 Shame, vanity, laziness and the desire to fit in are all to be used as tools of Government policy by ministers acting on the advice of a new psychology unit in Whitehall.  The first glimpse into the confidential work of the Cabinet Office's Behavioural Insight Team came on Tuesday when ministers suggested members of the public should be able to make small charitable donations when using cashpoints and their credit cards.  On Friday, the Cabinet Office again followed the unit's advice in proposing that learner drivers be opted in to an organ donation scheme when they apply for a licence, and also floated the idea of creating a lottery to encourage people to take tests to prove they have quit smoking.  These initiatives are examples of the application of mental techniques which, while seemingly paradoxical to the Coalition's goal of a smaller state, are likely to become a common feature of Government policy.  The public will have "social norms" heavily emphasised to them in an attempt to increase healthy eating, voluntary work and tax gathering. appeals will be made to "egotism" in a bid to foster individual support for the Big Society, while much greater use will be made of default options to select benevolent outcomes for passive citizens - exemplified by the organ donation scheme.  a clue to the new approach came early in the life of the Coalition Government, in a sentence from its May agreement: "Our Government will be a much smarter one, shunning the bureaucratic levers of the past and finding intelligent ways to encourage, support and enable people to make better choices for themselves," it read.  The Prime Minister, David Cameron, established the seven-strong unit in July, since when the Government has declined to divulge all its members and the full extent of its work. However, The Independent has learnt its guiding principles and some of the projects that have used its favoured techniques.  One experiment involved Her Majesty's Revenue and Customs (HMRC) secretly changing the wording of tens of thousands of tax letters, leading to the collection of an extra ?200m in income tax.  Other ideas tried elsewhere that have been studied by the unit include reducing recidivism by changing public perception of ex-prisoners, and cutting health costs by encouraging relatives to look after family members in "patient hotels".  The unit draws inspiration from the Chicago University professor Richard H Thaler and his colleague Cass Sunstein, whose book Nudge: Improving Decisions about Health, Wealth and Happiness is required reading for Conservative frontbenchers.  Professor Thaler, who advises the UK team, suggests that instead of forcing people to behave more virtuously through legislation, governments can guide them in the right direction using psychology. Ministers should become, in his jargon, "choice architects", making virtuous choices more attractive than unvirtuous ones. In his books he quotes the example of automatically opting workers into company pensions to raise the amount saved for old age, which will come into force in the UK in 2012 having been enacted by Labour. another is from amsterdam's Schiphol airport, where flies were etched on to urinals to give men something to aim at, reducing spillages in the gent's toilets.  Mr Cameron embraced nudge theory two years ago in a speech about "Broken Britain", but has subsequently placed more emphasis on his own idea of the Big Society, where individuals and charities play a much greater role ias the state shrinks.  Both ideas, however, fit neatly into the work of the insight team, which reports to key Government figures including Jeremy Heywood, the Prime Minister's Permanent Secretary, Steve Hilton, Mr Cameron's director of strategy, and Sir Gus O'Donnell, the Cabinet Secretary.  Central to this is limiting regulation and cost, according to the unit's director, Dr David Halpern, a former Cambridge University social psychology lecturer.  In comments to policymakers and businesspeople in Brussels recorded by The Independent last month, Dr Halpern said: "One of the policies of this new administration is essentially a 'one in, one out' approach to regulation, so departments wanting to introduce a new form of regulation have to get rid one at the same time. One of the fashionable things to say is: 'Well, what are the alternatives to regulatory instruments?' - spending money - which they're not very keen on. So it tends to support this shift towards behavioural economics."  Dr Halpern has experience of seeking unconventional solutions to policy problems via his role as chief analyst at Tony Blair's Strategy Unit, which looked into ways of increase happiness in the UK that - in common with other western countries - have not kept pace with economic growth.  Dr Halpern's approach, carried over from his days with Mr Blair, centres on his favourite term, "Mindspace," an acronym that stands for: Messenger (i.e. he who communicates information affects its impact); Incentives; Norms (what others do influences individuals); Defaults (pre-set options tend to be accepted); Salience (revelance and novelty attract attention); Priming (sub-conscious cues); affect (the power of emotional associations); Commitments (keeping public promises); and Ego (the stroking of which encourage positive action).  Seeking to explain Messenger he told his Brussels audience: "It matters who tells you. If you are go to say something about vaccination, you are much better off having the Chief Medical Officer say it than a Cabinet minister ... if you want anybody to follow the advice."  Similarly, tax officials who reinforce "norms" dramatically increase their collection rates. The authorities tend to be "quite aggressive and assertive" when chasing late payers, Dr Halpern said. "We will send you a rude letter and say: 'We're going to come and find you and break down your door and take away your children.' So [HMRC] officials had been reading a bit of [nudge] literature and they changed letters on just one block of letters [chasing] ?600m in unpaid tax.  "The normal repayment rate is about 50 per cent. The [new] letter says: '94 per cent of people pay their tax on time', so now you emphasis the underlying social norm - and then: 'Even if one person doesn't it has a significant impact'. The repayment rate went up to 85 per cent, [collecting] ?200m just in that experiment."  Intriguingly, closer co-operation between the unit and HMRC was referred to in passing by the Cabinet Office on Friday. at the centre of the unit's work, though, are its priorities: well-being, public health, the environment and philanthropy.  While there are few details so far on how the unit will tackle happiness, plans for public health are more advanced. Britons have one of the worst records in Europe when it comes to rates of obesity, drug use, and sexually transmitted diseases (STDs). The Health Secretary, andrew Lansley favours nudging rather than legislation and has controversially recruited food and drink multinationals, who profit from unhealthy behaviour, to devise appropriate strategies.  One is likely to see signs placed at supermarket checkouts reinforcing social norms about the amount of fruit and vegetables bought by the average shopper. another is the idea of "patient hotels", a Continental innovation where relatives can sleep alongside patients, cutting costs and improving outcomes. This has the added attraction of reducing health spending at a time when the NHS budget will come under increasing pressure from rising demand.  Public health campaigns on STDs are likely to replace factual warnings with questions designed to emphasise social norms. So, instead of advising people of the likelihood of sexual partners having an STD, posters would ask: "What would your girlfriend think of you if you say you don't want to use a condom?"  Some professional health organisations, such as the British Medical association, are concerned that nudges will be used at the expense of new legislation on tobacco advertising, tax on junk food and other issues.  But Nick Chater, Professor of Behavioural Science at Warwick Business School, who is not involved with the unit, welcomed the new emphasis on psychology. "Broadly speaking, I think it's a valid approach," he said.  "If you are interested in changing people's behaviour for their own or the collective good, then regulation is often a blunt tool and it often doesn't harness goodwill. But it's misleading to think with a few nudges consumer behaviour will head off in another direction. [Behavioural economics] is definitely an additional tool, [but] I don't see it as a way to eliminate regulation or redistribution."  THE NUDGE UNIT'S PRIORITIES  * Health  Public health is a priority for the unit, because half of UK health spending goes on treating the consequences of unhealthy behaviour such as drinking, smoking and having unprotected sex. Yet only one half of one per cent of NHS spending goes on promoting healthy behaviour. The unit suggests using respected medical fi 