Archive for June, 2008

A reader thinks fast food restaurants and banks should help people choose between the drive-thru lane and the inside counter

June 30, 2008

Reader Travis Walker, who previously proposed a nudge to create a routine for medical check-ups and car maintenance, thinks people would appreciate help in deciding whether to use drive-thru lanes.

In an attempt to reduce the time that vehicles spend idling in drive-thrus, I propose a nudge akin to how theme parks manage their lines for more popular rides. Such theme parks indicate how much longer you will have to wait in line simply by placing signs at various points in the line that indicate your estimated wait before you are able to get on the ride. These signs benefit theme park patrons by providing them the means to conduct a quick cost-benefit analysis of either waiting in the line or choosing to go find a different one (presumably one that’s shorter). Applying this principle to traditional drive-thru – such as fast-food restaurants and banks – would be rather easy. You could post signs at various points in the line with estimated wait times or you could even paint the pavement (for example, “If Parked On This Spot Your Estimated Wait is 15 Minutes”). Moreover, these times could be adjusted at various points of the day – maybe Burger King is faster at moving cars through its drive-thru during breakfast than lunch.

This nudge, I feel, would encourage more motorists to park and order their food (make their deposit) from inside vis-à-vis idling in a line with an estimated wait of 15 minutes or more. The result, then, may be a decrease in the use of gasoline and more efficiently run fast-food restaurants and banks. To be sure, there could also be some unintended consequences such as too many people going inside and not utilizing the drive-thru. I foresee a possible reluctance of fast-food restaurants to implement such a policy for fear of losing business (if the wait at McDonalds is an “Estimated 15 Minutes” than maybe customers would go elsewhere for their burger). To conclude, though, I feel that this policy would be a net gain in terms of the decrease in use of gasoline, the time saved by ordering in the lobby, and the overall increase of efficiency from restaurants and banks alike.

Assorted Links

June 30, 2008

Our home city of Chicago is the most paternalistic city in the U.S., according to Reason magazine.

Feedflix is a tool for Netflix subscribers to figure out how much each rental is costing you.

Impressive online choice architecture from Olay. If only the Medicare prescription drug web site was this user-friendly.

Mostly Economics thinks overconfidence is in our genes, and links to a funny paper (that is intended to be serious) for Excel users – overconfidence among spreadsheet creators.

Over-nudging in Whitehaven, England

June 30, 2008

This is why people dislike government. From the New York Times:

Threatened with steep fines if they dump too much trash, local governments around the country are imposing strict regimens to force residents to produce less and recycle more. Many now collect trash every other week, instead of every week. They restrict households to a limited amount of garbage, and refuse to pick up more. They require that garbage be put out only at strict times, reject whole boxes of recyclables that contain the odd non-recyclable item and employ enforcement officers who issue warnings and impose fines for failure to comply.

And when residents don’t comply, a “sticker of shame” is affixed to a resident’s garbage bin indicating a violation of garbage laws (ie. if a bin is left open). If governments are going to impose strict rules as a means to change behavior, they should create policies, technologies, or incentives to help people adapt. More rules, supported by harsher punishments, just anger citizens.

Amazon says the best price for Nudge is 17 (insert your currency here)

June 27, 2008

Amazon has priced Nudge consistently, well, except for the whole exchange rate part.

Amazon UK – £17.10 or $33.96 (according to current exchange rates)
Amazon Canada – 16.72 CDN or $16.51
Amazon Germany – 16.45 Euros or $25.87
Amazon Austria – 16.45 Euros or $25.87
Amazon France – 16.83 Euros or $26.48
Amazon U.S. – $17.16

Because of the yen, Amazon Japan’s price looks different but is actually about the same as in Europe (2955 Yen or $27.62). If someone knows the Chinese character for Nudge, or how to search on Amazon China, send an email our way.

Amazon’s pricing appears similar to Apple’s iTunes in some ways, but different in others. For instance, Apple has pushed for a single pan-European pricing system, but had to settle for some variations in European prices because of individual agreements with record companies and other music partners. Earlier this year, European Commission pressured Apple to lower U.K. prices, which had been as much as 10 percent higher. Apple then announced it would standardize prices across Europe at .99 (or about $1.56 today). Amazon’s European pricing follows a similar model, with a very slight difference in euro costs.

Unlike Apple, which restricts purchases across countries unless you have a credit card in that foreign country, Amazon allows you to buy products at any of its international sites in the local currency and convert it using the Amazon currency calculator. But don’t get too excited! Says Amazon:

In addition to the exchange rate, additional foreign conversion charges and fees may be applicable, all which increase the final cost of your purchase.

We’d love to hear from any of our European readers about exactly how large those fees are. Is it cheaper to buy Nudge on the U.S. site with the Euro?

A reader thinks putting symbols on labels is a better approach than dumping a list of nutritional content on diners

June 27, 2008

At Reason.com, Radley Balko argues that New York’s new calorie-posting requirements for restaurants with 15 or more outlets is “bound to fail.” Condensing (and hopefully not warping) Balko’s argument: It’s expensive, restaurants that want to save money have to spend time breaking down food into basic ingredients that can be evaluated (and then locking themselves into a specific recipe), and lawsuits will still be common.

Reader Garrick Linn thinks a labeling policy might be a superior strategy to nutritional disclosure. He posted this quote on the Reason.com board.

Balko raises some interesting points about the real costs of implementing various labeling policies. Perhaps NYC would be better served (so to speak) by setting up something like the EPA’s voluntary Energy Star program for food, complete with a logo and certification process. It worked for monitors…why not marzipan?

FWIW (For What it’s Worth), I’m rather skeptical of the claim that nutrition labeling has done consumers no good simply by pointing to the failure of labeling to singlehandedly reverse what is undoubtedly a complex sociobiological phenomenon; speaking as someone who actually pays attention to the information on nutritional labels (well, at least when I’m trying to lose weight) I wonder if the important issue isn’t whether or not to label so much as how the current labels are used and whether they can be improved. One study seems to indicate that consumers often erroneously assume that a single wrapped package of (say) two granola bars contains a single serving and treats the calorie count on the back accordingly…if the requirement were changed so that the count reflected the total amount of calories per individually wrapped package, this would give consumers better information based on how they actually use the labels.

Linn followed up with some comments for the Nudge blog:

In a sense the Energy Star program is a natural fit for food. After all, calories are a measure of chemical energy. There are probably better and worse ways of going about it. For example, using categories/tiers such as dessert, entrée, side dish, etc. might allow for better comparisons between dishes, but I’d worry that a creative chef might find a way to disguise a side as a dessert in order to qualify for a favorable rating if careful attention isn’t paid when drafting criteria for each category. I’m reminded of the old cliche about reclassifying certain cars as light trucks in order to get around emissions standards.

The American Heart Association has had a food certification program in place for “Heart Smart” foods since the mid-90s which grants companies the right to use a logo on specific products if certain requirements are met around fat, cholesterol and sodium (although not calories.) I’m not sure if good data is available on how successful the program has been, but even if it hasn’t done as well as originally hoped it should provide some insights into how (and whether) to take a closer look at this kind of approach.

We are not aware of any studies on the effectiveness of the food certification program, although critics blasted it (JAMA article is restricted) for requiring companies to pay the AHA a fee for the right to label its products. The AHA said it covered the costs of the labeling program. That said, the AHA’s web site features a quick way create a grocery list of only healthy-heart foods. It’s a heck of a lot faster and easier than creating a list off the FDA’s Heart Health site.

When it’s worth driving across town for a deal

June 26, 2008

Tom Vanderbilt of How We Drive picks up on a Thaler classic from mental accounting. People irrationally say they will drive across town to save $5 on a lousy $10 calculator, but won’t do the same for $5 off a nice $125 jacket. Vanderbilt says his car’s navigation system shows him real time prices at nearby gas stations, allowing him to rationally calculate when it’s worth driving across town or even down the street for a better deal.

Interestingly, there was a 36 cents a gallon difference between the closest station and one an additional .3 miles away. So, on a 11 gallon fill-up, i could save nearly $4, with a minimal amount of driving. Doesn’t seem so irrational…But the next three stations, all located near each other, were charging the same price. I’ve actually used that more expensive station before, for the odd reason that there’s hardly ever a line (perhaps precisely because it’s more expensive). But I’ll be curious to see what long-term effects will be on gas-station pricing transparency as more drivers have these devices; will prices flatten out, or will there be more volatility as individual stations advertise particular deals, luring drivers who wouldn’t have considered those stations before?

Behaviors that cause our blood to boil are prime candidates for nudges

June 26, 2008

PsyBlog picks up on a paper that identifies the top 5 “uncivil behaviors” that cause French urbanites blood to boil over. (What would be the top 5 for American suburbanites?)

  1. Failure to pick up after one’s dog
  2. Littering
  3. Illegally parked car
  4. Graffiti
  5. Aggressiveness towards others

The paper’s authors, Nadine Chaurand and Markus Brauer from the University of Clermont-Ferrand, suggest that we are most likely to try and eliminate these behaviors through “social control,” when we feel responsible to a particular geographical area, when we think we have a legitimate right to intervene, and when our anger stokes us to action. Thinking about this statement from a Nudge perspective, we would be most likely to activate or tap into preexisting social norms as a form of persuasion when we are upset about uncivil behavior in our neighborhood park.

What would be the best messages to, say, cut down on disgusting dog poop? Psyblog writes:

Authorities can remind citizens that removing litter and cleaning up dog poop all costs money – money that comes straight out of our taxes; money that is better spent on schools, hospitals and other public services.

At the Nudge blog, we are not convinced this is the best message, largely because dog poop and litter are relatively low cost public services. On a per person basis, the extra taxpayer dollars spent to clean up dog parks twice a week would probably seem worth paying compared to the high probability of stepping in dog business, or the high personal cost of tip-toeing around to avoid it.

PsyBlog also points to Sinagpore as an example of a country that has successfully eliminated most uncivil behaviors.

Singaporeans who litter or spit in the street now face stiff, rigidly enforced penalties, making them one of the most litter-conscious countries in the world. Singapore is now rightly famous for its clean streets.

When to use traditional economics incentives versus social norms is an important ongoing public policy debate. It’s worth pointing out that while all incentives are nudges in our categorizations, not all nudges are incentives. And indeed, a common statement by economists about many minor violations is that the low cost of the penalty limits their effectiveness. If illegally parking in a handicapped spot was punishable by death, it would never occur. Regardless, these types of violations are probably better handled by other kinds of nudges instead of strong deterrence incentives.

What behavior drives you crazy? What kind of nudge might reduce it?

The author of the MPG illusion on why we misunderstand the meaning of miles per gallon (and why we shouldn’t hate the hybrid Cadillac Escalade)

June 25, 2008

Understanding miles per gallon seems so easy. Richard Larrick and Jack Soll of Duke University’s Fuqua School of Business explain why the concept trips up most of us. The duo recently published a paper in Science titled “The MPG Illusion” that has received a national media attention (listen to the Science podcast here.). For a taste of the research and a test of your fuel efficiency expertise, take this quiz.

The Nudge blog invited Larrick to write a post summarizing his findings (with a more in-depth description of the three studies he and Soll conducted), and clearing up major misconceptions about his research that have been reported in the press. We are delighted to have him share his thoughts.

Read Larrick’s post here.

(Hat tip to three Nudge readers – Bob Bateman, David Hagmann, and Mostly Economics – for noticing the MPG Illusion.)

Social psychology’s “sexy” influence on British politics

June 24, 2008

Daniel Finkelstein’s column in the Times Online identifies the five “sexiest ideas” in politics. British politics, that is. Thirty years ago, economics ideas were at the vanguard of public policy. Today, it’s the ideas of social psychology. Here in the U.S., the economists, not the psychologists or the political scientists, still rule the roost. If even a couple of these ideas were embraced whole heartedly by a critical mass of politicians, psychologists and behavioral economists could swell with pride. So what are the five ideas?

1) Social Norms – by which we are influenced by cues from other people in our peer group about how to behave and think. Richard Woods, also the Times, has pointed out one recent initiative by Conservative Party Leader David Cameron to harness social norms for energy efficiency.

The divide was illustrated last week when Labour aired plans for yet another nanny-state initiative – fining householders who fail to recycle enough of their rubbish. In contrast, Cameron announced plans to encourage people to save energy simply by telling people what the typical energy usage is in their area. Research shows that high users would reduce their consumption by gravitating towards the norm.

2) Reciprocal Altruism – by which we help others, even strangers, on the expectation that they will help us in return. Finkelstein says this idea makes the argument for strengthening decentralized, local institutions. Although not spelled out specifically, the logic seems to be that It is easier to trust someone like you, even if you don’t know them, in your community, instead of someone 3,000 miles away. It’s also not clear if whether local institutions encompass strong local civil societies, or whether they are more formal political or social structures. Social media and networking sites will be good places to test the strength and validity of within-community relationships. Are strong centralized institutions balanced by strong local civil societies a brave new possibility – or just an unworkable contradiction?

3) Situationism – by which we behave differently given a particular situation. The Solomon Asch experiments on conformity are a nice example of situationism. Individuals of different backgrounds and ages conformed to the group norm in Asch’s experimental set-up.

4) Prospect Theory – by which we value gains differently from losses in our decision making processes. Despite the rich theoretical and empirical tradition established by Daniel Kahneman and Amos Tversky, the powerful ideas in prospect theory have a long, long way to go to be fully integrated into public policy.

5) Cognitive dissonance – by which we bend our perceptions of the present to keep commitments or hold onto ideas from our past. Cognitive dissonance is like a form of rationalization – or a convenient excuse – for a behavior you had planned to do all along. Writing in a separate column, Finkelstein thinks cognitive dissonance is a fact of life for political parties that move from out-of-power to in-power (as the Republican Party did in 1994, or the Labour Party did in 1997). These parties, he says, suddenly advocate for policies they spent years slamming. This is not the blanket rule that Finkelstein implies it is. Republicans did, for example, make an about face on the size of government, which has not shrunk since 1994 despite GOP pledges. But the party continued to push for many of its ideas like tax cuts (successfully) and social security privatization, (unsuccessfully). Finkelstein discounts the likelihood that cognitive dissonance is bounded by ideological conviction.


Follow

Get every new post delivered to your Inbox.

Join 62 other followers