Archive | 7:19 pm

Nudging Ventured, Nudging Gained

20 Sep


A tremendous amount  of effort is expended  trying to  get  people to do things that are good for them. Many  of us, however,   lack the know-how or discipline when it comes  to dealing effectively with challenges such  as our  health,  finances,  and the environment. 

Whether it is  fastening our  seatbelts, conserving energy, or exercising more,  people often  resist doing the right thing. Two social scientists at the Universityof Chicagorecently published a book entitled Nudge: Improving Decisions About Health, Wealth, and Happiness  that addresses this phenomenon.

The authors Richard Thaler and Cass R. Sunstein suggests that  positive change is best accomplished by the careful  design of “choice architecture” (nudging) rather than by punishing undesirable behavior. By “choice architecture” they mean the way we   arrange the settings where decisions are made. For example,  product placement in stores  greatly influences  the selections that are made. Products at eye level have a much higher probability of selling,  than those we have to stoop or tiptoe to see. That is why there is such a competition for desirable shelve space.

School lunchroom managers have similarly  found that they can significantly decrease the number of desserts that children  choose,  simply  by  putting  them  at the end of the cafeteria line or  placing them on a back row rather than right out front. Creating that need for tiny additional effort is what is meant by  “nudging”. 

Some people see nudging as outright manipulation,  but   Thaler and  Sunstein  believe that it is possible to help people make better choices while retaining our freedoms. Unapologetic about wanting to help  people  become healthier, wealthier, and wise, they subscribe to a philosophy called “libertarian paternalism”.  In a nutshell  they  believe in pushing people towards the choices they would have made anyway, if only they had sufficient wisdom, insight, or willpower.

I find this  approach  somewhat troublesome, as it seems   presumptuous to assume that someone else knows what is best for you. It tramples on our right  of self-determination, regardless of the quality of our choices. But I also have to admit that things like second-hand smoke and the governmental financial bailouts show that we are  so interconnected,   that other peoples’ bad decisions can  easily have a devastating effect on us. 

“Nudging” advocates  insist they are only trying to point our  decisions in the right direction, without significantly limiting  our freedom of choice. They even acknowledge peoples’  right to be self-destructive, but they see  no obligation to make that the easiest choice available. Also,  in designing choice situations,  there are unavoidable biases, so  why not have them skewed in a positive direction?  

One of the most powerful of  nudges  is setting  the desired default.  Default refers to what happens  if the person essentially does nothing. For example businesses that automatically enroll  employees in a savings plan  dramatically increase plan participation, even when employees are fully informed of their right to opt out. It is just like how most of us stick with the default options  on our computers and don’t change our passwords.  Newsweek columnist George Will sees the power of inertia in human behavior as formidable. He believes that the opt-out approach can applied beneficially to a variety of social  issues,  such as  increasing the number of organ donors by having it as the default option when getting a driver’s license.   

People  are also influenced by the way  in which issues are  framed. Consumers, for example,  are far more likely  to  purchase salami that is said to be “90%   fat-free” than salami that is said to contain “10% fat”. Patients even live longer if  physicians present their odds of living in terms of survival rates  rather than death rates.

            The need to conform  can  also serve as an important nudge. Research shows that if we think most other people  are recycling  or paying their taxes, we  are far more likely to do the same. Studies have shown that electricity consumption can also be pushed  in either direction,  depending on what information about other peoples’  usage is provided.  People who are told that neighbors are using less energy,  tend to decrease their  usage.  People  who are told that others  used more energy, generally do not change or even may increase  their energy consumption.

             Perhaps you have seen the  billboards on Interstate 64  saying things  like, “78% of Portlandyouth have never tried alcohol!” They come from the Portland Now Prevention Partnership’s (PNPP)  social norms campaign. This campaign is designed to contradict   the notion that all young people are using alcohol, tobacco, or drugs. Since young people are greatly influenced by what they think their peers are doing,   the PNPP  wanted to be sure that they are getting accurate information.  

            Finally, many issues are far too complex for  us  to make good decisions. Most of  us  do not have the requisite time or expertise to devote to the careful analysis that is required. Choosing how  to distribute money in a retirement fund, picking the right insurance product,  or God forbid, selecting the best Medicare Prescription plan are next to impossible tasks for most people. Psychologically we are predisposed to resort  to ineffective simplification strategies—  such as choosing on the  basis of color, or some other irrelevant detail, just to reduced the stress.

             After the recent storm flattened our car, we  had to buy a new one and for us that could be an overwhelming task. Fortunately, the internet has made this, and many other tasks, simpler  through what is called “expert collaborative filtering” . We eventually  bought one of the top ten expert-rated midsized autos,  based primarily  on price and yes color.  Also I noticed  that  window stickers on new  cars give fairly  detailed, but user friendly,  information regarding  safety and annual operating costs— a nice nudge towards  preventing accidents  and  energy conservation.       

            Nudging is also prominent in today’s  political arena.  According to University of Oregon economist Mark A. Thoma,  Democratic candiate Barack Obama  and  Britian’s Conservative party leader, have both shown considerable interest in the use of nudging  as a means to address social issues.  Without penalties, mandates, or bans, nudging techniques are governmental interventions that are usually much more palatable to voters.

            And  finally, you can only ignore the power of nudging at your  peril, as Republican candidate John McCain discovered back when he mocked  Barack Obama’s  nudging suggestion that we should inflate our tires properly to increase fuel efficiency. Although it sounds laughable and  trivial, optimal air pressure can actually save 3% or more on current fuel costs.   Despite his initial scoffing,  a chagrined McCain was eventually forced to issue  a statement  that he also supported proper tire inflation.  As anyone who has had a baby knows, sometimes even the  littlest of  things can have extraordinarily big effects.


Lucky Ducks

20 Sep

Lately I‘ve  been thinking a lot about luck.  In these uncertain times, its tempting to think that maybe there is something you can do to  get a little edge.  My father was an usually practical man, but he  could be superstitious, especially when it came to  luck.  Growing up during the depression I don’t think he  want to take any unnecessary  chances.   He was known to carry  a  buckeye in his pocket for  luck, he refused to eat anything that that scratched the ground on New Year’s Day, and he even nailed a horseshoe  over the doorway to the  garage (pointing  upwards, of course, so  the luck wouldn’t dribble out). Despite his best efforts the only thing lucky in our family was the brand of cigarettes my mother smoked.

 I always assumed that luck was sort of randomly distributed, but it seems like it is more like other characteristics, with some people  at each extreme and most of us in the middle. Multi-millionaire Senator  Judd Gregg fromNew Hampshirecould be a poster child for  the lucky ducks.  In  2005 he cashed in a Powerball ticket worth $853,000.   To add a bit of irony,  his good luck occurred right after voting  against raising the minimum wage and  increasing subsidies  to help  poor people pay their heating bills.

Our son had a Norwegian friend who also lived  a charmed existence.  He had Aryan superiority written all over him.  Slot machines are everywhere inNorwayand this fellow couldn’t  pass one by with out playing and winning.

On the other side of the spectrum are people like  outdoors writer Patrick Mc Manus who insists  that he is so unlucky, when it comes to hunting and fishing, that his bad fortune rubs off on others. I guess there is nothing  very new about hexes,   jinxes,  and Jonahs.  They even made a movie about it.  William Macy  starred in a  2003 film entitled The Cooler, in which a  casino boss hires an  extremely unlucky man to hang around so that his  presence will break  other players good luck streaks.

Of course, the big question is  whether we make our own luck or is really just random. Branch Rickey, manager of the Brooklyn Dodgers, once said, “Luck is the residue of design”.

English psychologist Richard Wiseman  from  the Universityof Hertfordshireand   author of   The Luck Factor,   has conducted a series of experiments comparing people who see themselves as lucky  and those who don’t.

In one  study he asked his subjects to follow a set path  across town to meet him at  a particular coffee shop.   Secretly he had  placed  20-pound notes along the pathway. He found that the  lucky subjects  were much more likely to notice the money and collect it along the way. Unlucky subjects were oblivious to the opportunities along the path.  When the subjects arrived at the  destination,   four people were waiting.One    was a very successful entrepreneur .  

The lucky subjects were  attracted to the rich entrepreneur and even engaged him in conversation. When  all  the subjects were   asked how the day went,  the unlucky ones said  nothing special  happened. The lucky subjects saw the day as very lucky and mentioned  finding the  money and talking to a person who might offer some business opportunities.

Not only were lucky people more  observant,  they also had their radar especially attuned to potential opportunities. Overall they were more open to the possibility  of   positive experiences.

 In another study  Wiseman asked  lucky and unlucky people to look through a newspaper to determine how many photographs it contained.  Unlucky subjects took about  two minutes to count  the photographs, but  lucky people averaged only a few seconds.  On the  second newspaper page was a  message printed in two inch letters which said  “Stop counting – There are 43 photographs in this newspaper.”   Invariably unlucky subjects overlooked  it, while the lucky subjects easily  spotted it.  Such opportunities for good luck may be  constantly staring all of us  in the face,  but  we are  too inattentive to recognize them.

Wiseman  posited   that unlucky people are generally more anxious, which supports  research that suggests  anxiety interferes with the ability to notice the unexpected.

Lucky people also engage  their environment more actively,  thereby increasing the possibility of positive outcomes. Unlucky people  are more  passive,  as if they expect a hostile reception to any overtures they might make.       

  Wiseman concluded  that people could be taught to be luckier and devised what he called LuckSchool. InLuckSchool people practice exercises that encourage them to think and behave like  lucky people.  Wiseman  found that about 80% of his graduates said that they felt luckier and more satisfied with their lives.   

The curriculum was based on four principles. First, lucky people believe that the future holds  good fortune for them. This  becomes   self-fulfilling  and helps them persevere  in difficult times. Psychologists believe that optimism is the major factor underlying luck.  

Second, lucky people are very good at  recognizing and talking advantage of  unexpected opportunities. Being relaxed  helps them do this.

Third,  they  trust their instincts in making decisions and they focus  exclusively on the issue under consideration. If your intuition is consistently wrong,  then maybe you should do the exact opposite,  like George Constanza did on a  Seinfeld episode.  

Finally, lucky people have superior coping skills that help  them weather  adversity. In fact they seem to thrive on it.

People may also do things that diminish their luck.  Unlucky  actions are not only foolish things, like walking down a dark alley with  100 dollar bills  hanging out of  your  pocket, but also more subtle  behaviors  like   walking around aimlessly looking vulnerable.  

When it comes to certain  crimes, perhaps we occasionally make our own bad luck. It has been said you can’t cheat and honest man. In the 1997  film Grosse Pointe Blank , John Cusack stars as  a professional  hit man, who says,  “If I show up at your door, chances are you did something to bring me there.”  But we should also be careful about  blaming  innocent victims and turning into Job’s comforters, who wrongly assumed Job did something wrong to merit his misfortune.

In tough times perhaps  we can all improve our  luck  a little by being more mindful of opportunities.  As for  the existence of luck?  French poet Jean Cocteau said,   “We must believe in luck. For how else can we explain the success of those we don’t like?