The World of Work Project

10 Important Nudges

Nudging is the process of influencing behaviors through minor changes to information or decision structures. There are 10 key ways in which this can be achieved.

Summary by The World of Work Project

10 Important nudges

Cass Sunstein brought further clarity to the concept of Nudging in the article: “Nudging: A Very Short Guide“. In this publication he identifies and elaborates of a handful (or two hands full to be precise) of specific nudge type interventions, which we’ve summarized below:

1 – Default rules

Changing the default selection in any decision process materially changes the decisions that individuals make. Decision making is effortful, and people generally prefer to avoid it, so will predominantly stick with a pre-selected default.

Changing defaults materially increases organ donor rates.

Two classic examples of where changing defaults has materially changed behaviors include organ donor registration and pension elections.

In countries where the default status for organ donation is “yes, I am a donor”, unless you opt out, donor rates are very high. However, in countries where the default status is “no, I am not a donor”, unless you opt in, the rates are very low. Similarly, if new employees are by default enrolled into a pension scheme (unless they opt out), then enrollment rates are very high, and vice-versa.

2 – Simplification

Making decisions requires effort and focus, something people have limited amounts of. What this means is that when decision processes and frameworks are complex, they will switch off and potentially make poor decisions. Simplification of decision volumes and structures will reduce the effort that people need to expend, and help increase the number of people making decisions that are in their best interest.

A classic example of this is complexity in the retail energy market. Many retail energy provides provide use complex pricing involving a variety of tariffs and variable charges for usage at different points in time. This complexity makes it very difficult for consumers to compare products to choose the best, or cheapest. Regulators often look to force energy companies to simplify their billing information and price structures to aid consumers, not always with successfully.

3 – Uses of social norms

Humans are fundamentally social beings, and generally want to feel like they belong and are conforming with what’s expected of them by their peers. What this means is that they are more likely to take actions that make them feel like they behaving in line with others, than actions that make them feel like they are breaking social norms. These acts of belonging reduce the risk of being rejected by the wider group, something humans are fairly instinctively afraid of.

Social norming as a nudge is used in many different ways, but an example that many people will have seen is that of hotel towels. Signage that says “9 out of 10 guests choose to reuse their towels” is far more effective at changing behaviors than signs that simply say “reusing your towel helps to save the environment”. Another classic example of this is in online retailing where the number of people who purchased a product is often displayed.

Washing hotel towels daily requires a lot of effort and damages the environment.

4 – Increases in ease and convenience

Anything that makes it easier and more convenient to take an action will increase the number of people who do take that action. This is fairly similar to the default nudge, and fairly self evident.

A simple example of this lies in building design. Where buildings have elevators that are easily accessed and prominently signed and stairs that are hidden (or unsigned), then most people will take the lift, even for only one or two floors. However, when lifts are less visible and stairs are well signed, then many more people will take the stairs for one or two flights.

5 – Disclosure

Improving the knowledge and information of decision makers helps them make more informed and generally better decisions. One way to improve this information is through increasing levels of information disclosure.

A classic example of disclosure is in the Financial Services industry where firms need to disclose not just the interest free period associated with credit cards, but also the annualized interest rates and, increasingly, what this means in layman’s terms.

6 – Warnings, graphics or otherwise

Health warnings can change behaviors.

Bold warnings and graphics can influence behaviors and decisions both in favor of or against certain potential decisions.

The most prominent example of this is health warnings on cigarettes, which now include photographs of smoking related diseases in many countries.

7 – Precommitment strategies

Humans make different decisions when considering different time periods. We’re generally good at making beneficial and helpful decisions when we’re deciding about hypothetical points of time in the future.

However, we’re less good at making beneficial decisions in the moment. For example, we might plan to eat a health salad for dinner when we make a dinner reservation for a week from today. However, when we get there, we are prone to changing our mind and deciding to eat a burger instead.

One way to take advantage of this temporal variation in decision making is to commit to future actions, which makes it harder to change our mind when that point in time arrives. For example, if we pre-order a salad for dinner with our meal, then we’ll probably eat it. If we’ve paid for it in advance and aren’t able to change our mind, then we’ll almost certainly eat it. Whether we decide to eat a burger as well, though, is a different matter.

8 – Reminders and prompts

Remembering information about decisions and decision points take effort, meaning many people fail to do so. This might mean that they forget to change energy suppliers when their contract ends or, more commonly, that they forget to change their mobile phone contracts when they have reached their end date.

A great way to overcome this is to introduce reminders that individuals can immediately act on. For example, in relation to mobile phones, efforts are being made to ensure that phone service providers notify their customers at the point at which their contracts complete, giving them them option to change tariffs to a “sim-only” contract (a cheaper contract in which the customer only pays for the services they use, not the phone itself which they’ve already purchased through their initial contract).

9 – Eliciting implementation intentions

People are more likely to do something if they have clearly thought about it and made a decision about it in advance. What this means is that if you speak to someone and elicit from them what they plan to do, then they are more likely to do it.

A well discussed example of this relates to the intention to vote. If people are asked if they will get out to vote and they say yes, then the probability that they will actually do so increases. The very act of asking someone their intentions, increases the likelihood that they will deliver on those intentions.

10 – Informing people of the nature and consequences of their own past choices

People often lose sight of how they’ve behaved in the past, and the outcomes that these behaviors lead to. This means that they have not been effectively able to learn from their past decisions when making future decisions. To help overcome this, it’s possible to inform them of their prior decisions and consequences. However, this type of intervention requires a lot of data.

One simple example of this in practice could be energy suppliers providing consumers with monthly information about how much money they saved by using night-time tariffs (by scheduling things like washing machines to operate over night). If people are reminded that they saved money by using a night-time tariff, they’re more likely to schedule their machines to operate in the night in the future.

Isn’t This All Just Common Sense?

Confused why this is all news? You’re not alone…

That’s a big question. And the answer might be yes. A lot of what’s been swept up into the world of nudging and the wider world of behavioral economics has been fairly well known for quite some time. The sales, marketing and advertising professions have been using this knowledge for a long time, as have many other professions and industries.

However, just because a lot of it is common sense doesn’t mean it’s not important. Understanding, analyzing and quantifying the effectiveness of different interventions is helpful, as is creating a common language that people can use in relation to this field.

The World of Work Project View

You can read more about our thoughts on Nudging itself in our post on that topic.

Overall, we think that nudging, and all aspects of behavioral science, are fascinating. 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.

Because these principles are often misused, we think it’s important for people to learn about them. When they do so, we believe they have a better chance of understanding when others are trying to influence them in ways that do not increase their own welfare.

Sources and further reading

Where possible we always recommend that people read up on the original sources of information and ideas.

This post is based on the original work of Cass Sunstein. You can read more in his article: “Nudging: A Very Short Guide“.

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