Nudge: How Small Manipulations Can Make a Big Difference

Nudge

 

A nudge is a modification that is made to an environment in order to alter people’s behavior in a predictable way, without forbidding any options or changing their incentives on a significant level.

For example, if a school has the goal of reducing 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, in various forms, are widely used in our society, and can be a highly effective tool when implemented properly. 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.

 

What is a nudge

A nudge is a simple modification that is made to an environment in order to alter people’s behavior in a predictable way, without forbidding any options or changing their incentives on a significant level. As such, nudges are seen as low-cost, behaviorally-informed, choice-preserving solutions to various personal and societal issues.

This means that nudges are generally easy to implement, highly 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, health, and education.

Note: though the concept of nudging has appeared in various forms in psychological research throughout history, nudge theory was brought into prominence by behavioral economist Richard Thaler (who later went on to win the Nobel Prize for his work) and legal scholar Cass Sunstein, in their 2008 book “Nudge: Improving Decisions About Health, Wealth, and Happiness“.

 

Examples of nudges

There are many examples of how nudges can be used in various areas of life:

  • Nudges can help people take better care of their health. For example, sending people a simple reminder to schedule a dental check-up doubled the rate of people who signed up for an appointment.
  • Nudges can get 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 make choices that benefit others. 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 encourage people to pay better attention to their privacy. For example, reminding social-media users who will see the content that they want to upload helped those users make better decisions regarding what content to post and where to post it.
  • Nudges can get people to take better care of the environment. For example, providing feedback to households about their and their neighbors’ electricity usage led people to reduce their energy consumption.

Furthermore, though many of these examples focus on how nudges can be beneficial in the short-term, research suggests that the impact 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 influence people’s lives in the long-term.

 

How nudges works

Nudges affect people’s choice architecture, which is the environment where people make decisions, by encouraging them to make a choice that is perceived as beneficial by the person who implemented the nudge.

To understand why nudges work, it’s necessary to first understand how people think and make decisions. In the past, economic and psychological models of human behavior viewed humans as homo economicus, meaning that these models saw people as perfectly-rational and self-interested agents, who always pursue their goals in an optimal manner.

Nudge theory acknowledges the fact that this model is wrong, since people often act in a way that is irrational, sub-optimal, and not necessarily focused on their own self-interests. Accordingly, nudge theory relies on a newer model of human cognition, in which people have two cognitive systems:

  • System 1-fast and automatic cognitive system, which is responsible for intuitive processing.
  • System 2-slow and deliberate cognitive system, which is responsible for conscious reasoning.

Based on this model, people often make decisions that do not align with their goals or with their self-interest, either because they rely on System 1 when they shouldn’t and therefore end up making intuitive decisions that are bad for them, or because they engage System 2 but fail to conduct a valid reasoning process which also causes them to make sub-optimal decisions.

For example, when people encounter a situation that is too complex for them because it offers too many options to choose from, they might intuitively choose to stick with the default option, which saves them from having to fully process all the available options. In this case, the issue is that people rely on System 1 to make a decision that generally necessitates the use of System 2.

Alternatively, when people have too many options to choose from, they might also struggle to choose the best option for them, even if they do engage System 2. In this case, when there is too much information for people to analyze properly or when the information that people have to analyze is too complex, they might end up making a sub-optimal decision, even when they truly try to figure out which option will be best for them.

Based on this model of cognition, nudges work by affecting people’s cognitive systems, and they can either target System 1, when they aim to influence people’s intuitive processing, or they can target System 2, when they aim to influence people’s deliberate reasoning.

For example, altering the default option by giving people water with their meal unless they ask for a soda is a nudge that generally targets System 1, since people’s decision regarding which drink to get is fairly intuitive. On the other hand, changing the way in which complex statistical information is presented in order to make it easier to understand is a nudge that generally targets System 2, since it affects the way in which people conduct their conscious reasoning.

An example of a prevalent form of irrational behavior that nudges can help prevent is people’s value-action gaps, which represent the distinct differences between people’s values and the actions that they undertake in reality based on these values.

For example, researchers who interviewed people in several countries found that between 50% – 90% of people said that they favor energy from renewable resources, but only around 3% actually bothered to use it. That is, despite the fact that the majority of people set clean-energy usage as a goal for themselves, few of them actually 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, was able to increase the number of people who use clean energy by approximately 45%, a success that has been replicated in other studies on the topic. In this case, the nudge likely targeted people’s intuitive System, since many people will decide to simply stick with a default option instead of going through the trouble to pick something else.

Overall, nudges work because people are often irrational in the way they make decisions, which causes them to make decisions that are bad for them. This occurs when people rely on their intuition in cases where they shouldn’t, and when they fail to conduct a valid reasoning process.

Accordingly, nudges can either help people make better intuitive decisions, by targeting their intuitive system (System 1), or they can help them make better deliberate decisions, by targeting their conscious reasoning system (System 2). The specific mechanisms that the nudge use in order to affect these Systems vary in different situations, but they will generally either encourage people to make a better intuitive decision, to use their conscious reasoning instead of intuitions where necessary, or to conduct a more effective conscious reasoning process.

 

How to nudge

So far, we saw what nudges are and how they work. Next, you will see what types of nudges you can use, followed by a few beneficial guidelines that will help you implement nudges as effectively as possible.

 

Types of nudges you can use

There are various types of nudges that you can use in order to encourage people to make better decisions. Though nudges can take many forms, the most common types of nudges that people usually implement are the following:

  • Changing the default option. People will often stick with the default option due to inertia, so by changing this option to the optimal one you increase the chance that people will stick with the optimal choice. For example, in the context of organ donations, switching to a default opt-out system, where people are presumed to be organ donors unless specified otherwise, led to double rates of organ donations compared to using an opt-in system as a default, where people have to actively register in order to become a donor.
  • Informing people. Informing people of the benefits of a certain action can increase the likelihood that people will perform it. For example, giving people a simple flyer with information about their employer’s retirement savings plan led people to contribute more to that plan, which allowed them to take advantage of the plan’s substantial tax advantages and of their employer’s matching contributions.
  • Reminding people of the situation. Reminding people about the situation at hand can often encourage them to make better decisions. For example, reminding doctors about the problem of antibiotic resistance in society reduced the amount of unnecessary antibiotics that they prescribed to patients.
  • Reminding people to do something. Reminding people of 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 got more people to do so when necessary.
  • Getting people to slow down. Encouraging people to slow down their decision-making process can often help them make better decisions. For example, encouraging people to wait a bit between the moment when they first hit the ‘submit’ button on social media posts and the moment that the post is actually submitted led people to edit and cancel posts that they would have otherwise regretted making public.

 

Guidelines for good nudges

When designing a nudge, you should first ask yourself what problem you are trying to solve, and how nudges can help you solve it, since identifying these two things is the key to creating an effective nudge.

In addition, there are a few guidelines that you should keep in mind when designing the nudge that you want to use:

  • The nudge should fit your intended audience. For example, you will likely want to use a different nudge if you’re targeting college students than you would if you were targeting seniors in a retirement home, even if your goal is to get both groups to make a similar decision. This is an important factor to consider, since different nudges work differently on different people, as the efficacy of nudges can be influenced by factors such as political views and social class.
  • Different nudges work in different situations. In addition to accounting for who your intended audience is, you should also make sure that the type of nudge that you intend to use is appropriate given the situation in which you intend to use it. Essentially, this means that context plays a big role in how effective a nudge is, and just because a certain nudge worked well in one case doesn’t mean that it will also be effective in other situations.
  • Smaller nudges can sometimes be more effective than bigger ones. For example, changing the default option by only a little can often be more effective than changing it drastically, since a major change might make people feel antagonized, which could cause them to overcome the inertia of sticking with the default option. At the same time, however, it’s important not to fall into the trap of making nudges so minor that they are rendered ineffective.
  • Nudges don’t have to be hidden. Nudges can often work even when people are aware of them. You can decide on how subtle to make your nudge based on what you’re trying to accomplish, as well as on your intended audience and on the context in which the nudge is applied.

Furthermore, there are a few additional guidelines that you should keep in mind with regards to how you present your nudges to others:

  • People should perceive the nudge as beneficial. To ensure that people accept the nudge and to reduce the chance of backlash, you should make sure that all the relevant stakeholders feel that the nudge benefits them in some way. Remember that, in general, the more effective the nudge is, the more likely people are to accept it.
  • People should feel that the nudge respects their ability to choose. The nudge shouldn’t be viewed as infringing on people’s right to choose, or on their autonomy. Remember that for an intervention to count as a nudge, it must respect people’s ability to choose freely.
  • People generally prefer nudges that target their conscious reasoning. There is generally more support for nudges that appeal to people’s conscious thinking, compared to nudges that target their intuition. However, there is some variation with regards to this, and an effective nudge that appeals to people’s intuition can also be well-received under the right circumstances.

In addition, after you set up the nudge, make sure to look at the data and check whether it works.

To do this, you need to start with a clearly defined idea of what metrics you are trying to improve, while also being aware of any potential issues that may arise, and of any other secondary factors which might be influenced by your nudging. As you analyze the data, ask yourself how you can improve the nudge, and be ready to notice any changes that you might not have expected.

Finally, when it comes to implementing nudges, remember that nudges often represent a solution that is only partial. Specifically, though nudges are often effective and easy to implement, they generally can’t completely solve the issues that they are meant to address, and they should therefore be viewed as a way to supplement other efforts which are meant to address those issues.

 

Remove negative nudges

Negative nudges are mechanisms which are usually created unintentionally, and which cause people to make decisions that are bad for them, by altering their decision-making environment.

There is no inherent difference between ‘positive nudges’ and ‘negative nudges’ in terms of how the nudges work, and the only difference between the two is that positive nudges are nudges that prompt people to make “good” decisions, while negative nudges are nudges that prompt people to make “bad” decisions.

Accordingly, negative nudges usually consist either of barriers which make it harder for people to take action that’s good from them, or of mechanisms which discourage them from doing so.

Some examples of negative nudges are the following:

  • Bad default option. For example, if the default status of organ donors is ‘opt-in’, meaning that people have to actively register in order to become organ donors, that means that many people who would be willing to donate their organs aren’t going to be listed as organ donors.
  • Easy-to-select bad option. 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.
  • Hard-to-select good option. For example, if registering to 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.

As such, it’s important to identify negative nudges, and remove them where possible.

Note that, in some cases, removing a negative nudge entails inserting a positive nudge in its place. This is what happens, for example, when you replace a negative default option with a positive one.

However, that’s not always the case, and it’s possible to remove a negative nudge without necessarily replacing it with a positive one. This is what happens, for example, when you remove a negative default option, but don’t replace it with any other default option, but instead make users pick an option themselves.

 

Attitudes toward nudging

As we saw so far, many governments and organizations are happy to use nudges on a large scale, due to their effectiveness, ease of implementation, and choice-preserving nature. Furthermore, there is compelling evidence that the citizens of many countries support the use of nudges in general, though there is, of course, some variation between countries and between individuals with regards to this.

In this context, nudging is often viewed as a form of libertarian paternalism, which represents the idea that it’s acceptable and even desirable to manipulate people when that manipulation prompts them to make choices that are believed to be better for themselves or for society, as long as they still have the full freedom to make whatever choice they want.

However, there have also been some criticisms of the idea of nudging, and some have called for the outright rejection of the use of nudges. The ethics of nudging is still being discussed, and strong arguments have been made both in favor of and against nudging.

The arguments in favor of nudging revolve around the factors that we saw so far, and namely around the fact that nudges can prompt people to make better decisions, while preserving their ability to choose freely.

On the other hand, many of the arguments against nudging revolve around the belief that manipulation of people’s choice is unethical even if it preserves their freedom of choice, and around the belief that nudges prompt people to make decisions that they might not agree are beneficial for them.

Furthermore, there are criticisms regarding how nudging is used in fields such as marketing, where nudges are implemented with the intent of getting people to buy certain products, rather than with the intent of helping them make decisions that are better for them.

Overall, though nudging is generally perceived positively by the population, especially when implemented correctly, there are still those who reject it on an ethical basis, at least in some contexts.

Nevertheless, one thing that people on both sides of the debate can agree on is that if nudges are used, they should be implemented with caution, especially when they are implemented by policymakers on a large scale. Furthermore, when nudges are used in such cases, there should be some form of oversight which ensures that nudges are implemented in a way that respects people’s choices, and gets them to make decisions that are truly better for them.

 

Summary and conclusions

  • A nudge is a modification that is made to an environment in order to alter people’s behavior in a predictable way, without forbidding any options or changing their incentives on a significant level.
  • Nudges are viewed as effective, low-cost, choice-preserving solutions to various problems, which has led to their adoption in a variety of fields, including healthcare, education, and finance.
  • Examples of nudges include sending people a reminder that they need to schedule a doctor’s appointment, providing people with information regarding how much electricity they use compared to their neighbors, and reminding people what sort of audience is going to see the posts that they upload to social media.
  • The main types of nudges that you can use involve changing the default option, informing people about a certain issue, reminding people about a certain issue that they are already aware of, reminding people to take a certain action, and getting people to slow down their reasoning process.
  • Good nudges should fit their target audience and the situation in which they are applied, and should be viewed by people as being beneficial and as respecting their freedom of choice.

 

If you found this article interesting, and if you want to learn more about nudges and about how you can implement them, you should read the highly acclaimed book on the topic “Nudge: Improving Decisions About Health, Wealth, and Happiness”.