The Concept of Nudging

A nudge is an aspect of choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives. It steers people in a certain direction but also allows them to go in their own way: A message that reminds people when to go for a clinic checkup is a nudge, an app that benchmark the household usage of electricity is a nudge, an automatic payment system is a nudge. Research has found out that small alteration in choice architecture can produce a large behavioural change. For example, using a simple message to reinforce a social norm was found to influence electricity consumption.

Even though it is a new concept, governments around the world are incorporating nudging as a tool for influencing behaviour change alongside traditional methods such as restrictions, incentives, disincentives and persuasion. In the year 2010, the government of the U.K. set up the cabinet office’s behavioral team that would help try improve public services and save money. One of their breakthrough was a project that cut the high drop rate on government-subsidized adult literacy by 36% simply by sending students a personalized text message every Sunday night that read: “I hope you had a good break, we look forward to seeing you next week. Remember to plan how you will get to your class. Manchester College.”

Biases in decision making and how to nudge your audience

• Default options: Default options heavily influence individual’s behaviour. It refers to the outcome of what is more likely to happen if an individual was to make a choice. In Australia, it is assumed that everybody will donate organs and those wishing to opt out follow a procedure to get de-registered. In Denmark, citizens wishing to donate their organs must follow a procedure to get registered. Organ donation rate in Australia is more than 90% while in Denmark, organ donation rate is less than 5%.
• Hyperbolic discounting: People would rather get less today than more in the future. For example, get KES 1,000 today rather KES 2,000 at the end of the month. This is either because of difficulties in projecting the future or is a result of the human tendency in undervaluing the future. To mitigate the bad consequence of this behaviour, people need to be encouraged to focus on short term goals rather than long term goals. For example, save KES 50 every day rather than KES 50,000 in a year.
• Loss and risk aversion: An outcome that is presented as a loss is more likely to have a great psychological impact than when it is presented as a gain. If you need to change people’s behaviour, you need to explain to your audience the benefit and gains of the choice that they will make, and contrast it with the losses so that there is a fair assessment.
• Social norms Individuals have a perception that the society expect them to behave in standard way; consequently, they usually conform with this expectation. To influence their behaviour, use of peer pressure becomes very effective. Example: In UK, households were sent letters to encourage them pay taxes on time with a statement, “9 out of 10 people in UK pay their taxes on time”. The outcome was impressive.
• Compromise effect: When an individual is presented with three choices that vary in dimension like quantity, price and quality, they tend to choose the one in the middle. Example: When selling three coffee beverages of different sizes, the medium size will become most popular.
• Reminders: People have a lot on their mind and may fail to engage in certain obligations e.g. paying bills, taking medicines, the reason may be because of competing obligations. A short reminder can have a significant impact.
• Goal visibility: When people are in the middle of a goal-oriented task, they work hard to it. Moreover, making the goal visible increases motivation. Example: When parents put their children’s photographs on saving envelopes, they will increase the saving rate for their children’s education.