Nudge: How Small Changes Can Significantly Influence People’s Choices

Nudge

 

A nudge is a simple aspect of people’s decision-making environment that alters their behavior in a predictable way, without forbidding any options or significantly changing their incentives.

For example, if a school wants to reduce the amount of soda that students drink, then placing water bottles instead of soda cans near the register in the cafeteria counts as a nudge, while banning soda outright does not.

Nudges are generally viewed as low-cost, behaviorally-informed, choice-preserving solutions to various personal and societal issues. This means that nudges are generally easy to implement, are relatively effective, and allow people to make their own choices, which has led to their widespread adoption in both the private and the public sectors, in fields such as finance, education, and health.

Because of how prevalent nudges are, and because of how substantial their influences can be, it’s important to understand them. As such, in the following article you will more about nudges, understand how they work, and see what you can do in order to implement them yourself as effectively as possible.

 

Examples of nudges

An example of a nudge is a sign, placed near the door of a room in an office building, which reminds people that they should turn off the light when they leave in order to reduce electricity consumption.

Another example of a nudge is a reminder, sent to students by their teacher via email, telling them that their class project is due in a week, and that it took past students a week of hard work to complete their own projects.

Furthermore, additional examples of nudges and their benefits appear in various other areas of life. For instance:

  • Nudges can prompt people to take better care of their health. For example, sending people a reminder to schedule a dental check-up doubled the rate of people who signed up.
  • Nudges can prompt people to make better financial decisions. For example, sending students a few personalized text messages helped many of them remember to refile their application for student aid.
  • Nudges can prompt people to pay better attention to their privacy. For example, giving social-media users a reminder about who will be the audience for content that they intend to post helped those users make better decisions regarding what to post and where to post it.
  • Nudges can prompt people to make choices that benefit other members of society. For example, using an opt-out system for organ donations, where people are automatically registered as organ donors unless they choose otherwise, instead of an opt-in system, where people have to actively register to become donors, significantly increased the number of people that are registered as organ donors.
  • Nudges can get people to make choices that are better for the environment. For example, providing feedback to households about their and their neighbors’ electricity usage led people to reduce their energy consumption.

In addition, research shows that the benefits of nudges can persist long after people encounter the nudge itself. For example, one study showed that the effects of nudges on people’s choice of a pension plan persisted for two decades after the original nudge has affected their decision, suggesting that simple nudges can benefit people’s lives in the long-term.

Finally, another well-known example of nudging appears in the following story:

“…small and apparently insignificant details can have major impacts on people’s behavior. A good rule of thumb is to assume that ‘everything matters.’ In many cases, the power of these small details comes from focusing the attention of users in a particular direction.

A wonderful example of this principle comes from, of all places, the men’s rooms at Schiphol Airport in Amsterdam. There the authorities have etched the image of a black housefly into each urinal. It seems that men usually do not pay much attention to where they aim, which can create a bit of a mess, but if they see a target, attention and therefore accuracy are much increased.

According to the man who came up with the idea, it works wonders… His staff conducted fly-in-urinal trials and found that etchings reduce spillage by 80 percent.”

— From “Nudge: Improving Decisions About Health, Wealth, and Happiness

Note: the concept of nudging has appeared in various forms in psychological research throughout history. However, nudge theory was formalized and popularized by behavioral economist Richard Thaler (who won the 2017 Nobel Prize in Economics for his work on the topic) and legal scholar Cass Sunstein, in their 2008 book “Nudge: Improving Decisions About Health, Wealth, and Happiness“.

 

Types of nudges

Nudges can be categorized into different types based on the main mechanism that they use to influence people. Based on this criterion, common types of nudges are the following:

  • Setting a default option. People will often stick with the default option that they’re presented with, so setting a certain option as a default increases the likelihood that people will pick it. For example, making people organ donors by default can increase the rate of organ donations, compared to requiring people to opt-in in order to become donors.
  • Creating a psychological anchor. A psychological anchor is an initial piece of information that people rely on strongly when making subsequent judgments and decisions. For example, a charity soliciting donations can create a psychological anchor by telling donors that “most people donate $20”, in order to nudge people to donate more money than they would otherwise.
  • Changing the ease of choosing certain options. This can involve either making a good option easier to choose, or a bad option harder to choose. For example, to encourage people to eat healthier, a cafeteria can place healthy foods in convenient locations and unhealthy food in less convenient locations.
  • Changing the salience of certain options. This can involve either making a good option more noticeable, or a bad option less noticeable. For example, to encourage people to save more money, a workplace can design relevant forms in a way that visually attracts people’s attention to the available saving program.
  • Informing people. Informing people of things such as the benefits or dangers of certain options can influence their behavior. For example, giving people a simple flyer with information about their employer’s retirement savings plan can lead people to contribute more to it.
  • Reminding people of information they know. Reminding people of information that they already know can influence people’s behavior, similarly to informing them of things that they didn’t know. For example, reminding doctors about the problem of antibiotic resistance in society can reduce the amount of unnecessary antibiotics that they prescribe to patients.
  • Reminding people to do something. Reminding people to do something that they need to do can prompt them to take action. For example, sending people a reminder that they need to schedule a doctor’s appointment can increase the likelihood that people will do so when necessary.
  • Getting people to slow down. Encouraging people to slow down their decision-making process can help them make better decisions. For example, on social media, encouraging people to wait a short while between the moment they submit a post and the time when it’s actually posted can lead people to edit and cancel posts that they would have otherwise regretted making public.

Many of these types of nudges can be used both to influence other people’s behavior, as well as your own. For example, to reduce the amount of soda that you and your family drink, you can make the soda bottles a more difficult option to choose, by placing them at the back of the fridge where they’re inconvenient to reach. Similarly, you can also put a sticker on top of them, with a reminder for you all that you’re trying to drink less soda.

Note: nudges can be classified based on other criteria, such as whether they are transparent or non-transparent, or whether they involve defaults and anchors, physical design, or deliberation tools.

 

The psychology of nudging

Because there are many different types of nudges, which can be used in different types of situations, there is no single mechanism that explains how nudges work. However, nudges are generally based on the premise that people are imperfect decision-makers, who display systematic patterns of deviation from rationality, so that by changing people’s choice architecture, which is the context in which they make decisions, it’s possible to influence the decisions that they make.

Specifically, many economic models view people as homo economicus: ideal decision-making machines, with flawless rationality, unlimited cognitive capacity, perfect access to information, and a narrow-range of consistent, self-interested goals. However, nudge theory acknowledges that this model is wrong, since people often act in ways that are not in line with it. As the original book on nudge theory states:

“Whether or not they have ever studied economics, many people seem at least implicitly committed to the idea of homo economicus, or economic man—the notion that each of us thinks and chooses unfailingly well, and thus fits within the textbook picture of human beings offered by economists.

If you look at economics textbooks, you will learn that homo economicus can think like Albert Einstein, store as much memory as IBM’s Big Blue, and exercise the willpower of Mahatma Gandhi. Really.

But the folks that we know are not like that. Real people have trouble with long division if they don’t have a calculator, sometimes forget their spouse’s birthday, and have a hangover on New Year’s Day. They are not homo economicus; they are homo sapiens.”

— From “Nudge: Improving Decisions About Health, Wealth, and Happiness

Accordingly, nudge theory relies on different models of human cognition, which acknowledge people’s imperfect judgment and decision-making process. The main such model is the dual-process theory, according to which people use two main cognitive systems:

  • System 1, which is responsible for intuitive processing, and which is relatively fast, automatic, and effortless
  • System 2, which is responsible for conscious reasoning, and which is relatively slow, controlled, and effortful.

Based on this model, people often display irrationality when System 1 generates a faulty intuition and System 2 fails to correct it, or when System 2 fails to engage in proper reasoning. For example, when people are faced with a large number of options to choose from, they might intuitively decide to stick with the default option, even if that’s not the best option, because this saves them from having to analyze all the available options. In this case, the issue is that people rely on System 1 to make a decision that requires the use of System 2. Alternatively, in the same situation, people may try to analyze the options using System 2, but fail to do so correctly due to the large amount of information involved, which could also cause them to pick an option that isn’t the best one for them.

Nudges can be understood through the cognitive system (or systems) that they involve. For example, altering the default option by automatically giving people water with their meal unless they ask for soda is a nudge that generally targets people’s intuition (System 1). Alternatively, informing people about the benefits of saving for their retirement is a nudge that generally targets people’s conscious reasoning (System 2).

Nudges can also be used to address specific systematic patterns of irrationality (called cognitive biases) that people frequently display, as predicted by this and similar models of human cognition. For example, one such bias is the value-action gap, which represents people’s tendency to act in a manner that is inconsistent with their personal values. In one study, researchers who interviewed people in several countries found that 50%–90% of people said that they favor energy from renewable resources, but only around 3% actually used it, so despite the majority of people setting clean-energy usage as a goal for themselves, few of them took the necessary steps needed in order to pursue this goal. Here, a simple nudge, in the form of changing people’s default contract to one that involves using renewable energy, increased the number of people who use clean energy by approximately 45%, a success that has since been replicated.

Finally, nudges can also take advantage of specific biases and heuristics (mental shortcuts) that people display, in order to influence their choices more effectively. For example, the use of a specific default option as a nudge is often associated with the status quo bias, which represents people’s tendency to prefer to maintain the current state of things.

Overall, nudges work because people are often irrational when making decisions, for example because they tend to rely on intuition when they shouldn’t, which means that they often make imperfect decisions, and that changing various aspects of their environment can prompt them to make better decisions. Nudges can use a variety of mechanisms to achieve this, and generally influence people by targeting their intuition (System 1) or their conscious reasoning (System 2), or both.

 

Negative nudges

A negative nudge is a nudge (a simple aspect of people’s environment that alters their behavior in a predictable way, without forbidding any options or significantly changing their incentives) that prompts people to make a decision that’s bad for them. For example, placing unhealthy snacks near the cash register in a supermarket is a negative nudge, because it prompts people to buy something that’s bad for them.

The difference between positive nudges and negative ones is that positive nudges prompt people to make decisions that are perceived as good for them, while negative nudges prompt people to make decisions that are perceived as bad for them. Either type of nudge may be intentional or unintentional, and in the case of negative nudges, the decision that people are prompted to make may be positive for someone else, such as a company using the nudge to persuade people to buy their low-quality product.

The concept of negative nudges is further illustrated in two examples that are mentioned by behavioral economist Richard Thaler, who refers to negative nudges in this case as sludge:

“…the same techniques for nudging can be used for less benevolent purposes. Take the enterprise of marketing goods and services. Firms may encourage buyers in order to maximize profits rather than to improve the buyers’ welfare (think of financier Bernie Madoff who defrauded thousands of investors). A common example is when firms offer a rebate to customers who buy a product, but then require them to mail in a form, a copy of the receipt, the SKU bar code on the packaging, and so forth. These companies are only offering the illusion of a rebate to the many people like me who never get around to claiming it. Because of such thick sludge, redemption rates for rebates tend to be low, yet the lure of the rebate still can stimulate sales—call it ‘buy bait’.

Public sector sludge also comes in many forms. For example, in the United States, there is a program called the earned income tax credit that is intended to encourage work and transfer income to the working poor. The Internal Revenue Service has all the information necessary to make adjustments for credit claims by any eligible taxpayer who files a tax return. But instead, the rules require people to fill out a form that many eligible taxpayers fail to complete, thus depriving themselves of the subsidy that Congress intended they receive.”

— “Nudge, not sludge” (Thaler, 2018)

Negative nudges often involve changing the ease of choosing a certain option, in one of the following ways:

  • By making options that are bad for the target individual easier to choose (i.e. encourage self-defeating behavior). For example, if unhealthy foods are easier to reach in the cafeteria, this encourages people to pick them, despite the fact that they’re unhealthy.
  • By making options that are good for the target individual harder to choose (i.e. discourage behavior that’s in a person’s best interests). For example, if registering for a good retirement plan is difficult or requires a large number of inconvenient steps, fewer people are going to do it, despite the fact that it’s beneficial.

Furthermore, negative nudges can involve many of the other mechanisms that are used in positive nudges, such as setting a default option, changing the salience of certain options, and creating a psychological anchor.

Because of the detrimental influence of negative nudges, it’s important to them. Specifically, this can benefit you in several ways:

  • It can help you identify situations where you need to remove an existing negative nudge, and potentially replace it with a positive nudge.
  • It can help you identify situations where you might be affected by a negative nudge that you can’t remove, so you can account for its influence, for example by using appropriate debiasing techniques.
  • It can help you understand why people act the way that they do in certain situations, predict how they will act in the future, and understand what you need to do in order to change their behavior.

 

How to use nudges

There are several key things that you should do in order to use nudges as effectively as possible.

First, before using a nudge, you should assess the situation, to consider primarily who the nudge will target and what outcome you want to achieve with it. In doing this, you should also ask yourself whether a nudge is an appropriate solution in your case, from both a practical and an ethical perspective.

Then, you can start designing and using your nudge, while keeping the following in mind:

  • The nudge should fit the target audience. For example, you might want to use a different nudge on college students than on elderly people in a retirement home, even if your goal is to get both groups to make a similar decision. This means that you should consider relevant characteristics of your target audience that pertain to nudging, such as their political views and social class, since different nudges can work differently on different types of people.
  • The effectiveness of specific nudges depends on the circumstances. Context plays a big role in how effective a nudge is, and just because a certain nudge works well in one case doesn’t mean that it will also be effective in other situations. As such, you should make sure that the type of nudge that you intend to use is appropriate given the situation in which you intend to use it.
  • Small nudges can sometimes be more effective than bigger ones. For example, changing the default option by only a little can sometimes be more effective than changing it drastically, since a major change might antagonize people, which could cause them to avoid that default. At the same time, however, it’s important not to fall into the trap of making nudges so minor that they are rendered ineffective.

Furthermore, there are a few additional guidelines that you should keep in mind when deciding whether and how to present your nudges to others:

  • Nudges shouldn’t necessarily be hidden. Nudges can often work even when people are aware of them and of their intended goal, and increased transparency can sometimes make nudges even more effective, in addition to having potential ethical benefits. You can decide on how transparent to make your nudge based on relevant factors such as where and why you’re using it.
  • People should perceive the nudge as beneficial. Specifically, you should make sure that the people who are affected by the nudge will feel that the nudge benefits them to a substantial degree.
  • People should feel that the nudge respects their ability to choose. Specifically, you should make sure that the people who are affected by the nudge feel that it doesn’t eliminate their autonomy and right to choose freely.
  • People generally prefer nudges that target their conscious reasoning. Specifically, people generally prefer nudges that target their conscious reasoning rather than their intuition, though this depends on the situation, and people may support a nudge even if it targets their intuition.

Note that, when designing a nudge, you can use the information provided earlier in the article, about examples of nudges, types of nudges, and the psychology of nudging, in order to inform your design and make it more effective. You can also gather information that pertains to the nudge, for example by reading case studies on similar situations, studying people’s current behavior, or asking people to explain why they previously chose a certain option over others.

In addition, after you set up a nudge, you can assess its use, in terms of factors such as effectiveness, cost, and unintended consequences, and experiment with different variants of it if possible. This will allow you to determine whether the nudge is a good tool to use in your situation, and whether it can be improved in some way.

Finally, it’s important to remember that nudges are often only one part of a larger solution, since even though they may be effective to some degree, they are often unable to entirely solve the issues that they’re meant to address. As such, when using nudges, you should consider combining them with other solutions, in order to fully achieve your desired outcomes.

Overall, to use nudges effectively, you should first determine who the nudge will target and what outcome you want to achieve with it, while considering whether a nudge is an appropriate solution in your case, from both a practical and ethical perspective. Then, you can start designing and implementing the nudge, while keeping in mind, among other things, that the nudge should fit your target audience, that the effectiveness of specific nudges depends on the circumstances, and that small nudges can sometimes be more effective than bigger ones.

 

How to respond to nudges

There are several things that you can do to respond to other people’s use of nudges.

First, you should realize that a given nudge is there, meaning that there’s an aspect of the decision-making environment that prompts people to make a certain decision.

Second, you should assess the nudge, by considering factors such as whether it was intentionally developed by someone, and if so, then why. When doing this, it can help to gather relevant information, and keep in mind relevant principles, such as:

  • Cui bono, which is a Latin phrase that means “who benefits?”, and which is used to suggest that there’s a high probability that those responsible for a certain event are the ones who stand to gain from it.
  • Hanlon’s razor, which is the adage that you should “never attribute to malice that which is adequately explained by stupidity”, and which, when applied broadly, suggests that when assessing people’s actions, you should not assume that they acted out of a desire to cause harm, as long as there is a reasonable alternative explanation.
  • Parsimony, which is a guiding principle that suggests that all things being equal, you should prefer the simplest possible explanation for a phenomenon or the simplest possible solution to a problem.

It can also help to deconstruct the nudge, in order to figure what it’s supposed to get people to do and through which psychological mechanisms it uses in order to influence them.

Finally, when it comes to responding to the use of nudges directly, there are several main courses of action you can choose from, based on factors such as the circumstances and your personal goals:

  • Accept the nudge, if you believe that doing so is beneficial, which may very well be the case in many situations.
  • Reduce the influence that the nudge has, by using appropriate debiasing techniques yourself, or by encouraging their use by relevant individuals.
  • Ask the individual or group who implemented the nudge why they’re doing it.
  • Mention the nudge, either publicly or privately, to whoever implemented it or to the people who are being nudged.
  • Eliminate the nudge, or replace it with an alternative nudge.
  • Take the use of the nudge into account, for example when understanding the type of behavior that someone is willing to engage in to influence others, but do nothing about it directly.

Note that although it may be beneficial to engage in all of the steps outlined here, it’s not always necessary to do so in order to respond to nudges effectively. For example, before making an important decision, you might decide to simply use relevant debiasing techniques, such as slowing down your reasoning process and making it explicit, even without identifying the specific nudges that may be influencing your thinking.

Overall, to respond to a nudge, you should realize that it’s in effect, assess it, and then either accept it, ask the responsible individual about it, call out its use, eliminate it, use debiasing techniques to reduce its influence, or take it into account without doing anything about it directly

 

Ethics and criticisms of nudging

From an ethical perspective, nudging is often viewed as a form of libertarian paternalism (also called soft paternalism). This represents the idea that it’s acceptable and even desirable to influence people’s decisions and actions when this leads them to make decisions that are believed to be better for themselves or for society, as long as they maintain the freedom to make whatever choice they want.

However, there have been many criticisms of nudging on ethical grounds, and the ethics of nudging is currently under debate, with arguments being made both in favor of and against nudging.

Many of the arguments in favor of nudging revolve around the claim that even though nudges influence people’s decisions, they do so in a manner that preserves people’s ability to choose freely, and around the claim that nudges are impossible to eliminate entirely from the environment, so nudging should be done in an intentional and transparent manner, with people’s best interests in mind.

On the other hand, many of the arguments against nudging revolve around the claim that manipulation of people’s choice is unethical, even if they maintain their freedom of choice, and around the claim that the decision of which direction to nudge people in can involve inherent ethical issues of its own. For example, many criticisms of nudging highlight the use of negative nudges in fields such as marketing and advertising, where nudges are implemented without the intent of helping people make decisions that are necessarily better for them.

In addition, many arguments claim that nudging is not inherently unethical, and depends on factors such as how the nudge was chosen and how it’s implemented. For example, one study differentiates between nudges based on whether they are transparent or non-transparent, and based on whether they engage people’s reflective system (System 2) or their intuition (System 1). According to this study, nudges that are both transparent and engage people’s reflective system lead to “transparent facilitation of consistent choice”, whereas those that are transparent but engage only system 1 lead to “transparent influence (technical manipulation) of behavior”, and those that are non-transparent lead to “manipulation of choice” (in the case of nudges that engage System 2) and “non-transparent manipulation of behavior” (in the case of nudges that engage only System 1).

Along those lines, both people who argue in favor and against nudging tend to agree that, if nudges are used, they should be implemented with caution, especially when they are implemented by policymakers on a large scale. Implementing them properly can involve, for example, setting a clear and transparent process for deciding which nudges to implement, which can further involve input from the individuals that it’s meant to influence.

Finally, note that from a practical perspective, many individuals, governments, and organizations are currently using nudges. Furthermore, there is evidence that the citizens of many countries support the use of nudges in general, though there is variation between countries and between individuals with regard to this, and this can also depend on the specific nudge in question.

Overall, from an ethical perspective, there are arguments both in favor and against nudging. Some of these arguments deal with whether or not nudging should be used at all, while others deal with which situations it should be used in and how, especially given that nudges are difficult—if not impossible—to eliminate entirely from people’s decision-making environment.

 

Summary and conclusions

  • A nudge is a simple aspect of people’s decision-making environment that alters their behavior in a predictable way, without forbidding any options or significantly changing their incentives.
  • Examples of nudges include sending people a reminder to schedule a doctor’s appointment, ensuring that healthier food is more noticeable in a cafeteria, providing people with information regarding how much electricity they use, and reminding people what audience will see what they’re about to post on social media.
  • Common types of nudges include setting a default option, creating a psychological anchor, changing the ease of choosing certain options, changing the salience of certain options, informing people of something, reminding people of information they already know, reminding people to do something, and getting people to slow down.
  • To use nudges, start by determining who the nudge will target and what outcome you want to achieve with it, while considering whether a nudge is an appropriate solution; then, design and implement the nudge, while remembering that the nudge should fit your target audience, that the effectiveness of specific nudges depends on the circumstances, and that small nudges can sometimes be more effective than bigger ones.
  • To respond to a nudge, you should realize that it’s in effect, assess it, and then either accept it, ask the responsible individual about it, call out its use, eliminate it, use debiasing techniques to reduce its influence, or take it into account without doing anything about it directly.

 

To learn more about nudges, read the highly acclaimed book on the topic: “Nudge: Improving Decisions About Health, Wealth, and Happiness”.