A Nudge poll

A couple weeks ago, reader Steve Miller suggested that we list a few nudges that are “ready for primetime,” and let people “vote for the one that they would be most in support of by contributing some money to an advocacy fund.” Creating an advocacy fund remains a ways off in the future, but one painless and costless way to get feedback for the present on what people think are the best ideas from Nudge is simply to ask them. With that in mind, please cast your vote in the first official Nudge poll for the proposal that you think should be implemented as soon as possible. The poll will remain open for the remainder of May.

The fine print on serving alcohol at universities

Why do bars serve peanuts and pretzels? It is because they are cheap? No. It is because they are salty, and salty foods make you thirsty. (Read the abstract of a paper about women, salty food, and alcohol here.) At the University of Chicago there is a twist on this relationship between brackish finger food and alcohol. Student groups that want to hold events that serve alcohol must agree to guidelines that include the following restriction: “Adequate quantities of non-salty food must be served.”

The non-salty food requirement is not unique to Chicago. It is standard at U.S. universities (see Washington University, UPenn, and Texas A&M as examples.) How much an “adequate” amount of non-salty food is remains vague, but at the University of Kansas, the requirement is “two servings” of non-salty food for every person in attendance.

Bus stop design errors

The Wall Street Journal critiques poor choice architecture in India.

The Bus Rapid Transit system is designed to get people on and off buses more efficiently and to cut down travel time. But it has a major flaw: The bus stops were put in the middle of the highway, three lanes of traffic from the sidewalk on each side. Any pedestrian who wants to reach the buses must run a gantlet of Delhi’s chaotic and unyielding traffic, which pays little attention to the niceties of staying in lanes or obeying red lights.

Since the first five-mile stretch of the road opened on April 20, there have been three or four accidents a day, says Vijay Kumar Singh, a marshal whose job is to try to ensure the system works. And in the morning, he says, it can take schoolchildren up to 30 minutes to cross the road to reach the bus stops.

You can see the bus stop in a slide show here.

Reshaping the square — Classroom choice architecture

In the late 1980s, the architectural firm Gruzen Samton Steinglass suggested that the public school system of New York City get rid of a century-old classroom design — the square. There was nothing terribly wrong with the square - it was certainly familiar and cost-efficient to reproduce - the firm concluded, but there were better ways to allow teachers to take advantages of their personalities and learning styles, and to hold student attention when multiple activities might be occurring in the same space.

“We if you just give the square a jolt?” said Peter Samton, recalling the creative process for the New Yorker magazine in 1991. “A whole handful of problems solved with a single jolt. You could turn one of the protruding ends of the new shape into a bay window, which would bring more light into the classroom. You could have little bays to put the independent-study groups in and a little niche to put the computers in. But at the same time the teacher would remain the real focus of the room instead of being just a bit player.”

Are there any New York City public school alumni out there who’ve been taught in these classrooms?

To understand Obama’s approach to government, read Nudge

The opening line of Teddy Davis’ article, “Obama pushes iPod government,” at abcnews.com.

To understand the intellectual underpinnings of Sen. Barack Obama’s plan for reinventing government, it’s useful to read “Nudge: Improving Decisions About Health, Wealth and Happiness.”

The article goes on to elaborate Obama’s ideas about iPod government (a phase used by his campaign), automatic savings accounts, and reforms for the Medicare drug plan. The remainder of the story is reprinted below.

The new book by two University of Chicago professors who serve as informal advisers to the Democratic Illinois senator explains how a “libertarian paternalist” government can preserve freedom of choice while moving its citizens in directions that will improve their lives.

Obama’s iPod Government

“His campaign has referred to a beautiful phrase ‘iPod Government,’” said law professor Cass Sunstein in an interview with ABC News. “We don’t use that phrase in the book, but iPod government is very close to what we have in mind. Those who are concerned about choice architecture love the idea of iPod government because it’s user-friendly, the default rules are sensible, you can adapt as you wish but if you don’t adapt, things are going to be fine.”

The premise of Sunstein’s book, which he wrote with behavioral economist Richard Thaler, is that people are less than rational when they make economic decisions. In the lingo of the book, there is no such thing as “economic man.” Humans are influenced by the power of inertia.

The authors believe that once it is accepted that some nudging is inevitable, the body politic can move on to consider how nudges can be used to improve people’s lives.

“Obama is very alert to the idea of choice architecture, which has to do with the fact that there’s a context against which people make decisions and the context can be confusing and harmful or straightforward and helpful,” said Sunstein.

The clearest example of how Obama plans to construct default rules to alter behavior is his automatic savings plan.

At present, millions of Americans are given the option of joining employer-based savings plans but do not exercise the option. Test studies have shown, however, that if employers automatically enroll their employees, enrollment rates shoot up dramatically.

In order to take advantage of what behavioral economists call “the status quo bias,” Obama would require all employers to enroll their workers in a direct deposit retirement account that places a small percentage of each paycheck into the account. This is the paternalistic part. The libertarian part of his proposal is that employees would still have the choice of opting out.

“Before he ran for president, I had a discussion with Sen. Obama personally about automatic enrollment,” said Sunstein. “He was completely on top of the topic and he understands the behavioral background.”

Medicare and Rx Drugs

Austan Goolsbee, Obama’s chief economic adviser, is a University of Chicago colleague of Sunstein and Thaler, and the concept of choice architecture can be seen in the Illinois Democrat’s proposal for improving the Medicare prescription drug program.

Thaler and Sunstein believe the designers of the drug benefit failed to appreciate that simply offering seniors a multitude of choices is not productive if the options are not well understood.

To help seniors determine which plans could help lower their out-of-pocket costs, Obama would require prescription drug companies to send Medicare beneficiaries a full list of the drugs and fees they paid the previous year.

Obama also employs nudges in his proposals for making credit card and mortgage terms easier to understand and he has adopted a Goolsbee proposal to simplify tax filings by offering people with no outside income or itemized deductions a prepared tax return that they can simply sign and return.

Sunstein thinks Obama’s “libertarian paternalist” instinct can also be seen in his reluctance to resort to mandates.

“Obama shows signs of being more of a libertarian paternalist than Hillary Clinton,” said Sunstein. “What I would single out for Obama is two things: for health care, it’s revealing that she has a mandate and he doesn’t.”

“In responding to the mortgage crisis,” he continued, “Sen. Clinton has proposed a [five-year] freeze … on [subprime] interest rates. Obama has resisted that strongly in favor of a disclosure policy, which is very much in the spirit of libertarian paternalism.”

A reader asks why appliances are preset to energy-hog mode?

Ruth Fleischer writes:

Many household appliances are designed for worst case energy use (at energy levels that are frequently wasteful and unnecessary.) These appliances may have an energy saver switch for lighter loads, air drying etc, but choosing the energy-saving alternative requires a conscious choice, usually with each use. Why not make the energy saving mode the default and the energy boosting alternative the special and conscious case?

Procrastination is on the rise

Says Slate.

30 years ago, just 5 percent of Americans were self-described “chronic procrastinators”; today that number is up to 26 percent.

Blame technology (again). Men procrastinate more than women; the young procrastinate more than the old.

And what does all that procrastination get procrastinators? Nothing but trouble.

“Procrastinators tend to be more miserable, less wealthy, and less healthy than those people who don’t dilly-dally,” says psychologist Piers Steel.

Behavioral economics tips for home sellers: How to price a house

Anchoring is one of the most common human biases. As an example (from Nudge), write down your phone number and add two hundred. Now answer when you think the Hun sacked Europe? In surveys, people’s answers differ by a few hundred years depending on whether they have a low or a high anchor.

Marketers have long been curious about how different prices affect customers’ ideas of a product’s value. In the February issue of Psychological Science, marketing professor Chris Janiszewski and research assistant Dan Uy of the University of Florida tackled the age old question of whether people are really fooled - or at least subconsciously nudged - by a price tag than ends with quirky .95 instead of a nice, round, even .00.

Continue reading the post here.