- Thu, May 24 2012
- Filed under: Marketing essentials
Did you know the British Government has a Nudge Unit? It’s true, The Economist says so. The behavioral economists behind the favorite book Nudge are advising UK policymakers (and the Obama administration) on how to use insights into how people think to advance public policy.
Here’s how my buddy Alia McKee explains behavioral economics: “Behavioral economics challenges the notion that people will choose the best action or the most logically presented choice and explores the bounds of rationality — identifying the patterns of social, cognitive and emotional factors that influence the decisions people make. The big takeaway? People don’t arrive at most decisions through a process of weighing costs against benefits. In their book Nudge, Richard Thaler and Cass Sunstein put it simply: Real people make decisions like Homer Simpson, not Spock. When we understand what motivates their inner Homers, we can nudge them toward the best action rather than trying to convince them as if they were Spock.”
So what’s Thaler up to in the Nudge Unit? Testing behavioral economics to guide people to the right decisions! Here’s what The Economist says:
A set of trials in Britain focused on energy efficiency. Research into why people did not take up financial incentives to reduce energy consumption by insulating their homes found one possibility was the hassle of clearing out the attic. A nudge was designed whereby insulation firms would offer to clear the loft, dispose of unwanted items and return the rest after insulating it. This example of what behavioural economists call “goal substitution”—replacing lower energy use with cleaning out the attic—led to a threefold increase in take-up of an insulation grant.
All this experimentation is yielding insights into which nudges give the biggest shove. One question is whether nudges can be designed to harness existing social norms. In Copenhagen Pelle Guldborg Hansen, founder of the Danish Nudging Network, a non-profit organisation, tested two potential “social nudges” in partnership with the local government, both using symbols to try to influence choices. In one trial, green arrows pointing to stairs were put next to railway-station escalators, in the hope of encouraging people to take the healthier option. This had almost no effect. The other experiment had a series of green footprints leading to rubbish bins. These signs reduced littering by 46% during a controlled experiment in which wrapped sweets were handed out. “There are no social norms about taking the stairs but there are about littering,” says Mr Hansen.
I want to go work for the Nudge Network!
Do you have a Nudge Unit? Maybe you should.
And for more on behavioral economics for nonprofits, check out the ebooks I wrote with Alia and Mark Rovner.