choices-help that goes beyond merely furnishing information.
There is, incidentally, also a latent danger in this second perspective, i.e. that the authorities have low expectations of people's self-reliance and are too quick to solve their problems for them. This may be the sensible thing to do when people are making the sort of choices that come up only once or twice in life (for example, picking a mortgage or a pension), but not for everyday choices (managing their household budget, for example). Ultimately, people must be able to do this themselves as best they can. After all, there is a second paradox of self-reliance: underemphasising self-reliance prevents people from becoming more self-reliant in the longer term.

Policy Preparation: More Focus on Mental Burden
What does all this mean for policymaking? Let us first look at how the authorities create policies and legislation governing natural persons. 11

Monitoring Mental Burden
There are clearly limits to the mental burden that people can manage. Not only are there only 24 hour in a day, but there are also limits to how much mental exertion is possible in that 24-hour period. At some point, fatigue sets in, the quality of mental performance declines and it becomes more difficult to maintain self-control. Stress, sorrow and loneliness exacerbate these effects. We could therefore argue that people have only a limited daily 'budget' to make informed choices and act on them. This budget will be depleted further when people are forced to remain vigilant in case they need to spring into action regarding regulations or benefits that are complex or subject to change, for example. Even minor changes in legislation or regulatory measures place additional demands on mental capacities because they disrupt routine and require more concentration-and our powers of concentration are limited.
The government does not appear to take this into account, however. Implicitly, it assumes that people have an inexhaustible mental budget; no one, at any rate, is monitoring the total number of choices, temptations and assumed actions bombarding people, and whether they can manage it all. To some extent, this blind spot is inherent in the way in which departments are organised. One of its distinguishing features is the considerable autonomy with which policy domains and ministries operate. That autonomy can easily lead to a fragmented understanding of reality. Each policy compartment tends to see only that aspect of reality pertinent to its mission, and so it applies rules that are logical and manageable within the boundaries of its own policy domain. That is different for citizens, of course: to them, it is the sum total that matters.
We referred in an earlier publication to the sum total of choices and temptations that force themselves upon a person per unit of time as 'choice overload'. 12 Identifying choice overload and the mental burden that it entails can help us to predict the mental burden that new policy proposals will cause people and foster debate about the desirability and design of such policies. Mental burden consists of a variety of different components: the cognitive burden, the necessary vigilance, the number of choices, and the self-control needed to make the 'sensible' choice and persevere with it. If this strain consistently exceeds people's available 'mental budget', the government must take this into account. At the moment, it does not do enough to monitor this. New policy proposals do often identify the consequences for income, prosperity or the regulatory burden. 13 We propose that policymakers should also analyse and monitor the mental strain that new policies place on the public. Our proposal is inspired by the 'cognitive load stress test' suggested by the Behavioural Insights Team (BIT), but goes one step further. 14 'Capacity to Act Test': People Must Be Able to 'Act' on It Many policy economists and legislative lawyers apply the rationalistic perspective, often implicitly. Policymaking is about creating the right mix of information provision and financial incentives. People are expected to know the law and be able to 'act' on it. Within the context of the second, realistic perspective, the judicialeconomic approach is inadequate. Insights gained in the behavioural sciences should also make their way into policy and legislation. Not only insights concerning the limits of the human capacity to think (that is already increasingly the case), but also insights regarding the human capacity to act. The question is not only whether people know the law, but also whether they can 'act' on it-is it based on realistic assumptions about human behaviour? This question should be part of a broader test of proposed policy and legislation that addresses behavioural science aspects. When preparing legislation and policy proposals, in other words, legislators and policymakers should specifically question whether their designs acknowledge differences in people's capacity to act.

Box 6.1: Make the Public's Perspective Part of Implementation Tests
In preparing legislation, legislators should examine more closely whether it is 'doable' for the public. Implementation tests should assess legislation not only from the perspective of the implementing organisations but also from the perspective of ordinary people. The key question is whether the legislation is based on realistic assumptions about people's mental resilience.

Process:
The following process-related questions can help in assessing the proposed legislation during its preparation: • Have preliminary tests been carried out among the public, for example using test panels, simulations or experiments? • Did the preliminary tests involve all the relevant target groups and user profiles? • Have other sources been consulted that could help to analyse the viability of the proposed legislation, such as research or experience with similar legislation?
Content. The following content-related questions can help in assessing the quality of the proposed legislation: • Mental burdens: What mental burdens-such as processing information, assessing one's own situation, taking action, checking deadlines, objecting to wrong decisions-does the scheme impose on people? Can those burdens be lightened? Is it possible for people to develop a routine or is constant vigilance required because parts of the scheme change regularly? Does the scheme require people to take action themselves much of the time, or does it work with a default option? • Cumulative burdens: What is the relationship between the scheme and associated schemes? What is the total mental burden on people who are covered by the scheme? Could the scheme plausibly coincide with life events that are known to have a negative impact on people's mental resilience? • Consequences of inertia or mistakes: What happens if someone does not immediately take action, for example does not open an envelope or forgets to complete or send in a form? Do small mistakes immediately have major consequences, or can they be rectified? Can people change their minds and how much capacity to act does this require? Is there a hardship clause and how much does it demand of people's capacity to act?
• Help and early warning: Is an easy-to-access front office available for those who cannot manage? Is an early warning system in place, and a regime of actively approaching problem cases?

Reducing the Mental Burden Accompanying Life Events
It is especially important to reduce mental burden in situations that occur only occasionally in life but that can have a major impact, such as having a child, going through a divorce, losing a close relative, being made redundant or going bankrupt. There is often much to be arranged at such times but the accompanying stress or sadness undermines people's ability to cope. Life events often mean a drop in income, requiring them to take immediate action at a time when they are agitated and lack a proper overview, for example when divorce leaves a woman solely responsible for her children's care. Western societies have relatively comprehensive systems of social support for these situations. Even so, a single mother on a low income must be on constant alert to keep up with all the administrative red tape. The National Ombudsman 15 of the Netherlands calculated that a single parent with two schoolage children, a part-time job, a supplementary social assistance benefit and rented housing receives at least twelve different income components from eight different authorities. He or she must complete eighteen different forms and the family receives eighty different payments a year. Managing all the necessary forms, documents and correspondence requires enormous self-organising capacity, on top of the mental burden of raising two school-age children on one's own. It is precisely in such circumstances that people who are normally self-reliant run into problems; they lose the overview and motivation to carry on, and consequently postpone decisions or make the wrong choices. Reducing the mental burden by simplifying the rules or by offering targeted support can improve self-reliance. We propose that governments launch projects on 'reducing mental stress' for some common life events, such as job loss, divorce and loss of partner. They should involve a nationwide inventory of what policy and legislation require of the mental capacities of individuals facing these stressful situations. A distinction should be made between the stress factors of the life event itself and the stress and mental burden that the relevant legislation generates in such situations. The projects can then look at how to reduce this mental burden.

Policy Content: More Than Information Alone
Adjusting the Choice Architecture There are limits to people's ability to always choose and implement the option that best suits their enlightened self-interest. In the long run, these limits can have major consequences for their financial or physical self-reliance. Policies that aim to improve people's self-reliance must therefore take into account differences in their mental capacities. In the first perspective, based on the notion of the rational individual, this primarily means providing information. Give people all the knowledge and information they need to make an informed decision and everything will be fine. We now know that it doesn't always work that way. In fact, an overabundance of information can put further pressure on an individual's mental capacities and lead to choice anxiety. 16 That is why the second perspective offers a much broader spectrum of guidance mechanisms. It is much more effective to make allowance for human limitations than to repeat an explanation. This also explains the enormous interest in 'nudging'. Nudging is a form of influence that goes beyond information transfer; it also involves designing the choice architecture in such a way that people are automatically guided towards making 'a sensible choice'. 17,12 Nudging leaves freedom of choice intact. Although people may be steered towards a certain option, everyone is free to choose something else. Nudging differs in this respect from harsher instruments, such as statutory injunctions, prohibitions or financial sanctions. Nudging can work well as an appropriate but gentle means of helping people with less capacity to act towards making choices consistent with their long-term goals and aspirations.

Adjust the Choice Architecture
Governments can anticipate variety in people's non-cognitive capacities by adjusting the choice architecture. They can do so in various ways.
• Simple labels • Ticking standard options (defaults) • Opt-out systems • Limited availability of undesirable options • Scalable freedoms The power of nudges can vary. A very mild form of nudging is a simple label that shows at a glance whether a product is consistent with a healthy diet, such as traffic light food labelling. There are already many different quality marks and logos on product packaging that provide consumer information. 18,19 That is not really illuminating, and having too much information to absorb or details that are difficult to compare can make it even harder for people to choose. 20 Instead of labels that are sometimes hard to decipher, it would be better to work with (red or green) colours that more or less automatically influence shoppers' choices owing to their deeply ingrained association with 'stop', 'proceed with caution' and 'go' 18 . The authorities can regulate this by providing comprehensible and practical information that does not in any event complicate people's ability to make the right choice.
Another option is to arrange the physical environment in such a way that it encourages the right choices. One example is the 'healthy' cafeteria that is being introduced in a growing number of schools. Healthy products are prominently displayed and easy to grab, while unhealthy snacks are relegated to the back shelves, requiring children to make a more conscious effort to notice and acquire them.
A relatively strong nudge is to change the default option, in other words to tick standard options on multiple-choice forms in advance. If the government pre-selects the option that is likely to be best for most people, it can be assigned to those unwilling or unable to choose. They still have freedom of choice because they can choose to deviate from the pre-selected option (opting out). The precise moment when people make choices is also of relevance. There are times when people are better able or feel more motivated to make sensible choices. The annual pension statement, for example, could be accompanied by a low-threshold offer to join a supplementary pension scheme, with the default option being appropriate to the individual's personal circumstances.

Box 6.2: Nudging for Self-reliance
The government agency that administers student grants, DUO, offers a successful Dutch example of nudging in the financial domain. Initially, students who had lost their right to a grant after four years but continued with their studies, were automatically paid the maximum loan amount. Students who did not want the loan had to go to the DUO website to enter the necessary change. Many students failed to do so and automatically borrowed the maximum amount. In 2009, DUO changed the standard option to the amount (in many cases much lower) that the student had so far received as a performance grant. As a result, the number of students who borrowed the maximum amount after their basic grant ceased fell from 68% in 2009 to 11% in 2011. DUO made a further change in 2014. It eliminated the 'maximum loan' option from the student financial aid application screen on its website and instead asked students to enter how much they wanted to borrow. The number of students who opted to borrow the maximum amount subsequently declined by 50%. 21 Much has already been written about the normative implications of nudging. 22,12 Many of the objections raised apply equally to other mechanisms meant to influence behaviour. They question whether it is desirable for government to intervene in certain behaviour, regardless of the form the intervention takes. There is, however, one objection specifically associated with nudging, and that is the risk of non-transparency. In previous publications, we have therefore argued that governments (or other parties) should always be candid about the way in which they use nudging. 12

Reducing Temptations
The most rigorous way to protect people from their mental weaknesses is to avoid tempting them in the first place, of course. Examples of such policies are those prohibiting smoking and alcohol consumption. They impose strict limitations on the freedom to smoke in certain places or on alcohol purchases by minors. Questions of self-regulation obviously inform the underlying rationale. By now, everyone knows that drinking too much, smoking, and eating the wrong food are unhealthy, and many people would like to stop drinking to excess, quit smoking or eat healthily. These are, however, precisely the sorts of behaviours where knowing does not automatically lead to people taking action. The decisive factor here is the ability to resist temptation, something mainly determined by self-control. Because many people have limited self-control, policymakers also need to focus on reducing temptation. Making it more difficult for young people to smoke or buy alcohol reduces temptation significantly and lowers the need for self-control. The same applies to combatting obesity. It is particularly difficult to maintain a healthy dietary pattern when public spaces become obesogenic environments in which people are constantly being tempted to eat a lot of unhealthy food. We therefore propose to restrict the sale of unhealthy products in specific places, such as schools and care institutions.
A similar strategy can also be applied in other areas. By making it more difficult for people to incur debt, we can improve society's financial resilience. Debts incurred through gambling, a mortgage or consumer credit play a significant role in the onset of financial problems. To combat this, we recommend limiting opportunities for gambling and consumer borrowing. A further measure would be to lower the maximum mortgage that borrowers can take out.

Reducing Temptations
One element of a realistic approach to self-reliance is to kerb temptations so that people are not constantly being called upon to exercise self-control. This is particularly true in situations and environments where people are prone to temptation due to stress, poverty or youthful inexperience. Examples include candy-free cash registers, 23 banning gambling halls from socially and economically disadvantaged neighbourhoods, and stricter supervision of payday loans by regulatory bodies or financial markets. 24 The private sector, parties in civil society and governments have a joint responsibility in this regard.
A realistic approach also means that government limits freedom of choice in the case of crucial safety nets such as pension schemes, occupational disability insurance and health insurance. Many people have the necessary self-awareness in this respect; witness the fact that only a small minority of the Dutch population favours having greater freedom of choice in pension schemes. 25 If, however, government decides to offer more freedom of choice, then the preference is for an opt-out system that automatically provides pension coverage unless people explicitly choose otherwise.
Another option is to offer a scalable freedom of choice. The basic provision is compulsory, but people may choose whether or not to insure themselves above a certain amount. One example of this is the Dutch system of compulsory basic medical insurance with optional supplementary policies. The same system is conceivable for occupational disability and pension schemes, for example a system in which everyone is obliged to join a pension savings and take out occupational disability insurance, even groups that are unable or unwilling to do so, such as self-employed persons.
The obligation, however, would be limited to an insured minimum income; above and beyond that amount, people would be at liberty to make their own choices. Such a system would prevent people who have little capacity to act from slipping into poverty after an occupational disablement or retirement and having to rely on social benefits. At the same time, those who are willing and able to arrange matters themselves will have the freedom to do so. 26

Limit Freedom of Choice in the Case of Crucial Safety Nets
Just how far the government wants to go in reducing temptations and choices is a political matter. It is up to politicians to strike the right balance. In various sectors, however, it is not always the case that permitting a large measure of individual choice contributes most to individual autonomy and self-reliance in the long term. We recommend being extremely cautious about giving people unlimited freedom of choice in essential financial matters, for example medical and occupational disability insurance and pension plans. If government does decide to allow greater freedom of choice, then opt-out systems with scalable freedoms are to be preferred.

Policy Implementation: Verification and Differentiation
How does the transition from rationalistic to realistic policy pan out in everyday life?

The Proportional Government: Minor Mistakes, Minor Consequences
Over-confidence in the rationalistic perspective can have very unpleasant consequences when combined with automated policy implementation. Combining unrealistic assumptions about people's capacities and motives with automated implementation can lead to disastrous situations in which well-intentioned people are penalised disproportionately. Someone whose attention lapses momentarily or neglects to pay on time will be facing the rapid accumulation of automatic fines.

Box 6.3: System of Cumulative Fines
If you get rid of your old moped in the Netherlands and forget to cancel your insurance, you will have to pay a fine of 330 euros. After eight weeks, the fine will increase automatically by 50% to 495 euros. If you do not pay up, the fine will increase again to double this amout. Within just a few months, you will owe 990 euros. 27 The debt collection organisation is then authorised to deduct this amount directly from your bank account and to levy attachment of wages. If that fails, you may be imprisoned for debt. This is what has happened to thousands of people every year. After imprisonment, the fine is still outstanding and people sometimes lose their jobs or homes as a result. On balance, imprisonment for debt solves nothing and only exacerbates problems.
The Dutch Employment Insurance Agency (UWV) imposed a strict regime in recent years on benefits recipients who did not comply with their reporting duty and pass on the requisite benefit-related information properly and on time. Its regime also got many well-intentioned people into trouble because, for example, they had made an unintentional mistake when filling in a form or had to rely on others who did not deliver information on time.
Strictly speaking, we could argue that all these people had only themselves to blame: they should have been more vigilant. For many, however, vigilance is sometimes too much to ask. In the meantime, things appear to be changing. The application of the Fraud Act has now been considerably relaxed and the Central Judicial Collection Agency (CJIB) has permitted payment arrangements since July 2015. It also makes allowance for voluntary debt recovery arrangements or debt restructuring processes. Many judges no longer allow imprisonment for debt unless the Office of the Public Prosecutor can provide evidence that the debtor is able but unwilling to pay. Authorities no longer automatically assume that an individual has intentionally been negligent in such cases, but acknowledge that he or she may have made an inadvertent error and that the consequences should be proportionate to the gravity of that error.
Taking the realistic approach to mental capacities, government should begin its enforcement policy by verifying the extent to which someone is unwilling or unable to pay. It should then differentiate and tailor its response to the nature of the situation. Conversely, people should also conduct themselves as responsible citizens. Reciprocity must therefore be ensured: people who are trying to cheat the system should be treated differently from those who are endeavouring to pay their debts. In July 2014, the Dutch government began using a guidance model for collecting financial penalties that distinguishes between different types of persons (Table 6.1). It is not enough, however, to recognise that some people are willing but unable to pay; the realistic perspective on mental capacities requires government to act proportionally in such cases. Serious fraud merits severe penalties, but minor errors should have only minor consequences. It is better to assist those who are willing to pay but have difficulty filling in forms or making plans than to levy automatic fines. For those who are willing but unable to pay, a payment arrangement is much more effective than attachment of wages. In the case of problem debt, the government should not use special powers such as imprisonment before establishing that the debtor is capable of repayment. Only if the debtor is indeed unwilling to pay should severe sanctions be imposed.
From a realistic perspective, it is often also pointless to punish people who have an unhealthy lifestyle by excluding them from treatment or having them pay a higher personal contribution. 30 The problem is usually not one of unwillingness, but mainly of being unable to persevere with a healthy lifestyle. A proportional government does not, for example, automatically deduct a portion of a benefit if a jobseeker fails to submit the required number of job applications but is clearly working to improve his labour market position, for example by doing voluntary work. The City of Amsterdam takes a customised approach by offering groups who face barriers to employment an activation programme or voluntary work. 31 The realistic perspective on mental capacities also means giving people the chance to backtrack and correct previous 'mistakes'. That is especially true if they did not understand the consequences of their decisions. It seems that people in the Netherlands who claim care services are not always adequately informed about the personal contribution they are required to pay. 32 As a result, they are unprepared for the financial consequences or unable to opt out at that point. They should be allowed to reverse their earlier decision. That is another way to reduce stress and choice overload.

Box 6.4: Unexpectedly High Personal Contribution 33
The 'kitchen table conversation' has become a fixture in the Netherlands since the introduction of a new law governing home care. During this conversation, representatives of the local authority and those in need of care discuss the latter's wishes and what sort of care is available. The local authority must also inform the care recipient that he or she may be required to pay a personal contribution and should take this into account. It is not, however, the local authority that determines the amount of the personal contribution, but a separate national public organisation, the CAK. That is also what the local authority tells people who contact it to find out how high their personal contribution will be. Some local authorities refer care recipients to the calculator on the CAK's website. In theory, people can use the calculator to get an idea of what they will need to pay, based on the type of care received, their household situation, their (aggregate) income, their assets and their age. But to do so, they also have to know what rates the local authority charges for care and which product code they have to enter. If people want to make an informed decision, in other words, they have to take action themselves, track down the right information, and persevere until they have all the data necessary to do the calculation. This is simply too much for many people, and they run the risk of receiving a bill that is too much for them to pay. An additional problem is that after receiving the CAK's bill, it is often too late to object to the local authority's decision to award care. It is incomprehensible to people in such situations that they cannot object to the CAK's decision but only to a decision by the local authority whose financial consequences were impossible for them to foresee.

Early and Personal Contact
A proportional government should also seek early and personal contact with people in the event of irregularities. Government can only verify and differentiate if it familiarises itself with someone's personal situation. Behavioural science teaches us that early and personal contact is important. Once people are in serious trouble, for example because they are heavily in debt, they often experience such high levels of stress that they lack the mental resources to think clearly, plan and persevere. By that time, they no longer have an overview, they lack faith in their own abilities, and their self-reliance has taken a serious beating. Contacting people early on and approaching them with an open mind helps to reduce stress levels and improves their ability to stay out of trouble on their own. 34 This not only helps them to be self-reliant but also benefits the public purse, since they are not obliged to rely on debt assistance or other social services.

Box 6.5: Early and Personal Contact by Health Insurers
In 2013, Dutch health insurer CZ implemented an accounts receivable policy that accommodates the personal circumstances of its customers. As soon as people fall slightly behind in paying their premiums, a CZ representative calls them. The representative does not start the call by asking 'when are you going to pay?' but rather 'how can we help you?'. Whereas in the past the amount due had to be paid off in six months, with a minimum payment of 50 euros a month, CZ now asks the customer how much he or she can afford and arranges a more personalised payment regime. CZ is pushing the limits of Dutch law in this respect because officially, it is supposed to report clients who are several months behind schedule to the Netherlands Health Care Institute. 35 The Institute then imposes a heavy administrative fine on these clients, which they are obliged to pay on top of their insurance premium. They must continue paying the fine until their health insurer removes them from the list of defaulters.
CZ's personal, proportional approach is successful. It makes five times as many payment arrangements as it used to and customers are much more likely to comply with them. Depreciation on bad debt has been cut in half, from e20 million in 2010 to around e10 million in 2015, and more than 90% of arrears are now being cleared instead of 70%. 36 CZ is also one of the initiators of the creditor coalition 'From debts to opportunities', which has drafted an ethics manifesto setting out rules of conduct for dealing with defaulters. The coalition also includes mail order companies, housing associations, telecom providers and energy companies that want to take a more responsible approach to problem debt. The manifesto clearly differentiates between those who are unwilling and those who are unable: 'Some customers simply cannot pay. We work with them to find a solution. Customers who are unwilling to pay can expect to be treated fairly but strictly.' 37 These initiatives not only involve (physical) proximity but also communication, starting with the terminology. For example, many local authorities refer in their information documents to 'debt assistance' or 'help with debt'. People who are not yet in serious debt or who are not happy regarding themselves as the sort of person who needs 'help' can easily assume that the assistance is not meant for them. They believe such assistance is only available if you've hit rock bottom. Some of the relevant web pages also have a stern, bureaucratic look and refer immediately to 'conditions' that must met, 'documents' that must be turned in, and so on. They are not always very inviting and could do with some improvement (see the Box 6.6).

Box 6.6: The Money Helpdesk
A good example of how things can be done differently is the Money Helpdesk established by the City of Amersfoort. The helpdesk is housed in a separate office, at a central location in the city. There are posters displayed in the windows saying 'Bring your money questions to us', 'Getting divorced? Lost your job? Having a baby? Find out what it means for your finances' and 'Call or walk in for an appointment'. In terms of texts and design, the Money Helpdesk website also more closely resembles a non-profit advisory organisation than a government unit. The slogan on the home page is 'Amersfoort's Money Helpdesk shows you the way in money matters'. The word 'debt' is nowhere to be found, and the staff say that people contact the helpdesk not so much for help as to use it as a 'financial sparring partner'. According to the annual report by the Amersfoort institution responsible for the Money Helpdesk, it reaches precisely those people who are in financial distress but have so far avoided problem debt. 38

Personal Contact
We recommend that implementing bodies seek early and personal contact with people when irregularities occur so that finer distinctions can be made between those who are unwilling and those who are unable, and so that guidance can be provided at a point when people still have enough mental 'reserves' to think clearly and take action.

The Professional Setting: From Improving Knowledge to Reducing Stress
Even if government bases its policy design and implementation on realistic expectations about what people are willing and able to do, not everyone will be self-reliant at all times. How should professionals deal with this? First and foremost, they must be able to assess the mental capacities of those in question. This means that care providers, benefit agency staff and debt relief workers must be aware of the importance of the capacity to act, so that they can provide more effective support where necessary. Such awareness should be a priority during their training. Government can further support the development of methods for assessing individual mental capacities and how to deal with them.
In addition, authorities should acknowledge that some people require more time and attention than others. A more flexible system of reimbursements for medical expenses would give some patients more time to grow into their role as active patients, with the help of their physician. As professionals, benefit agency staff should be given leeway to adapt their approach to a job seeker's specific situation, for example, by understanding the 'mourning process' of the recently unemployed, and by proposing a pathway in which job seekers gradually accumulate positive experiences so that they feel more confident about their own abilities and improve their employment prospects.
Finally, professionals should be mindful of problems in other areas of life and of positive and negative feedback loops. Problems tend to accumulate precisely because stress and mental burden have such a huge impact. This also means that the best way to improve people's self-reliance may sometimes lie in a different domain. Care providers are becoming more aware of this. For example, the juvenile psychiatry unit at Utrecht University Medical Centre has extended its treatment team to include social workers. They accompany patients during therapy to ensure that, once they have recovered from psychosis, they do not lose their jobs, homes and incomes and therefore run the risk of relapse.

Epilogue: A Realistic Government Is a Legitimate Government
The examples of health insurer CZ and the Amersfoort Money Helpdesk demonstrate that a realistic perspective on mental capacities can help combat problem debt. Avoiding problem debt is good for people's self-reliance and for the public purse. Perhaps even more importantly, the realistic perspective can also enhance the legitimacy of governments and policy. Over the past few decades, the behavioural sciences have shown that when people feel that administrative bodies are treating them fairly, they have more confidence and are more willing to accept those bodies' decisions, even the unfavourable ones. 39 This book has attempted to take this line of research and policy a step further. A realistic approach to the public and policymaking, based on the insights of modern behavioural science summarised in this book, can help to redefine the social contract between government and the public. A government that does not acknowledge the limits of our human capacity to think and act will ultimately be regarded as unreliable. Behavioural science shows that not everyone is capable of understanding the law and acting rationally under all circumstances. People must be able to trust government not to push them over the edge, and should also feel confident that momentary inattentiveness and mental weakness do not have immediate and severe consequences. That calls for a government with a human face that respects individual differences.
A realistic government is tough on cheaters, but lenient towards those who are willing but unable. A realistic government understands that 'normal' people are not always vigilant and well organised due to choice overload, stress, sorrow, poverty or old age. A realistic government facilitates by making sensible choices easier. A realistic government is mindful of human failings and sees to it that minor mistakes do not have major consequences. A realistic government seeks early and personal contact when things go wrong. As a result, a realistic government is a reliable and legitimate government.
Endnotes procedures led to an increase in public satisfaction of 40% and an average cost saving of 20% (ROB 2014 Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.
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