Shove Not Nudge
Soft behavioural nudges are insufficient when suppliers actively re-complexify around them
The libertarian paternalism framework — 'nudge' — has delivered genuine wins: auto-enrolment in pensions, opt-out organ donation, default investment allocations. But Ramadorai argues it has hit its ceiling in personal finance. Suppliers are adaptive. When a regulator nudges consumers toward better defaults, suppliers innovate around the intervention: auto-enrolment contribution rates get set at levels too low to produce adequate retirement income; insurance simplification triggers product proliferation; teaser-rate warnings are added but not banned.
The alternative is what Ramadorai calls 'shove' — prescriptive structural mandates that define what products may exist and how they must be structured, rather than trying to influence consumer choice within a broken product landscape. The analogy he uses is a maglev rail system: you cannot innovate at high speed until the track has been rigorously engineered. Once the guardrails are set prescriptively, innovation can operate freely within them.
The key distinction from prior regulation is specificity. Ramadorai explicitly rejects vague obligations like 'duty of care' or conduct-based approaches that apply after the fact. These create chilling effects on innovation without solving the structural problem. Prescriptive product-category mandates — what a starter-kit mortgage must look like, what overdraft fee reordering is prohibited — are durable in a way that principles-based regulation is not.
- Nudges work when the environment is basically honest and well-designed — they fail when suppliers actively exploit the choice architecture.
- Prescriptive product standards are durable in a way that principles-based regulation is not; they leave no room for adaptive re-complexification.
- Financial innovation should be allowed to flourish within tightly defined guardrails, not constrained uniformly.
- Vague obligations like 'duty of care' chill innovation without fixing incentives — specificity is required.
- Auto-enrolment at the wrong default rate can produce the illusion of participation while delivering inadequate outcomes.
- Audit whether current nudges are being gamedBefore proposing a new nudge or default intervention, map how suppliers have historically responded to similar nudges in this product category. If product proliferation, rate segmentation, or definition manipulation followed previous interventions, nudge is unlikely to be sufficient.Pro tipThe UK insurance price-walking case is a template: measure product variant count before and after any 'simplification' regulation as a proxy for gaming.
- Define exactly what the guardrail prohibits or requiresReplace principles with rules. Rather than 'products must be fair and transparent', specify: 'mortgage SVR cannot exceed base rate plus X basis points', 'overdraft debit reordering within a day is prohibited', 'all providers must offer a standard-form no-fee current account'. Vagueness is the enemy of durability.Pro tipTest the rule by asking: could a supplier legally comply while still producing the harmful outcome you are trying to prevent? If yes, the rule is not prescriptive enough.WarningOverly prescriptive rules can lock in existing product forms and prevent beneficial innovation. Ramadorai's answer is to prescribe the floor (the starter kit) while leaving headroom for innovation above it.
- Require plain-vanilla alongside any complex productAny provider offering a complex financial product must also offer the standardised plain-vanilla baseline from which it deviates. This creates a permanent comparison anchor without prohibiting innovation. The medical analogy: paracetamol is always on the shelf next to the branded formulation.Pro tipThe plain-vanilla product must be offered in the same channel with the same prominence as the complex product. Display-rules matter as much as existence-rules.
- Set mandatory-offer vs mandatory-take differently by product categoryFor catastrophic risks (flood insurance in flood zones, term life insurance for dependents), mandatory purchase is justified by the systemic cost of non-coverage. For other products, mandatory offer by the provider — combined with informed consumer choice — is sufficient. Distinguish the two carefully to avoid paternalism overreach.WarningMandatory purchase without income support can create affordability crises for households who cannot afford the premium even if they need the coverage.
Auto-enrolment achieved near-universal participation in workplace pensions — a genuine nudge success. But contribution rates were set at 8% on qualifying earnings, which for a higher earner excludes a significant slice of salary, producing lower actual savings rates than the headline number implies.
Ramadorai compares the regulatory guardrail to a maglev track: you cannot operate a high-speed train on a track that has not been rigorously engineered for safety. But once the track is built to standard, trains can run as fast as the technology allows.
Before the Apothecaries Act and OTC regulation, doctors endorsed branded products (like Lucky Strikes) with no standardised evidence base. After regulation, paracetamol sits on the shelf next to branded versions at a fraction of the price — consumer can choose freely, comparison is trivial.
The 'shove not nudge' framing emerged from Ramadorai's dissatisfaction with what he saw as the academic community's over-reliance on behavioural economics as the policy toolkit for personal finance. Having reviewed evidence from financial education programs, competition-based approaches, and nudge interventions across multiple countries, he concluded that none of them adequately addressed the structural mis-incentivisation of the product design process itself.