Tag Archives: Default position

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.