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Vol. LXIV, No. 3
February 3, 2012
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‘Nudges’ Help People Choose Rightly, Says Thaler

On the front page...

Dr. Richard Thaler
Dr. Richard Thaler
So there are two kinds of beings in the world: humans, with their messy, faltering, blinkered and occasionally brilliant existences, and “econs,” imaginary creatures invented by economists who are unfailingly rational, undistractable, self-interested— but also “unboundedly unscrupulous; they try to exploit humans.”

The differences between these two species define the field of behavioral economics, according to one of its founding adherents, Dr. Richard Thaler of the University of Chicago, who visited NIH as a guest of the National Institute on Aging recently.

Whereas humans suffer from bounded rationality, bounded willpower and are easily distracted, econs “never overeat, never have hangovers and they save for retirement,” Thaler observed.

Continued...

In his popular new book Nudge: Improving Decisions About Health, Wealth, and Happiness, co-written with White House advisor Cass Sunstein, Thaler borrows the advantages of the econ worldview to tutor erring humans, who need help in the form of small nudges to make choices that benefit them and society.

Nudge asked, ‘What are the implications for public policy?’ of these two perspectives,” said Thaler, who proceeded to give examples, from around the globe, of subtle attempts to tilt human behavior in ways that would appeal to that all-sensible creature and master architect of a more perfect society, the econ.

Still wondering what constitutes a nudge? Consider an example from Amsterdam, where authorities grappled with the challenge of untidy public men’s rooms. A clever designer etched the image of a fly near the center of the porcelain urinals. Subsequent sharpshooting led to an 80 percent reduction in wet floors.

“The fly is a nice example of a nudge,” said Thaler. “It is some feature of the environment that attracts our attention and influences our behavior.”

Another nudge: in a school district in upstate New York, authorities relocated the salad bars in school cafeterias, resulting in a 300 percent increase in salad consumption.

In both nudges, a benefit results from slightly (and cheaply) modified conditions that are unlikely to be interpreted as overt behavior modification.

Dr. Paul Offit

Thaler met prior to his talk with Dr. Richard Suzman (l), director of NIA’s Division of Behavioral and Social Research, in Wilson Hall.

Photos: Ernie Branson

Thaler said his book unites two concepts that normally are totally at odds: libertarian paternalism. Libertarian means you call the shots; it is choice-preserving. Paternalism, to the authors, “helps people choose what’s in their best interest, as defined by themselves. It’s possible to achieve both goals.”

One of the most useful tools for achieving a nudge is “choice architecture,” Thaler explained. Choice architects design the environments in which people make decisions. A well-designed choice structure will produce better decisions, so since you have to structure choices in some way, “why not pick something good?” he asked. “People don’t always do that, but good design is just a matter of trying.”

By locating a salad bar near the cash registers, nudgesters in New York yielded healthier food choices. But the potential applications that can take advantage of choice architecture are bounded only by the imagination.

“You can apply the principles of good design in any domain,” said Thaler, who is an advisor to the behavioral insight team that British Prime Minister David Cameron has established in the U.K. to help implement these sorts of ideas to create effective public policy.

Thaler said good design is characterized by four components and gave examples of each in action.

  • Defaults: Set them correctly at the outset—or as Thaler put it, “Pad the path of least resistance”— and you can get a desired result. Take organ donation, for example. In the United States, citizens opt in by signing some form. In other countries, consent for organ donation is presumed unless you deliberately opt out. While the latter nations in principle have more available donors, since very few people take the trouble to opt out, this comes at a cost: more families object at the moment of crisis, Thaler said. His preference? Prompted, or mandated, choice—you are simply asked whether you want to be a donor when you renew or obtain a driver’s license, as is now done in Illinois and California.

  • Feedback: “You can’t learn without it,” said Thaler. His example was the problem with compliance in health care—making sure patients take their meds. “Many medications give patients no feedback that they are improving [statins, for example, make no one feel noticeably better], so compliance wanes.” A French designer crafted an inhaler that changes to a sickly color if it goes unused. The pallor is both a reminder to use it and, because the vibrant color returns after use, “it taps into a child’s desire to help others [even an inanimate disk] feel better.”

  • Expect error: Some people—not Thaler—might call this idiot-proofing. Examples include differently sized and shaped nozzles for gasoline versus diesel pumps, so the user knows by look and feel which is appropriate. Another example is what behavioral researchers in Mumbai, India did to reduce pedestrian fatalities near train tracks. Using a combination of painted rails (to improve a pedestrian’s perception of depth and speed), alarming ads in train stations and a change in the sound of trains’ horns, authorities put a dent in the 10 deaths the system was experiencing daily. “It turns out you can nudge people in unusual and creative ways,” Thaler said.

  • Create incentives: The traditional regulatory model governing federal health insurance— issue rules, watch industry evade them, repeat—yields worse results than a model built on disclosure, Thaler said. “My regulatory principle is that if someone is collecting data on your usage, you should own or have access to that data,” he explained. Once deciphered and interpreted—and there’s an app for that (“usually written by a 12-year-old,” quipped Thaler)— that data provides a basis, a nudge, for improved decision-making by consumers. “Consumers will move to safer, more effective providers,” he said.

“We’re all humans, and humans err,” Thaler concluded. “Let’s design a health care delivery system that helps humans achieve better health.” NIHRecord Icon


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