Nudge: Improving Decisions About Health, Wealth, and Happiness
Decisions are greatly influenced by small changes in the context .
A choice architect has the responsibility for organizing the context in which people make decisions.
There is no such thing as a “ neutral ” design.
In many cases, the power of these small details comes from focusing the attention of users in a particular direction.
Libertarian Paternalism
We argue for self - conscious efforts, by institutions in the private sector and also by government, to steer people’s choices in directions that will improve their lives.
we show that in many cases, individuals make pretty bad decisions — decisions they would not have made if they had paid full attention and possessed complete information, unlimited cognitive abilities, and complete self - control.
A nudge, as we will use the term, 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.
unbiased forecasts. That is, the forecasts can be wrong, but they can’t be systematically wrong in a predictable direction.
“ planning fallacy ” — the systematic tendency toward unrealistic optimism about the time it takes to complete projects. Everything takes longer than you think, even if you know about the planning fallacy.
Research shows that whatever the default choices are, many people stick with them, even when the stakes are much higher than choosing the noise your phone makes when it rings.
Harness the power of inertia
Ordinary consumers are novices, interacting in a world inhabited by experienced professionals trying to sell them things.
There is no way of avoiding nudging in some direction, and whether intended or not,
user - friendly environments.
Send reminders, and then try to minimize the costs imposed on those who, despite your ( and their ) best efforts, space out.
We are not for bigger government, just for better governance.
The approach involves a distinction between two kinds of thinking, one that is intuitive and automatic, and another that is reflective and rational. We will call the first the Automatic System and the second the Reflective System.
System and System , respectively. )
Brain scientists are able to say that the activities of the Automatic System are associated with the oldest parts of the brain, the parts we share with lizards ( as well as puppies ).
The Reflective System is more deliberate and self - conscious.
Most Americans have an Automatic System reaction to a temperature given in Fahrenheit but have to use their Reflective System to process a temperature given in Celsius ;
Accomplished chess players and professional athletes have pretty fancy intuitions ; their Automatic Systems allow them to size up complex situations rapidly and to respond with both amazing accuracy and exceptional speed.
Automatic System is your gut reaction and the Reflective System is your conscious thought.
Econs never make an important decision without checking with their Reflective Systems ( if they have time ). But Humans sometimes go with the answer the lizard inside is giving without pausing to think.
In many domains, the evidence shows that, within reason, the more you ask for, the more you tend to get.
The inference from anchoring
Clever negotiators often get amazing deals for their clients by producing an opening offer that makes their adversary thrilled to pay half that very high amount.
the availability heuristic. They assess the likelihood of risks by asking how readily examples come to mind. If people can easily think of relevant examples, they are far more likely to be frightened and concerned than if they cannot.
recent events have a greater impact on our behavior, and on our fears, than earlier ones.
Biased assessments of risk can perversely influence how we prepare for and respond to crises, business choices, and the political process.
good way to increase people’s fear of a bad outcome is to remind them of a related incident in which things went wrong ; a good way to increase people’s confidence is to remind them of a similar situation in which everything worked out for the best.
easily remembered events may inflate people’s probability judgments,
representativeness biases can creep in when similarity and frequency diverge.
It is, of course, not logically possible for any two events to be more likely than one of them alone.
Use of the representativeness heuristic can cause serious misperceptions of patterns in everyday life.
people do not have accurate perceptions of what random sequences look like.
When they see the outcomes of random processes, they often detect patterns that they think have great meaning but in fact are just due to chance.
We often see patterns because we construct our informal tests only after looking at the evidence.
People are unrealistically optimistic
Unrealistic optimism can explain a lot of individual risk taking, especially in the domain of risks to life and health.
if people are reminded of a bad event, they may not continue to be so optimistic.
Roughly speaking, losing something makes you twice as miserable as gaining the same thing makes you happy.
“ loss averse. ”
As we will see, loss aversion operates as a kind of cognitive nudge, pressing us not to make changes, even when changes are very much in our interests.
Status Quo Bias
people have a more general tendency to stick with their current situation.
“ status quo bias, ”
One of the causes of status quo bias is a lack of attention.
When renewal is automatic, and when people have to make a phone call to cancel, the likelihood of renewal is much higher than it is when people have to indicate that they actually want to continue
The combination of loss aversion with mindless choosing implies that if an option is designated as the “ default, ” it will attract a large market share. Default options thus act as powerful nudges.
Default options thus act as powerful nudges.
Frames
“ Of one hundred patients who have this operation, ten are dead after five years. ” If you’re like most people, the doctor’s statement will sound pretty alarming,
the credit price should be considered the “ normal ” ( default ) price and the cash price a discount — rather than the alternative of making the cash price the usual price and charging a surcharge to credit card customers.
“ framing. ” The idea is that choices depend, in part, on the way in which problems are stated.
Because they are busy and have limited attention, they accept questions as posed rather than trying to determine whether their answers would vary under alternative formulations.
We will call something “ tempting ” if we consume more of it when hot than when cold.
when we are in a hot state, we can often get into a lot of trouble.
George Loewenstein ( ) calls the “ hot - cold empathy gap. ” When in a cold state, we do not appreciate how much our desires and our behavior will be altered when we are “ under the influence ” of arousal.
our behavior reflects a certain naïveté about the effects that context can have on choice.
Self - control problems can be illuminated by thinking about an individual as containing two semiautonomous selves, a far - sighted “ Planner ” and a myopic “ Doer. ”
On average, recipients of the big bucket ate about percent more popcorn —
Large plates and large packages mean more eating ; they are a form of choice architecture, and they work as major nudges. ( Hint : 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. )
Planners are taking steps to control the actions of our Doers, often by trying to change the incentives that Doers face.
Alarm clocks are external devices people use to solve their self - control problems.
mental account ) into a different pocket. Gamblers even have a term for this. The money that has recently been won is called “ house money ” because in gambling parlance the casino is referred to as the house. Betting some of the money that you have just won is referred to as “ gambling with the house’s money, ” as if it were, somehow, different from some other kind of money.
When investments pay off, people are willing to take big chances with their “ winnings. ”
The sanctity of these accounts can lead to seemingly bizarre behavior, such as simultaneously borrowing and lending at very different rates.
When asked to decide on their own, without seeing judgments from others, people almost never erred, since the test was easy. But when everyone else gave an incorrect answer, people erred more than one - third of the time.
It is almost as if people can be nudged into identifying a picture of a dog as a cat as long as other people before them have done so.
If the confederate spoke confidently and firmly, his judgment had a strong influence on the group’s assessment. If the confederate’s estimate was much higher than those initially made by others, the group’s judgment would be inflated ; if the confederate’s estimate was very low, the group’s estimate would fall.
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.
“ collective conservatism ” : the tendency of groups to stick to established patterns even as new needs arise.
We may follow a practice or a tradition not because we like it, or even think it defensible, but merely because we think that most other people like it. Many social practices persist for this reason, and a small shock, or nudge, can dislodge them.
conformity effects
Five alternatives were offered : economic recession, educational facilities, subversive activities, mental health, and crime and corruption. Asked privately, a mere percent chose subversive activities. But when exposed to an apparent group consensus unanimously
selecting that option, percent of people made the same choice !
Public officials decided that they needed “ a tough - talking slogan that would also address the unique spirit of Texas pride. ”
Dallas Cowboys football players
“ Don’t mess with Texas ! ”
Within the first year of the campaign, litter in the state had been reduced by a remarkable percent. In its first six years, there was a percent reduction in visible roadside
The Spotlight Effect One reason why people expend so much effort conforming to social norms and fashions is that they think that others are closely paying attention to what they are doing.
The moral is that people are paying less attention to you than you believe. If you have a stain on your shirt, don’t worry, they probably won’t notice. But in part because people do think that everyone has their eyes fixed on them, they conform to what they think people expect.
Most strikingly, the success of songs was quite unpredictable, and the songs that did well or poorly in the control group, where people did not see other people’s judgments, could perform very differently in the “ social influence worlds. ” In those worlds, most songs could become popular or unpopular, with much depending on the choices of the first downloaders.
Facebook and social networking are conformity engines
We are also greatly influenced by consumption norms within the relevant group. A light eater eats much more in a group of heavy eaters. A heavy eater will show more restraint in a light - eating group.
If choice architects want to shift behavior and to do so with a nudge, they might simply inform people about what other people are doing. Sometimes the practices of others are surprising, and hence people are much affected by learning what they are. Consider four examples.
When informed that the actual compliance level is high, they become less likely to cheat.
If you would like to increase turnout, please do not lament the large numbers of people who fail to vote. ) *
“ Many past visitors have removed the petrified wood from the park, changing the natural state of the Petrified Forest. ” Other signs emphasized an injunctive norm : “ Please don’t remove the petrified wood from the park, in order to preserve the natural state of the Petrified Forest. ” Cialdini’s theory
predicted that the positive, injunctive norm would be more effective than the negative, informational one. This prediction was confirmed.
“ social norms ” approach,
boomerang effect, and it offers an important warning. If you want to nudge people into socially desirable behavior, do not, by any means, let them know that their current actions are better than the social norm.
Visual feedback given to power customers in San Marcos, California
Priming refers to the somewhat mysterious workings of the Automatic System of the brain. Research shows that subtle influences can increase the ease with which certain information comes to mind.
When they measure people’s intentions, they affect people’s conduct. If people are asked whether they intend to eat certain foods, to diet, or to exercise, their answers to the questions will affect their behavior. In our parlance, the mere - measurement effect is a nudge, and it can be used by private or public nudgers.
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.
Often we can do more to facilitate good behavior by removing some small obstacle than by trying to shove people in a certain direction.
The golden rule of libertarian paternalism : offer nudges that are most likely to help and least likely to inflict harm. *
Self - control issues are most likely to arise when choices and their consequences are separated in time.
For investment goods, most people err on the side of doing too little.
It is particularly hard for people to make good decisions when they have trouble translating the choices they face into the experiences they will have.
If consumers have a less than fully rational belief, firms often have more incentive to cater to that belief than to erradícate it.
The nozzles that deliver diesel fuel are too large to fit into the opening on cars that use gasoline, so it is not possible to make the mistake of putting diesel fuel in your gasoline - powered car ( though it is still possible to make the opposite mistake ).
the more often you have to take the drug,
But frequency is not the only concern ; regularity is also important.
By contrast, remembering to take your medicine every other day is beyond most of us.
Feedback The best way to help Humans improve their performance is to provide feedback. Well - designed systems tell people when they are doing well and when they are making mistakes.
Some helpful person invented a type of ceiling paint that goes on pink when wet but turns white when dry.
This is described in the choice literature as a “ compensatory ” strategy, since a high value for one attribute ( big office ) can compensate for a low value for another ( loud
neighbor ).
as the choices become more numerous and / or vary on more dimensions, people are more likely to adopt simplifying strategies.
it may not be entirely wonderful if our primary source of information is about what people like us like.
it’s good to nudge people in directions that they might not have specifically chosen in advance.
making the increases salient will have a greater effect.
Cost - disclosing thermostats might have a greater impact
A related strategy is to simplify the enrollment process.
One factor that influences a patient’s decision to sue is whether the doctor apologized for the mishap and admitted fault.
In this book we have made two major claims. The first is that seemingly small features of social situations can have massive effects on people’s behavior ; nudges are everywhere, even if we do not see them. Choice architecture, both good and bad, is pervasive and unavoidable, and it greatly affects our decisions. The second claim is that libertarian paternalism is not an oxymoron. Choice architects can preserve freedom of choice while also nudging people in directions that will improve their lives.