Nudge as Choice Architecture
Knowing how people make decisions is important. For various practical reasons, from making better policies to delivering product or service with higher value, to managing teams and companies, to effectively winning campaigns (think of elections, for example). Not surprisingly, the way how we make decisions as individuals and groups interests scientists—psychologists, sociologists, behavioural economists, political science and communications scholars. They have been studying human decision-making for long, but the real boom started with publishing a seminal work by Richard Thaler and Cass Sunstein, who made the concept comprehensible (as compared with technical jargon filled academic publications/journals) to broad audiences of non-experts and coined the term ‘nudge’.
This is how they define it: ‘A nudge, as we will use the term, is any aspect of the choice architecture that alters people’s behaviour in a predictable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates. Putting fruit at eye level counts as a nudge. Banning junk food does not.’
What made the notion so popular was efficiency of its practical application—relatively unsophisticated and inexpensive methods that can deliver tangible benefits. Moreover, as the proponents claim, it is beneficial both ways: the governments and citizens in policy implementation and service delivery, the businesses and customers alike, in their interaction. The logic is pretty simple: by helping people make better choices of your products and services, you help yourself (through customer satisfaction, for instance).
Nudge and Free Will
The use of insights from behavioural sciences in public administration and business management has been growing for years, and there are many followers of employing ‘nudging’ methods for communicating public policies (in US and UK even public offices established), but also critics who claim that ‘nudging’ is paternalistic, even unethical.
The main concern of opponents is that by using behavioural science, the governments and businesses (and in fact anyone else) can manipulate our decision making, ‘softly’ push us toward making choices which are not necessarily in our best interest. On the other hand, there is a notion of free will in individual choice involved. For us, the very fact of the choice made voluntarily matters. In fact, we value it so much that we are ready to make sacrifices and accept the cost of it (at times, stubbornly pursuing our course—remember sunk cost?) thus, exercising our ‘right to be wrong’.
This is what I recall from Dostoyevsky: ‘What human being wants is just an independent choice, whatever the cost of this independence and whatever it may bring about.’ Therefore ‘rationality’ (strictly self-interest based behaviour, as defined by mainstream economists in their models) is not necessarily the driving or determining factor of any given decision made by us as individual human beings, and I assume this makes it impossible to model an individual’s behaviour (for good or bad). The value of a model which does not incorporate our intuitive cognition is of small practical use.
So what are the most important nudges? According to Cass Sunstein, the co-author of Nudge, there are ten of them:
Default rules: Setting the most beneficial to customers (as perceived by the initiative owners) as a default—most of us automatically accept them without giving second thought. Application may include automatic enrolment in programmes, including education, health, or savings;
Simplification: Making programmes easily navigable, even intuitive. This may include simplification of (at times numerous and lengthy) forms and regulations (which only experts dare ‘decoding’);
Uses of social norms: For example, by emphasizing what most people do—putting phrases like ‘most people plan to vote’ or ‘most people pay their taxes on time’ or ‘nine out of ten hotel guests reuse their towels’ in the communication with customers. In UK, this kind of nudges have proven effective in target interventions that support families with long-standing problems, turning around their lives and improving the life chances of children;
Increases in ease and convenience: We frequently reject some offers, especially those related to change of habit, because find them complicated (this is not the only reason, of course). The benefit shall be presented up-front, to immediately attract attention, without much effort. Applications may include, for example, making low-cost options eye-catching in the list or healthy foods visible on the store shelf;
Disclosure: For example, the economic or environmental costs associated with energy use, or the full cost of certain credit cards, or making easily available large amounts of data, through the Internet (as in the cases of data.gov and the Open Government Partnership);
Warnings: We know they work—campaign against smoking, with its emotional appeal through graphic means (as for cigarettes), is an example. Other visual effects, such as large fonts, bold letters, and bright colours can be effective in triggering people’s attention. Generally, visual effects can be used not only to warn but to encourage certain behaviour: for example, the use of flags can affect tension between communities, feeding into reconciliation strategies (as shown in the Northern Ireland Government’s Shared Future policy);
Precommitment strategies: These are nudges by which people commit to a certain course of action at a precise future moment in time—it is thought to better motivate action and to reduce procrastination;
Reminders: For example, by email or text message. The purposes may broadly vary—from paying bills, to taking medicines, or making a banker’s or doctor’s appointment. It also has a nice touch (‘we care’) which is good for building consumer trust and confidence. Closely related approach is ‘prompted choice’, by which people are not required to choose, but asked whether they want to choose (for example, clean energy or a new energy provider, a privacy setting on their computer, or to be organ donors);
Eliciting implementation intentions: Asking questions like ‘do you plan to vote?’ or ‘do you plan to vaccinate your child?’. Emphasizing people’s identity can also be effective (‘you are a voter, as your past practices suggest’). There are some interesting outcomes, for example in encouraging people towards more sustainable transport habits by leaving their cars at home and use public transport, by using this nudge;
Informing people of the nature and consequences of their own past choices: Private and public institutions often have a great deal of information about people’s own past choices – for example, their expenditures on health care or on their electric bills. The problem is that individuals often lack that information. If people obtain it, their behaviour can shift, often making markets work better (and saving a lot of money). Take for example, initiatives like ‘smart disclosure’ in the US and the ‘midata project’ in the UK.
* * *
In the following article I will share examples from the experience of governments as well as business practice on nudging people to take certain action—as practical application of the above nudges (or stated intentions to do so).
For other articles in this series see How Humans Think: Five Mental Shortcuts and How to Make Right Decisions in the Age of Uncertainty