Nudge Theory: A Simple Introduction

Nudge Theory

The book “Nudge: Improving Decisions about Health, Wealth, and Happiness“, by Chicago economist Richard H. Thaler and Harvard Law School Professor Cass R. Sunstein, catapulted the concept of nudging into the mainstream when it was published in 2008.

In the book, Thaler and Sunstein focus on how it’s possible to positively influence the decisions that individuals make. They particularly consider decisions relating to health, wealth and happiness. They say that by changing the framing and “choice architecture” of decisions that you can influence people’s behaviors.

Put simple, they explain that minor changes to the ways that decisions are presented or structured, as well as minor changes to the ways that information is presented to people, can lead to statistically significant changes to their behaviors. For example, if you change the order in which a list of options are presented, you may find that more people choose the first option. Similarly, if you change the default decision in an situation, you’ll change the behaviors that most people take. You can read more about different approaches to nudging in our post on Sunstein’s 10 important nudges.

Nudge Theory and Influence

At its heart, nudging is all about influencing others into making specific decisions or behaving in specific ways. Thaler and Sustein, though, are conscious that such influence could be used to coerce others. To mitigate this they call out that a key factor of nudge theory is that individuals must always maintain full freedom around the choices that they make and feel in control of them.

To further explain this they introduce the concept of “Libertarian Paternalism”. This is the idea that it’s both acceptable and possible for public and private institutions to influence people’s behaviors while also respecting their freedom of choice.

The Three Principles of Nudging

To ensure that the concept of nudging was a force for good and anchored in line with the underlying belief structure that they hold, Thaler and Sustein introduce three key principles of nudging. These are that:

• All nudging should be transparent and never misleading,
• It should be as easy as possible to opt out of the nudge, and
• There should be good reason to believe that the behavior being encouraged will improve the welfare of those being nudged.

Nudging at an Institutional Level

Following the publication of Nudge, governments around the world sought to use the concept to help shape their policies and processes. This has been highly effective in some parts of the world, leading to the rise in many “Behavioral Insights Teams”. Through the use of nudge and other behavioral science techniques, governments and other large organizations have managed to make material changes to the ways that individuals behave.

Nudging in Action

There are many examples of nudging that you can read about, but one of the most famous minor interventions that significantly changed behavior relates to the men’s toilets in Amsterdam’s Schiphol Airport.

Schiphol airport is a large airport serving many passengers and its toilets are heavily used. The airport found that the area around the urinals in the men’s toilets was often dirty and un-hygienic as a result of poor focus and aim from the gentlemen using the urinals. To address the problem, the airport’s leaders decided to nudge men towards more attentive behavior. They did this by having the image of a small fly embedded into the center of each of the urinals.

As a result of this minor change, men’s aim material improved (they all tried to hit the fly) and the toilets became considerably cleaner and more hygienic. If all experiments of nudge theory led to such great outcomes, the world would be a better place!

There is nudging in the wider world, and there is nudging in the world of work. Like persuasion, it can be used with more or less ethical intentions. When it is less ethical it is known as Sludge. A lot of nudge theory involves changing a choice architecture that people are faced with.

Part of the reason that nudging is so effective is that we all have cognitive biases. We also have bounded rationality, limited ability to make really rational decisions. Similarly, the fact that humans have a dual process way of thinking plays into why nudging is effective.

Communication is another tool often used to change people’s behaviors. Ideas like the rhetorical triangle and the five canons of rhetoric shed some light on how this works. For a more detailed look at communicating for persuasion, explore Monroe’s Motivated Sequence.

Increasingly, products are also design to be persuasive, as it were. They are designed to create habits and drive increased use. Examples of this include Fogg’s model and the Hook model of behavioral design. You can listen to our podcast on this topic below.

A lot of the the ideas associated with nudge theory and other concepts of behavioral economics or behavioral science are fairly common sense. People have know how to influence others through structuring decisions and adjusting information for a very long time. What’s different now, though, partly as a result of academics like Thaler and Sunstein, is the data and evidence that exists behind these concepts.

Personally, we struggle a little with the ideal of Libertarian Paternalism. We think saying that it’s possible to influence others while still leaving them choice is perhaps technically true, but it’s a bit like trying to have your cake and eat it to. That said, allowing that independent choice is hugely important and we don’t dispute that at all.

We also think the fact that the rules of nudge theory call out that nudging should only be used to improve the welfare of those being nudged is indicative of the damage nudge can do. In the same way that weapons can fall into the hands of self-interested people, the concepts behind nudge and other forms of behavioral science can easily be used by unscrupulous individuals. It’s for this reason that we think that individuals benefit from learning about the concept.

Overall, we think that nudging is fascinating as a concept. We think there are some great uses for it that are truly benevolent both in the world of work and in the wider world. However, we think that the concepts behind behavioral science are often misused.