Nudge

How choices are presented influences decisions a great deal. This is a book about choices and hidden influences that government and companies can utilise leading people to good behaviour and outcome.

A nudge is any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives.

By properly deploying both incentives and nudges, we can improve our ability to improve people’s lives, and help solve many of society’s major problems. And we can do so while still insisting on everyone’s freedom to choose.

Making choice is difficult and may not lead to the best outcome when deciders are inexperienced and poorly informed, and when feedback is slow or infrequent.

Above average effect

The ‘above average’ effect is pervasive. Ninety percent of all drivers think they are above average behind the wheel. This applies to the world of academia. About 94 % of professors at a large university were found to believe that they are better than the average professor. People always think that they are better than they actually are.

Hot–cold empathy gap

When in a cold state (level-headed, no temptation), we do not appreciate how much our desires and our behaviour will be altered when we are ‘under the influence’ of arousal. The classic application is if you would like to lose weight, get smaller plates, buy little packages of what you like, and don’t keep tempting food in the refrigerator.

Mental accounting

People are far more likely to splurge impulsively on a big luxury purchase when they receive an unexpected windfall than with savings that they have accumulated over time, even if those savings are fully available to be spent. People feel that windfall is free money, but in reality money is money no matter where it comes from.

The need to conform

The typical conformity experiments are something like this. A group of people sit in front of a computer, answer questions of what’s on the screen. There’s only one subject in a group, the rest were planted and told to answer incorrectly in a specific way. After hearing the rest of the group answer incorrectly and repeatedly, the subject tend to follow answer of the group even though it obviously wrong. Conformity experiments have been replicated and extended in more than 130 experiments from seventeen countries, including Zaire, Germany, France, Japan, Norway, Lebanon, and Kuwait (Sunstein, 2003). The overall pattern of errors – with people conforming between 20 and 40 percent of the time. That means the need to conform is universally applied to people across the board.

The academic effort of college students is influenced by their peers, so much so that the random assignments of first-year students to dormitories or roommates can have big consequences for their grades and hence on their future prospects. (Maybe parents should worry less about which college their kids go to and more about which roommate they get.)

Herd mentality

Why, exactly, do people sometimes ignore the evidence of their own senses and incorrectly answer the question similar to other people? The first involves the information conveyed by people’s answers; the second involves peer pressure and the desire not to face the disapproval of the group.

Spotlight effect

People think that everyone has their eyes fixed on them, so they conform to what they think people expect.

Antivaxxers, conspiracy theorists, extremists

The concept of conformity/herd mentality, social media filter bubble can explain why antivaxxers, conspiracy theorists, extremists do not easily accept evidence that paints different pictures from beliefs their groups hold. A little nudge, if it was expressed confidently, could have major consequences for the group’s conclusion. The clear lesson here is that consistent and unwavering people, in the private or public sector, can move groups and practices in their preferred direction Muzafer Sherif (1937). More remarkable still, the group’s judgments became thoroughly internalized, so that people would adhere to them even when reporting on their own – indeed even a year later, and even when participating in new groups whose members offered different judgments

Heisenberg's Uncertainty Principle applies in psychology.

The ‘mere-measurement effect’ refers to the finding that when people are asked what they intend to do, they become more likely to act in accordance with their answers. Asked before the election, whether they intend to vote, you can increase the probability of their voting by as much as 25%. If people are asked how often they expect to floss their teeth in the next week, they floss more. The nudge provided by asking people what they intend to do can be accentuated by asking them when and how they plan to do it. Asking questions can influence behaviour. This may have applications on survey research.

Energy consumption reduction strategies

People may most need a good nudge for choices that have delayed effects; those that are difficult, infrequent, and offer poor feedback; and those for which the relation between choice and experience is ambiguous. 

Past attempts to notify people of their energy use with emails or text messages did no good, but what worked was to give people an Ambient Orb, a little ball that using lots of energy but green when energy use is modest. In a period of weeks, users of the Orb reduced their use of energy, in peak periods, by 40%. The genius of the Orb is that it makes energy use visible. Emphasizing the importance of feedback.

Cost-disclosing thermostats (whereby changing temperature gets immediately translated to money saved/lost) might have a greater impact than (modest) price increases designed to decrease use of electricity.

Australian carbon tax failure

One solution to the political problem of getting such bills passed may be to use some mental accounting. For example, the revenues from a carbon tax might be paired with a cut in personal tax rates, the funding of Social Security and Medicare, or the provision of universal health insurance.

Dozen nudges section

If I were to set up a political party to win an election and run the country, this section is a party policy goldmines e.g. Give more tomorrow, Charity debit cards, The automatic tax return, Gambling self-bans etc.

One of the dozen nudges that piques my interest

Destiny Health Plan. Insurance companies don’t like paying large medical bills any more than patients do. Such companies can work with their customers to improve people’s health while reducing medical bills for all. Consider here the Destiny Health Plan now offered in four states (Illinois, Wisconsin, Michigan, and Colorado). The plan features a Health Vitality Program explicitly designed to give people an incentive to make healthy choices. A participant is able to earn ‘Vitality Bucks’ if he works out at a health club in a particular week, has a child join a soccer league, or completes a blood-pressure check with normal results. Vitality Bucks can be used to obtain airline tickets, hotel rooms, magazine subscriptions, and electronics. The Destiny Health Plan is a clever effort to combine health insurance with nudges designed to get people to live healthier lives.

Another interesting one

Disulfiram causes alcohol drinkers to throw up and suffer a hangover as soon as they start drinking.

How do we know not to nudge?

The philosopher John Rawls (1971) called the publicity principle. In its simplest form, the publicity principle prohibits government from selecting a policy that it would not be able or willing to defend publicly to its own citizens. Essentially, it is transparency. If you can’t defend it publicly it can’t be good. The book quoted supreme court judge something along the line of “Sunlight is the best disinfectant.” So true…