Nudge for good: How insights from behavioral economics can improve the world— and manipulate people | Source: World Bank Blog, Aug 16 2016 |
Richard H. Thaler is a world-renowned behavioral economist and professor of finance and psychology. Recently, he was interviewed by The Economist. The discussion covers some of the fundamental studies in the field, like “save more tomorrow” which encourages people to save more by signing up to increase their savings rate every year and auto-enrollment for pensions that have drastically increased employee participation in pension funds.
Thaler also suggests, in the interview, that behavioral economics has the ability to influence human behavior for both good and bad. He argues that much of what behavioral economics does is remove barriers.
The goal is not to change people but to make life easier, but that idea can be skewed by organizations or individuals looking to capitalize on the biases of people. Whenever he is asked to sign a copy of his book Nudge, he writes “nudge for good” which is a plea, he says, to improve the lives of people and avoid insidious behavior.
The list of ways companies nudge behavior is endless, and I would love to hear more examples from you all in the comments section. In the meantime here are a few- I’ll let you judge which ones “nudge for good”:
- Waterborne diseases such as cholera cause widespread illness, especially among children, in developing countries without nation-wide water and sanitation networks. In Kenya, chlorine tablets are distributed by NGOs and other organizations, and people generally understand that the tablets disinfect their water, protecting them from disease. Nevertheless, usage rates are often low. Cost is not the barrier here, convenience is because routinely purifying water requires energy and attention. Michael Kremer of Harvard University and his colleagues found, through a series of randomized controlled trials conducted in Kenya, that providing chlorine as a concentrated liquid at prominently displayed dispensers at local water sources dramatically increase the rate of disinfection. The dispensers provided a visual reminder when and water was collected and made it easy to add the right does. Along with promotion by community members, this approach increased chlorine use by 53%. Thus, making it easier to disinfect water increased the rates at which tablets are used.
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