Psychology view

Nudging for good

It’s difficult to persuade people to make sustainable choices. The subtle, unconscious influencing of behaviour, also called nudging, can push people in the right direction. There are three nudge methods that have proven useful.

Footsteps painted on the ground, so that we take the stairs rather than the lift. Lines on the road, each one closer to the next, to stop us from driving too fast. And smart meters that make it easier for people to use their heating or air conditioning more efficiently. Nudging is influencing choices by giving a push in the right direction using insights from behavioural science. Smart design can stimulate people to make sustainable choices. Nudging is incredibly popular, particularly since nudge guru Richard Thaler won the Nobel Prize for Economics 2017.

Not the whole picture

Nudging is especially popular among marketers and policymakers, who are increasingly using behavioural science and nudging in particular in their customer strategies. An example of this is the Sustainable Energy Association of Ireland (SEAI). Karl Purcell, head of SEAI’s Behavioural Economics Unit, says that behavioural science can be useful in encouraging sustainable choices. “Putting the supply of energy on a more sustainable footing calls for a change in behaviour. Most people want to change their behaviour, but there is a gap between good intentions and actions. If you know what influences behaviour, you can respond smartly.”

For example, it’s difficult to persuade people to save energy, explains Purcell. You’re asking consumers to invest in something now that won’t benefit them until later. Another hurdle is that we don’t all realise how much energy we are consuming and how we can save it. To remove these hurdles, SEAI applies various tools, such as grants that allow people to invest now in energy-saving measures and tools that give energy users a greater understanding of how much energy they are consuming. SEAI uses various insights from behavioural science in its tool development, explains Purcell. “Nudging is one of them.”

Nudge method 1: Provide feedback on the behaviour of others

According to Purcell, an effective nudge is the social comparative energy bill, which provides a detailed breakdown of a person’s energy consumption. It also compares your energy consumption to that of others like your neighbour. If this feedback shows that your consumption is above average, it provides an incentive to save energy. Marketers or policymakers who use this nudge should realise, however, that there are limitations to consumption. It works less well with people who are above-average performers. Purcell: “In that case, you can compare your consumption with the top-ten savers in the neighbourhood.” He also recommends always complimenting high-performing consumers on their performances.

Getting feedback is effective because we like to improve ourselves or compare ourselves with others. Furthermore, we have a strong desire to be ‘normal’: we prefer not to lag too far behind others. Marketers can respond smartly to our desire to comply with social norms by communicating that peers are already displaying the desired behaviour, for example, a healthy choice. This has been shown in research conducted by a consortium led by Wageningen University in the Netherlands, which proved that by displaying advertisements saying that other rail passengers very often opt for fruit as a snack, the consumption of healthy snacks in train stations would increase.

Nudge method 2: Use the default option

Behavioural science shows that people seem to always want to maintain the status quo. Out of fear of being different or out of complacency, we often subconsciously choose what seems ‘normal’, expressed in a preference for default options. Marketers who want to persuade people to make sustainable choices can also make use of this insight. For example, you can offer sustainable or healthy food as ‘normal’ food. Canadian professor Joe Arvai carried out research using sustainable meals in cafeterias that make sustainable food the default option. The meals were presented as a menu option and served slightly faster than less sustainable options. This had a significant effect, says Arvai in The Guardian. “We were able to easily shift most (upwards of 80%) consumer’s choices in the direction of more sustainable options.”

The default option also works, for instance, in bathrooms in luxury hotels, as proves another investigation conducted by Arvai. He adjusted the standard setting of the multiflow shower heads in a hotel to the low flow savings setting. In practice, not many guests changed the setting. Arvai: “Guests rarely turn their showers to full power, thereby saving water and energy.”

Marketers at energy companies can also use the default nudge, which works well in persuading people to choose green electricity. In a study of just over 40,000 German energy consumers, people were able to choose an online option of 100% green energy at a surcharge of three cents per kilowatt hour. If this option was ticked by default, 69.1% chose it. If this wasn’t the case and consumers had to actively tick the option, only 7.2% chose it. Researcher Sebastian Lotz from Stanford University followed up to see whether the energy consumers in the investigation had deliberately opted for 100% sustainable. And that proved to be the case for the majority of consumers.

Nudge method 3: Tweak the environment

Humans are anything but rational beings who always make carefully considered decisions. We are creatures of habit who like convenience. Retail marketers make good use of this when placing their products on shelves. They know that you and I are more likely to choose products positioned at eye level because we see them first and don’t have to bend down or stand on our tiptoes to reach them. Anybody wanting to draw attention to healthy or sustainable options therefore has to ensure that they are in the direct line of sight. Another thing to bear in mind is that in addition to this ‘vertical preference’, consumers also have a ‘horizontal preference’. This was discovered by the researchers of the Wageningen consortium referred to earlier. In a virtual and a real supermarket, consumers were more likely to choose tea with a fair-trade label if it was positioned in the middle of the shelf displaying tea rather than on the left-hand or right-hand side.

The Wageningen researchers do warn about the ethical aspects of nudging. “Nudging should not unacceptably curtail the freedom of the consumer.” You don’t want customers to feel that they have been cheated on or that they have made a choice they didn’t want to make. For people who take these ethical aspects into account, nudging is a useful tool to encourage sustainable choices, particularly as part of a wider tactic to persuade customers, argues Karl Purcell. “I don’t see nudging as the whole picture, but as a strong element. You can achieve a lot with small interventions.”

The View is the online magazine of ING Wholesale Banking