The Nudge Factor

20/05/2020 1 By indiafreenotes

Nudge is a concept in behavioral economics, political theory, and behavioral sciences which proposes positive reinforcement and indirect suggestions as ways to influence the behavior and decision making of groups or individuals. Nudging contrasts with other ways to achieve compliance, such as education, legislation or enforcement.

The nudge concept was popularized in the 2008 book Nudge: Improving Decisions About Health, Wealth, and Happiness, by two American scholars at the University of Chicago: behavioral economist Richard Thaler and legal scholar Cass Sunstein. It has influenced British and American politicians. Several nudge units exist around the world at the national level (UK, Germany, Japan and others) as well as at the international level (e.g. World Bank, UN, and the European Commission). It is disputed whether “nudge theory” is a recent novel development in behavioral economics or merely a new term for one of many methods for influencing behavior, investigated in the sciences of behavior analysis.

The first formulation of the term and associated principles was developed in cybernetics by James Wilk before 1995 and described by Brunel University academic D. J. Stewart as “the art of the nudge” (sometimes referred to as micronudges). It also drew on methodological influences from clinical psychotherapy tracing back to Gregory Bateson, including contributions from Milton Erickson, Watzlawick, Weakland and Fisch, and Bill O’Hanlon. In this variant, the nudge is a microtargetted design geared towards a specific group of people, irrespective of the scale of intended intervention.

In 2008, Richard Thaler and Cass Sunstein’s book Nudge: Improving Decisions About Health, Wealth, and Happiness brought nudge theory to prominence. It also gained a following among US and UK politicians, in the private sector and in public health. The authors refer to influencing behaviour without coercion as libertarian paternalism and the influencers as choice architects. Thaler and Sunstein defined their concept as:

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. To count as a mere nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates. Putting fruit at eye level counts as a nudge. Banning junk food does not.

In this form, drawing on behavioral economics, the nudge is more generally applied to influence behaviour.

One of the most frequently cited examples of a nudge is the etching of the image of a housefly into the men’s room urinals at Amsterdam’s Schiphol Airport, which is intended to “improve the aim”.

Types of Nudges

Nudges are small changes in environment that are easy and inexpensive to implement. Several different techniques exist for nudging, including defaults, social proof heuristics, and increasing the salience of the desired option.

A default option is the option an individual automatically receives if he or she does nothing. People are more likely to choose a particular option if it is the default option. For example, Pichert & Katsikopoulos found that a greater number of consumers chose the renewable energy option for electricity when it was offered as the default option.

A social proof heuristic refers to the tendency for individuals to look at the behavior of other people to help guide their own behavior. Studies have found some success in using social proof heuristics to nudge individuals to make healthier food choices.

When an individual’s attention is drawn towards a particular option, that option will become more salient to the individual, and he or she will be more likely to choose to that option. As an example, in snack shops at train stations in the Netherlands, consumers purchased more fruit and healthy snack options when they were relocated next to the cash register. Since then, other similar studies have been made regarding the placement of healthier food options close to the checkout counter and the effect on the consuming behavior of the customers and this is now considered an effective and well-accepted nudge.

Application of Theory

Behavioral insights and nudges are currently used in many countries around the world.

  1. Government

In 2008, the United States appointed Sunstein, who helped develop the theory, as administrator of the Office of Information and Regulatory Affairs

Notable applications of nudge theory include the formation of the British Behavioural Insights Team in 2010. It is often called the “Nudge Unit”, at the British Cabinet Office, headed by David Halpern.

Both Prime Minister David Cameron and President Barack Obama sought to employ nudge theory to advance domestic policy goals during their terms.

In Australia, the government of New South Wales established a Behavioural Insights community of practice.

In 2020, the UK government of Boris Johnson decided to rely on nudge theory to fight the coronavirus pandemic. Patrick Vallance, the UK’s chief scientific adviser, seeks to encourage “herd immunity” with this strategy.

  1. Business

Nudge theory has also been applied to business management and corporate culture, such as in relation to health, safety and environment (HSE) and human resources. Regarding its application to HSE, one of the primary goals of nudge is to achieve a “zero accident culture”.

Leading Silicon Valley companies are forerunners in applying nudge theory in corporate setting. These companies are using nudges in various forms to increase productivity and happiness of employees. Recently, further companies are gaining interest in using what is called “nudge management” to improve the productivity of their white-collar workers.

  1. Healthcare

Lately, the nudge theory has also been used in different ways to make health care professionals make more deliberate decisions in numerous areas. For example, nudging has been used as a way to improve hand hygiene among health care workers to decrease the number of healthcare associated infections. It has also been used as a way to make fluid administration a more thought-out decision in intensive care units, with the intention of reducing well known complications of fluid overload.