Nudges 101

By pjain      Published July 14, 2021, 12:08 a.m. in blog Lambda7   

Nudging 101

What

Nudging refers to small changes in the decision-making context that can alter human behavior in predictable ways, without restricting the individual’s freedom of choice or changing the economic incentives

Nudges are often low-cost interventions but may nevertheless be surprisingly effective.

Why Nudge?

  1. More State Interventionist vs "Free Choice" - to the extent that people fail to act in their own self-interest, it provided an argument for paternalistic policies that enforce or encourage better choices and therefore improve welfare .

  2. Alone more traditional policy tools such as taxes or subsidies might not function as well as the standard rational-agent model had predicted

When Nudges don't work?

However, as the research field has matured, it has also become clear that nudges are not always as effective as originally thought.

r Core, Top References

  • “Nudge” by Nobel Laureate Richard Thaler and Cass Sunstein in 2008

  • Thaler, R. H., Sunstein, C. R., & Balz, J. P. (2013). Choice Architecture. In E. Safir (Ed.), The Behavioral Foundations of Public Policy (pp. 428–439). Princeton University Press.

  • Thinking Fast and Slow (Kahneman, 2013)

  • A decade of nudging: What have we learned? 2020-07 Mette T. Damgaard

Nudging BPR - What Works!

Nudging and Coaching Methods, Effectiveness, Technology, Digital and AI Nudges

Defaults Work! - Opt Out vs Opt In

A very powerful nudge is, for example, implementing a default choice option that is selected unless individuals decide differently, which has been shown to lead to drastic changes in the proportion of organ donors, greatly increasing participation in 401k and retirement plans, etc.

  • Johnson, E. J., & Goldstein, D. (2003). Do Defaults Save Lives? Science, 302(5649), 1338–1339. https://doi.org/10.1126/science.1091721

Choice Architecture and Design

The success of choice architecture, has led to its adoption in government policy and practice.

Are choice architecture design decisions are sufficiently transparent and publicly acceptable. We examined whether disclosing to decision-makers that a particular choice architecture is in place reduces its effectiveness and whether an understanding of the effectiveness of choice architecture design decisions increases their acceptability. We find that disclosure of the design decision does not reduce its effectiveness and that individuals perceive the effectiveness of specific designs to be higher for others than for themselves. Perceived effectiveness for self increases when individuals have actually experienced the effect of a design decision rather than having it simply described to them. Perceived effectiveness for oneself and others increases the acceptability of the designs. We also find that the intentions of the source matter more than who the source actually is. Important for policy-makers, then, is that disclosure of design decisions does not reduce their effectiveness, and their acceptability depends on their perceived effectiveness and the inferred motivations of the design architect.

  • Thaler, Sunstein and Balz, 2013. Choice Architecture. In E. Safir (Ed.), The Behavioral Foundations of Public Policy (pp. 428–439). Princeton University Press.

Differential Prominence - Perceptual Salience

This technique modifies the salience of information presented via the interface. The salience of information is a determining factor of whether it is processed and to which extent it is included in the decision-making process.

By adjusting the salience of specific information is a promising avenue for digital nudging and can directly affect individual behavior.

Based on salience theory, we develop a digital salience nudge to increase the healthiness of online food product choices by reducing the visual salience of unhealthy food products. In an online experiment with 399 participants, we evaluate the effectiveness of this nudge and investigate the effect of disclosing transparent information on the nudge. The results suggest that the digital salience nudge reduces the share of unhealthy food product choices by 44% (from 27 to 15%). Disclosing transparent information on the nudge, however, does not change its effectiveness. - SRC Michels et al. Is It All About Transparency? The Effectiveness and Ethics of a Digital Salience Nudge 6-14-2021

  • Graf et al., 2020 2020). Supporting Citizens’ Political Decision-Making using Information Visualisation. Proceedings of the 28th European Conference on Information Systems (ECIS 2020).

  • Hong et al., 2007 How do Web users respond to non-banner-ads animation? The effects of task type and user experience. Journal of the American Society for Information Science and Technology, 58(10), 1467–1482. https://doi.org/10.1002/asi.20624

  • Lee et al., 2018. Salience bias in crowdsourcing contests. Information Systems Research, 29(2), 401–418. https://doi.org/10.1287/isre.2018.0775

Efficacy of Nudging

  • Arno, A., & Thomas, S. (2016). The efficacy of nudge theory strategies in influencing adult dietary behaviour: A systematic review and meta-analysis. BMC Public Health, 16(1), 1–11. https://doi.org/10.1186/s12889-016-3272-x

t Levels of Nudging Behavior Changes

0 --- Punishment, 220v through Keyboard

1 --- Tiny Habits

Repetition, Ingrained, Biases

  • Tversky, A., & Kahneman, D. (1974). Judgment under Uncertainty: Heuristics and Biases. Science, 185(4157), 1124–1131. https://doi.org/10.1126/science.185.4157.1124

Just-in-Time and Real Time Feedback

  • Tiefenbeck, V. et al. Overcoming salience bias: How real-time feedback fosters resource conservation. 2018 Management Science, 64(3), 1458–1476. https://doi.org/10.1287/mnsc.2016.2646

Heuristics: Mental Effort and information overload

Steve Jobs is known for wearing ONLY one set of turtleneck and jeans, so he did not waste mental effort deciding what to wear every day.

A typical example is deciding between different food products. To avoid information overload, consumers often resort to automatic and heuristic decision processes when making food-related decisions.

  • Thinking Fast and Slow (Kahneman, 2013)

Easy to Access - Make bad things further away

2 --- Enabling Autonomy, Choice, Self-Efficacy - via Transparency

3 --- Goody Goody Level

Nudging Delivery and Execution

Art and Analog Nudges

Digital Nudges 101

Digital nudges extend the concept of nudging to digital environments by using, for example, push notifications on wearables, reminding users to stay active. In digital spheres, nudge designers can draw from a plethora of rich, user-centered, and tailored interventions and ways to communicate them that would not be applicable in the analog world.

Digital nudges offer a promising avenue to promote individual welfare by supporting individuals in their daily decision-making. However, most existing digital applications merely adapt analog nudges to the digital world, rather than leveraging the unique possibilities that digital environments offer.

With the increasing digitization of both our professional and private world, nudges have become more and more ubiquitous, as we encounter an increasing number of digital nudges in our everyday lives

  • Weinmann, Schneider and vom Brocke, 2016,
  • Mirsch et al., 2017;
  • Hummel & Maedche, 2019
  • Schaer & StanoevskaSlabeva, 2019
  • Meske & Amojo, 2020a;

Digital Nudges Unique Opportunities

We can leverage the unique opportunities that digital nudges offer.

  1. UX Adjust “user-interfaces to guide people’s behavior in digital choice environments”

Web Delivery

Mobile Delivery

Human Delivery - Peer, Assistant, Nurse, Professional - Doctor

AI driven

Nudging Ethics, Manipulation, Transparency and Explanations

individual’s freedom of choice

Costs of changing the economic incentives

Ethical Issues

Some have raised ethical objections to nudges.

Manipulation

Resentment to manipulation has contributed to a negative perception of digital nudges in general and led to a vivid debate questioning the ethical underpinnings of nudging.

Deception

One of the key ethical objections associated with nudging is the claim that nudges manipulate people’s choices by deceiving them.

  • Bovens, 2009; The Ethics of Nudge. In T. Grüne-Yanoff & S. O. Hansson (Eds.), Preference Change: Approaches from Philosophy, Economics and Psychology (pp. 207–219). Springer Netherlands.

  • Hansen & Jespersen, 2013; Nudge and the Manipulation of Choice. European Journal of Risk Regulation, 4(1), 3–28. https://doi.org/10.1017/s1867299x00002762

Transparency - Does it Reduce Effectiveness

Ethicists suggest disclosing transparent information about nudges as a measure to overcome objections.

One way to address nudging ethics would be to transparently communicate a nudge’s ends and means before the nudged decision is made, giving the individual the freedom of informed choice to resist changing her behavior in response to the nudge.

For example Apple raised the bar for privacy on iOS'21 by forcing opt-in for ad-campaign data gathering. Of course VERY FEW users explicitly opted-in to be spied on. Interestingly Apple never really had made money on ads inside apps before, so it had everything to gain from being more "ethical" and representing its end users.

This upset the "apple cart" (pun intended) for Facebook, etc. forcing the downgrading of ad revenue and the ad-analytics tools provided by Facebook. There has in fact been a flight to Android, which was considered lower profitability or yield compared to IOS. The ecosystem has had severe impacts from deep links, far beyond just "showing ads" as repsonse and traction of sites ranging from Tinder, Bumble, News etc. may be suffering from declining traction.

In this context, several empirical studies have investigated the impact of transparently disclosing information on the effect of nudges to the individuals and revealed that the effectiveness of nudges is not negatively influenced – and may even be increased – by multiple types of transparency

Nudging Theory, Psychology, Personalization

Salience theory

  • Bordalo, P., Gennaioli, N., & Shleifer, A. (2012). Salience theory of choice under risk. Quarterly Journal of Economics, 127(3), 1243–1285. https://doi.org/10.1093/qje/qjs018

  • Bordalo, P., Gennaioli, N., & Shleifer, A. (2013). Salience and consumer choice. Journal of Political Economy, 121(5), 803–843. https://doi.org/10.1086/673885

  • Taylor & Thompson, 1982.

Human Behavior Theory

Thaler et al built upon research in behavioral economics that has shown that human behavior differs considerably from predictions!

Rational economic theory

Binging on Diversity, Variety - M&M

Ever-growing product assortments may, in fact, overwhelm consumers with too many options to choose from and criteria to consider.

  • Briesch et al., 2009; How does assortment affect grocery store choice? Journal of Marketing Research, 46(2), 176–189. https://doi.org/10.1509/jmkr.46.2.176

Basic heuristic processes of thinking

  • Gilovich, Griffin and Kahneman, 2002; Heuristics and Biases: The Psychology of Intuitive Judgment. Cambridge University Press

  • Tversky and Kahneman, 1974; Judgment under Uncertainty: Heuristics and Biases. Science, 185(4157), 1124–1131. https://doi.org/10.1126/science.185.4157.1124

These processes allow individuals to make decisions in a fast and automatic way, without exerting too much cognitive effort This is especially beneficial in situations with many different options, where a holistic evaluation of all alternatives and information available would not be possible.

===USE CASES ==== Marketing, AdTech

Algorithms

  • Gal, U., Jensen, T. B., & Stein, M.-K. (2020). Breaking the vicious cycle of algorithmic management: A virtue ethics approach to people analytics. Information and Organization, 30(2), 100301. https://doi.org/10.1016/j.infoandorg.2020.100301

SN and Content Algorithms

Growth

Engagement

UX, Customer Journeys - Beyond good Looks to Actions

Salience in Digital marketing

Marketers who nudge individuals in ways that primarily aim at making the nudging party better off rather than the individuals exposed to the nudge

  • Dennis et al., 2020; Digital Nudging: Numeric and Semantic Priming in E-Commerce. Journal of Management Information Systems, 37(1), 39–65. https://doi.org/10.1080/07421222.2019.1705505

  • Schaer & Stanoevska-Slabeva, 2019. Application of digital nudging in customer journeys – A systematic literature review. Proceedings of the 25th Americas Conference on Information Systems (AMCIS 2019), 1–10.

Retail and E-Commerce Nudging

  • Hui, S. K., Bradlow, E. T., & Fader, P. S. (2009). Testing behavioral hypotheses using an integrated model of grocery store shopping path and purchase behavior. Journal of Consumer Research, 36(3), 478–493. https://doi.org/10.1086/599046

  • Coffino, J. A., et.al. 2020. Nudging while online grocery shopping: A randomized feasibility trial to enhance nutrition in individuals with food insecurity. Appetite, 152, 104714. https://doi.org/10.1016/j.appet.2020.104714

  • Dennis, A. R., Yuan, etal 2020. Digital Nudging: Numeric and Semantic Priming in E-Commerce. Journal of Management Information Systems, 37(1), 39–65. https://doi.org/10.1080/07421222.2019.1705505

Finance

Retirement - Opt Out vs Opt In

Health Care Proactive Coaching

Dietary for Disease specific

Weight Loss, Combat Obesity

One key domain in which digital nudges could help to promote the welfare of both the individual and society, is the domain of healthy eating and food choice.

  1. We are currently facing a global obesity pandemic of 39% of the world’s adult population being overweight and 13% being obese. It poses severe risks to individual health and puts a burden on societies as a whole in disease and suffering.

  2. While a large proportion of the adult population has the goal to lose weight and to eat healthier many individuals fail to act on these goals in their everyday lives.

  3. Martin et al., 2018. Attempts to Lose Weight Among Adults in the United States, 2013-2016. In NCHS Data Brief (Issue 313). National Center for Health Statistics.

  4. Bucher et al., 2016; 2016). Nudging consumers towards healthier choices: A systematic review of positional influences on food choice. British Journal of Nutrition, 115(12), 2252–2263. https://doi.org/10.1017/S0007114516001653

  5. Cadario & Chandon, 2019, Viewpoint: Effectiveness or consumer acceptance? Tradeoffs in selecting healthy eating nudges. Food Policy, 85(March), 1–6. https://doi.org/10.1016/j.foodpol.2019.04.002

  6. Cadario, R., & Chandon, P. (2020). Which Healthy Eating Nudges Work Best? A Meta-Analysis of Field Experiments. Marketing Science, 39(3), 465–486. https://doi.org/10.1287/mksc.2018.1128

  7. Guthrie et al., 2015. Nudging Consumers toward Better Food Choices: Policy Approaches to Changing Food Consumption Behaviors. Psychology & Marketing, 32(5), 501–511. https://doi.org/10.1002/mar.20795

Hard to Scale Up

Nudges have been identified as a viable approach to support consumers in following through with their long-term preference of eating healthy. However, no nudge that is both effective in changing food choices and easy to scale and implement, has been identified so far.

Food Science - Marketing and Addictions

  • Chandon, P., & Wansink, B. (2012). Does food marketing need to make us fat? A review and solutions. Nutrition Reviews, 70(10), 571–593. https://doi.org/10.1111/j.1753-4887.2012.00518.x

Role of Eating Out and Food Delivery - 50% of calories

The versatility of digital nudges and the plethora of opportunities to implement them could open up promising new avenues in the food choice domain, as an increasing proportion of food products is purchased online with a current market share in the US of over 10% and a projected market share of over 20% in 2025 – further accelerated by the COVID-19 pandemic

Dietary Education

Food Labels, Nutrition Scoring and Policy

  • Julia, C., etal 2015. Discriminating nutritional quality of foods using the 5-Color nutrition label in the French food market: consistency with nutritional recommendations. Nutrition Journal, 14(1), 100. https://doi.org/10.1186/s12937-015-0090-4
  • Dréano-Trécant, etal 2020. Performance of the front-of-pack nutrition label nutri-score to discriminate the nutritional quality of foods products: A comparative study across 8 european countries. Nutrients, 12(5), 1–13. https://doi.org/10.3390/nu12051303
  • Dubois, P., etal 2020. Effects of front-of-pack labels on the nutritional quality of supermarket food purchases: evidence from a large-scale randomized controlled trial. Journal of the Academy of Marketing Science. https://doi.org/10.1007/s11747-020-00723-5
  • Ducrot, P., etal 2016. Impact of different front-of-pack nutrition labels on consumer purchasing intentions: A randomized controlled trial. American Journal of Preventive Medicine, 50(5), 627–636. https://doi.org/10.1016/j.amepre.2015.10.020
  • Enax, L., etal 2016. Salient nutrition labels increase the integration of health attributes in food decision-making. Judgment and Decision Making, 11(5), 460–471.
  • Finkelstein, E. A., Ang, F. J. L., Doble, B., Wong, W. H. M., & van Dam, R. M. (2019). A Randomized Controlled Trial Evaluating the Relative Effectiveness of the Multiple Traffic Light and NutriScore Front of Package Nutrition Labels. Nutrients, 11(9), 2236. https://doi.org/10.3390/nu11092236

Fitness

Preventing Falls

Public, Government, Health and Social Policy

Social Policy

  • Benartzi, S., Beshears, J., Milkman, K. L., Sunstein, C. R., Thaler, R. H., Shankar, M., Tucker-Ray, W., Congdon, W. J., & Galing, S. (2017). Should Governments Invest More in Nudging? Psychological Science, 28(8), 1041–1055. https://doi.org/10.1177/0956797617702501

Fertility


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