The Euro Did Not Make Europeans Feel More European

The American economist Richard H.Thaler was recently awarded the Nobel Memorial Prize in Economic Sciences for his contributions to behavioural economics. Among his many specific contributions to the field is also his popularisation of ‘nudge theory’; the idea that subtle changes to rules and policy can encourage significant changes in individual behaviour and attitudes.

Take for example plastic bag charges. Evidence suggests that increasing the cost of a plastic bag from zero to a few pence (or cents) has reduced usage rates in countries and companies that introduced such schemes by 70-90%. The increased monetary costs in many instances is so tiny that it is unlikely to materially matter to people. What matters however is that the miniscule cost of using plastic bags served as a ‘nudge’ in reminding people that plastic bags are bad for the environment.

The power of ‘nudge’ is such that many governments have set up dedicated behaviour insight teams, or ‘nudge units’, to help find innovative ways to support government policy and overcome irrational aspects in people’s behaviour that do not conform to homo economicus. Given the power of some of these ‘nudge’ policies one would think, a priori, that the introduction of the euro currency in the majority of European member states in 2002 might offer significant behavioural influences that go far beyond the pure economic rationale. Indeed, among the expected benefits of the introduction of the euro was the belief that is would foster a pan-European identity, a shared feeling of “Europeanness” that would add to, if not replace, existing national identities.

To prove whether this was the case, I together with colleagues (Dr. Daniel Muller and Prof. Lionel Page), conducted research on the subject and the result suggested that this did not happen. By examining data from Eurobarometer surveys over a 20 year time span, and complementing this with analysis from a novel data set that tracked the diffusion of euro coins of foreign origin into France between 2002 and 2011, we came to the conclusion that the introduction of the euro did relatively little in building a European identity. Our analysis contained over 350,000 individual responses and using modern statistical methods our results suggested that, apart from the fact that euro-adopting countries generally have higher levels of European feelings than non-euro adopting countries, no statistically significant effects on a range of euro treatments can be found, either in the short run or the long run.

Therefore, 15 years after the introduction of the euro, our study “Can a common currency foster a shared social identity across different nations? The case of the euro” concluded that in spite of these high expectations, the euro does not appear to have been a major factor in building a common European identity. It can be argued that either the build-up of a shared European identity takes place on a much longer time scale (if at all), or that other institutional innovations are needed to create this ‘shared’ identity.

While our study is a pan-European study that looks specifically at the case of the euro, the question of what determines national and international identities appears to be a very contextual question. Recent events in Catalonia are grounded in a fundamental difference in how two groups of people view their national identity. We don’t even have to look far to observe similar long standing rumblings beneath the surface – think of Scotland, Wallonia, Lombardy. If a common currency and iconography (the euro) that permanently resides in your wallet is not able to significantly change someone’s outlook on whether they identify themselves as a European; then one must ask, what can? What more can be done to make people across different nation states feel some sort of shared identity?

While my own life experiences have made me a staunch advocate of “project Europe” and I generally support slogans and policies that aim for a wider uptake of the euro and the creation of a ‘United States of Europe’, my own research (and current political events) does make me wonder to what extent this is actually feasible in anything but the very long run (50+ years). I am no expert at ‘nudging’, but I suspect it may be much more difficult than previously thought to nudge people into feeling more European. My guess it that traditional, ‘non-nudge’, policies will have to help build shared identities. Policies such as harmonising education syllabi across countries, for example. However, such policies are likely to face their own, very difficult and very lengthy, obstacles before they are implemented, I suspect.