New Coke, the sweeter reformulation of Coca-Cola that the company launched in the 1980s, is remembered as a failure of market research or at least, of the interpretation of market research. Surveys in advance, focus groups and taste tests preferred the new version of Coke. When it actually launched there was a negative backlash. People didn’t like their Coke being messed with and Coca-Cola eventually reversed and went back to the old formula. It’s a classic example of how a product that tests well in the artificial environment of a survey or taste test doesn’t necessarily perform the same way “in the wild”, when subject to the full chaotic system of public opinion.
This isn’t going to be a post about Coca-Cola market research strategy in the 1980s – I am sure it was far more complicated than the myths that have grown up about it – rather this polling from YouGov for the Times about NHS spending. At the weekend some of the papers reported that Labour were considering an increase in National Insurance contributions to help fund the NHS. YouGov asked people directly about this – would they like to see the basic level of National Insurance go up from 12p to 13p to help fund the NHS – indeed, people would, by 48% to 37%.
Politicians have in the past tended to use National Insurance as a rise that is less noticeable to the public than income tax, even though for salaried employees it is much the same thing (obviously it has different thresholds, but it’s still essentially an extra 1% of your salary deducted at source). I was a little cynical about that – did it really work, or do people treat it just the same? Or even, would people prefer the honesty of an income tax rise? YouGov asked the same question using a rise in the basic rate of income tax. Funded from income tax its the other way around, 34% support it, 51% are opposed. It looks as it the ruse works – if the extra 1% of people’s wages is labelled a NI rise, people support it. If it’s labelled an income tax rise, people oppose it.
Of course there are technical differences between NI and income tax (the way it affects the self-employed, or isn’t paid by pensioners, or is paid by people on lower pay than income tax is) and in theory they could contribute to the difference. I suspect most of the answer is simply that people are more aware of income tax and how it works and understand national insurance less well. Hence they are less supportive of a tax rise when they understand exactly how they’ll be paying it.
To bring it back to the New Coke analogy though, what does the question tell us about the policy? Would it be a popular thing for Labour to promise? Well, I think it tells us there’s a risk there. If support for a tax rise is conditional upon people not understanding it very well it does pose the question of what would happen if they had it explained to them, or even “misexplained” to them (remember how a National Insurance rise was packaged up as a “Labour jobs tax” by the Tories before the last election?). Essentially people like spending more on the NHS, they generally dislike paying more taxes (YouGov also asked if people would support keeping income tax, NI and health spending the same – people supported that too!). In the artificial scenario of a polling question you can link those two things and force people to consider them as one, you can use a form of tax people answering the question aren’t so familiar with. If it was an actual party policy, it would be out there being debated by parties, reported by the media, discussed in the pub. Would it be a discussion about how Labour are willing to make the hard but necessary decisions on providing the funding for the future of the NHS? Or would it be a discussion about how Labour would be putting up ordinary people’s taxes? Until a policy goes out into the wild that’s not an easy question to answer.