Nudge, nudge...

At the end of 2022 we wrote about the tumult within behavioural economics and concluded that ‘nudge theory isn’t discredited, it’s just complicated.’ We were more right than we knew.

A new working paper states that, as well as direct effects, nudges can also have substantial and positive indirect effects, essentially by freeing up brain space for people to make better choices in other aspects of their lives.

As a result, say the authors of the paper, previous research may have seriously underestimated the impact of nudges.

The new study, called The Double Dividend of Nudges, used a combination of maths problems and memory puzzles to test how nudges affect people’s performance on cognitively demanding tasks.

In some of the conditions, the researchers introduced nudges to make the maths problems easier, either by improving the quality of the default answer (so that the correct response to the multiple choice question was automatically selected 80% of the time), or by simplifying the questions.

Not only did these nudges help participants score higher in the maths test, they were also linked to better performances in the memory test, increasing the quality of choices by 22% overall.

The researchers think that this knock-on effect is a result of nudges in the maths test freeing up the participants’ mental ‘bandwidth’, enabling them to give more attention to the memory test.

According to the results of the study, people with the lowest bandwidths — which the researchers also refer to as a person's ‘stock of cognitive resources’ or ‘ability’ — benefit more from the direct interventions. Which in this case, meant they scored better on the maths test when nudges were introduced, but did more or less the same on the memory test. Meanwhile, those with the highest bandwidths performed better on the memory quiz when nudges were introduced to the maths test, suggesting they get more indirect benefits out of nudges.

Not all nudges produce these positive, indirect effects, though; only so-called attention-releasing ones, which make decisions simpler and less taxing. Attention-grabbing nudges, like reminders, tend to have the opposite effect because they demand more of people's cognitive resources.

The Double Dividend of Nudges paper was more about policy interventions than marketing, although it does lend weight to the theory that making commercial processes less cognitively taxing promotes competition, by giving people more capacity to think about alternatives.

But anything that sheds light on how nudges — and people — work is worth at least some of your bandwidth.

Campaign of the week /

Renault in France is offering new-job starters a long-term car lease that they only have to start paying if they pass their probation period, with a buyback option for those that don’t.

The Cars to Work scheme is part of Renault’s long-term strategy of presenting itself as a mobility company that helps people access opportunities and employment.

France Travail, the government agency that provides aid and advice to jobseekers, helped promote the Cars to Work scheme with ads on TV and online. Publicis Conseil, Paris, created the campaign. Read our full analysis here. Contagious.

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