Richard Thaler has won a Nobel prize for his research into ‘nudge’ theory
Think the Nobel prize for economics has nothing to do with you? In some years that may well be true.
But this year’s award has gone to Richard Thaler who, in his book Nudge, was one of the first to outline how tiny prompts can alter our behaviour.
The Nobel judges are clearly keen on the discipline, since they awarded fellow behavioural economist Daniel Kahneman the Economics prize in 2002.
Since when “nudge theory” has been applied to a wide range of problems.
Here are a few ways you may have been nudged yourself.
Fly in my bowl
In probably the most well-known example, spillage around the toilet, an age old problem for at least half of the human race, was cut by 80% using an ingeniously simple intervention.
First introduced at Schiphol airport in Amsterdam back in 1999, the idea was simple: etch the image of a fly in the urinal and men cannot help but take aim, saving on clean-up costs as well as alleviating unpleasantness.
The painted porcelain was one of Prof Thaler’s early favourite examples of tweaking the environment in a way that makes us change how we behave.
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When David Cameron became prime minister in 2010, one of his pet projects was the “Nudge Unit” or to give it its official title: the Behaviourial Insights Team.
It set about encouraging better behaviour amongst UK citizens in a range of ways from letting you know that other people had filled in their tax returns (so you should do yours now) to offering a more personal approach at the job centre.
But the most eye-catching, for those on the receiving end, was what you were sent if you failed to pay your car tax.
A big heading shouted: “Pay your tax or lose your Ford Fiesta” (or whatever car you owned) accompanied by a photograph of the untaxed car. The focused approach paid off.
A more positive tone was taken with the wealthy failing to pay their taxes. They received letters explaining how their taxes would help improve local services, and pointing out what would disappear without funding. These tweaks saw £210m in overdue tax paid into the Treasury.
Woolwich in south-east London had a problem with anti-social behaviour. During the riots in 2011 several shop fronts were smashed in.
The following year advertising agency Ogilvy & Mather, embracing the new science of behavioural economics, offered an innovative strategy.
Knowing that even the toughest heart is melted by the sight of a infant, they spent a night with graffiti artists painting pictures of local babies’ faces onto the shutters protecting the shop windows.
The move was credited with helping to reduce anti-social behaviour by 18% in Woolwich.
Ringing up sales
If you’ve ever been on the phone to a salesperson, you may well have heard one of the following:
“Most people in your position buy this” or “This deal is only available today”.
The first plays on our susceptibility to “social norming” – we think if others are doing it they must have a good reason.
The second is based on loss aversion: we hate the idea of missing out.
Thirdly, there can often be a tone of inexplicable cheeriness. Relentless positivity is catching apparently, and makes us feel good about signing up.
Big brands have embraced the idea. For example, a team from Ogilvy and Mather has coached staff selling subscriptions to the Times and the Sunday Times to use these persuasive techniques. Did they work on you?
In the past, people who want to donate their vital organs in the event of their death have usually been asked to “opt in” by putting their name on a register. Thanks in part to behavioural economics, there’s a growing trend to adopt policies that presume consent and ask objectors to “opt out”.
Though the results are inconclusive it’s clear we’ve embraced the concept – that we need to design the system in a way that helps us to “do the right thing” rather than rely on individuals’ consciences.
Likewise, we all know we need to save for our retirement, but it can be hard to summon the will-power.
The “save more tomorrow” approach pioneered in the United States saw employees automatically signed up to pay into a pension, but starting with very small contributions to avoid loss-aversion that could make them baulk. Only later do payments rise.
All if all this makes you feel as though the policymakers and marketers are only out to manipulate us, well at least thanks to Prof Thaler we now understand what they’re up to a little better.
Source :  http://www.bbc.co.uk/news/business-41549533