Choice Architecture
There a tremendous amount of power that lies in default choices. And so, the person who gets to control the default choice has a lot of power.
Organ donation is opt-in in California. That means that when you register for a driver's license, if you do nothing, you don't get put onto the donor list. You have to check a box to say you'll participate in the program. So, because of inertia, the numbers are much lower than they would be if everyone were enrolled by default and they were required to check a box not to participate.
In a lot of companies, employees don't get enrolled in the 401k or retirement programs automatically. In order to start withholding and contributing to the plans, the employee must elect to contribute. If they do nothing, they save nothing. The alternative to this is to enroll them in a plan by default and require them to elect to stop withholding.
I'm not talking about being dishonest or deceitful. You call tell an employee fresh out of college, "Sign here; by default, we're enrolling you in our retirement program to save a modest part of each paycheck. You can stop this withholding at any time." Some of them will almost choose to opt out of withholding, either because they aren't thinking about retirement or because they want the money to buy that car they wanted since they were 15 years old.
But many of them won't give it a second thought. They'll sign and be done with it, not really consider the ramifications. And by the time they realize that their employer has been socking money away for retirement for them, they'll probably have saved a large enough nest egg that they'll have trouble getting angry about it.
There's a power in the default. Companies can help people save for their retirement, and states could help people save lives through organ donation programs, simply by changing where the masses of indifferent people end up.
Libertarians oppose these kinds of measures, because they appear to remove choice. The impose a choice on each person, and they smell bad because they appear to decide what is best for that person. They're partly right; there's always a risk that policymakers will get it wrong. Maybe they won't end up doing what's best for people.
Of course, you have to balance that against the fact that people won't always do what's best for themselves. Libertarians assume two things:
1. People always have all the necessary information available to them to make an informed decision.
2. Armed with all necessary information, people make decisions rationally.
I can think of very few situations in the real world where both of these assumptions hold true. We're usually pretty ill-informed (even when we think we're not), and we don't act rationally (even when we think we do.)
To be clear, I'm not talking about using defaults to get people to do things they don't want to do. It's mischievous that free credit report services will give you your credit score in exchange for enrolling in a monitoring service that's free for 30 days, then starts to bill you every month, unless you cancel. I'm not saying that scamming people is a good idea. Nor am I saying that people are dumb, or incapable of making decisions for themselves. But there's a powerful potential for influencing the decision merely by changing how you offer the choices.
There's a terrific book written about this topic and its implications in our world. They discuss setting default choices, and nudging people in one direction or another, as choice architecture. At times, they implications far-reaching and large, but I think there are small chances for most of us to change the decision people make.
The ladies at my orthodontist's office have two flavors of a particular paste they can mix to put into a person's mouth: strawberry and mint. The strawberry smells great when you're preparing it, mixes easier, and its bright color makes it easier to work with in a patient's mouth. The mint smells pretty bad when its being mixed and it's more transparent, making it harder to work with. People are given a choice between the two flavors. So, if you're working at that office, and the flavor people pick matters a great deal to you, and you want people to pick strawberry instead of mint, how do you push them in that direction?
Hang up a sign with the two choices listed and an image next to each: the first is a high-quality pic of a strawberry being dunked into liquid chocolate, and the other is a grainy picture of a mint leaf against a backdrop of dirt. Which flavor would you choose? (Those ladies were nice enough to listen to my suggestion...but there was enough eye-rolling that I'm pretty sure they won't use my idea.)
If you're a barista working in a coffee shop, and you've got a tip jar sitting out, isn't there a ton of things you could do that might draw people's attention to the tip jar? Or make them want to drop something into it?
Some restaurants calculate 15% for tip and print it on the check so the patron can easily see it. I'd almost guarantee that this reduces the number of 20% tips a server gets from people. If the restaurant printed the amount of 25% on the check as a recommended tip, most people probably wouldn't leave that much, but I'm willing to bet that on average they'd leave more than when they were shown the 15% amount.
First impressions are a mental anchor. Once people drop it, it's tough to take the boat down the river. (Sometimes, even with the current.) Make sure people are dropping it where you want.
Organ donation is opt-in in California. That means that when you register for a driver's license, if you do nothing, you don't get put onto the donor list. You have to check a box to say you'll participate in the program. So, because of inertia, the numbers are much lower than they would be if everyone were enrolled by default and they were required to check a box not to participate.
In a lot of companies, employees don't get enrolled in the 401k or retirement programs automatically. In order to start withholding and contributing to the plans, the employee must elect to contribute. If they do nothing, they save nothing. The alternative to this is to enroll them in a plan by default and require them to elect to stop withholding.
I'm not talking about being dishonest or deceitful. You call tell an employee fresh out of college, "Sign here; by default, we're enrolling you in our retirement program to save a modest part of each paycheck. You can stop this withholding at any time." Some of them will almost choose to opt out of withholding, either because they aren't thinking about retirement or because they want the money to buy that car they wanted since they were 15 years old.
But many of them won't give it a second thought. They'll sign and be done with it, not really consider the ramifications. And by the time they realize that their employer has been socking money away for retirement for them, they'll probably have saved a large enough nest egg that they'll have trouble getting angry about it.
There's a power in the default. Companies can help people save for their retirement, and states could help people save lives through organ donation programs, simply by changing where the masses of indifferent people end up.
Libertarians oppose these kinds of measures, because they appear to remove choice. The impose a choice on each person, and they smell bad because they appear to decide what is best for that person. They're partly right; there's always a risk that policymakers will get it wrong. Maybe they won't end up doing what's best for people.
Of course, you have to balance that against the fact that people won't always do what's best for themselves. Libertarians assume two things:
1. People always have all the necessary information available to them to make an informed decision.
2. Armed with all necessary information, people make decisions rationally.
I can think of very few situations in the real world where both of these assumptions hold true. We're usually pretty ill-informed (even when we think we're not), and we don't act rationally (even when we think we do.)
To be clear, I'm not talking about using defaults to get people to do things they don't want to do. It's mischievous that free credit report services will give you your credit score in exchange for enrolling in a monitoring service that's free for 30 days, then starts to bill you every month, unless you cancel. I'm not saying that scamming people is a good idea. Nor am I saying that people are dumb, or incapable of making decisions for themselves. But there's a powerful potential for influencing the decision merely by changing how you offer the choices.
There's a terrific book written about this topic and its implications in our world. They discuss setting default choices, and nudging people in one direction or another, as choice architecture. At times, they implications far-reaching and large, but I think there are small chances for most of us to change the decision people make.
The ladies at my orthodontist's office have two flavors of a particular paste they can mix to put into a person's mouth: strawberry and mint. The strawberry smells great when you're preparing it, mixes easier, and its bright color makes it easier to work with in a patient's mouth. The mint smells pretty bad when its being mixed and it's more transparent, making it harder to work with. People are given a choice between the two flavors. So, if you're working at that office, and the flavor people pick matters a great deal to you, and you want people to pick strawberry instead of mint, how do you push them in that direction?
Hang up a sign with the two choices listed and an image next to each: the first is a high-quality pic of a strawberry being dunked into liquid chocolate, and the other is a grainy picture of a mint leaf against a backdrop of dirt. Which flavor would you choose? (Those ladies were nice enough to listen to my suggestion...but there was enough eye-rolling that I'm pretty sure they won't use my idea.)
If you're a barista working in a coffee shop, and you've got a tip jar sitting out, isn't there a ton of things you could do that might draw people's attention to the tip jar? Or make them want to drop something into it?
Some restaurants calculate 15% for tip and print it on the check so the patron can easily see it. I'd almost guarantee that this reduces the number of 20% tips a server gets from people. If the restaurant printed the amount of 25% on the check as a recommended tip, most people probably wouldn't leave that much, but I'm willing to bet that on average they'd leave more than when they were shown the 15% amount.
First impressions are a mental anchor. Once people drop it, it's tough to take the boat down the river. (Sometimes, even with the current.) Make sure people are dropping it where you want.