Archive for January, 2009

Slang for “choice architect”

January 30, 2009

Courtesy of Philip Frankenfeld. Add your own…

1. Nudgeletarians
2. Noodges
3. Noodgeniks
4. Vectordictorians
5. Chess Theorists
6. Suasarians (Moral suasion)
7. Carrot and Stickleteers
8. Homo Vectoris
9. Boxitects
10. Funnelists (akin to finalists)
11. Carrotodomists
12. LibPats (libertarian paternalists)
13. SofPats
14. ComPats
15. Gridologists
16. Matrix d’s

Can high art tell us something about procrastination?

January 30, 2009

Does thinking about big abstract concepts – instead of little concrete facts – lead to procrastination? Psyblog writes about a series of new studies on this question. From one study:

Participants were presented with one of the two pictures below just before they were asked to complete a simple survey. In the first experimental condition participants looked at the full painting of (pointillist Georges-Pierre Seurat’s) La Parade and were told it is a good example of neo-impressionism in which the artist was using order and colour to invoke emotion and harmony.

In the second condition participants just saw (part of) the detail and were told that this demonstrated the pointillist technique of using contrasting points of colour to build up an image.

After this both groups completed the same survey which they were asked to return within three weeks. The survey’s question, however, were essentially irrelevant, the only thing experimenters were interested in was how long participants took to complete and return the questionnaire. This was their measure of procrastination.

The results of this apparently simple manipulation were striking. Those who were thinking about the techniques of pointillism (concrete construal) returned their questionnaires in an average of 12.5 days while those thinking about emotion and harmony (abstract construal) took almost twice as long at an average of 20.5 days.

Reader Jeff Zemla thinks there’s a lesson in here for choice architects trying to design procedures to avoid procrastination. Keep the nudgee’s focus narrow. At least, when you put up a post-it note reminder to workout, it’s better to say, “Burn 500 calories today,” instead of, “Imagine how good you’ll look in that new outfit.”

Addendum: Is daydreaming just an exercise in “abstract construal”? Readers who want to see what La Parade looks like can go here.

Revisiting a behavioral economics classic: Why do people hold on to losing stocks?

January 29, 2009

Tyler Cowen poses the following question about stocks, and what he says used to be the conventional behavioral economics answer.

Let’s say you bought two stocks last year. One has tanked and looks likely to fall further. One has gone up and you expect it to keep rising. (Hey, it’s not completely impossible.) Which are you more apt to sell?

Behavioral economists used to think they knew the answer: neither. Studies have shown that people tend to value things more – whether shirts, stereos or stocks – once they own them, no matter what has happened to their actual worth. This phenomenon is called the endowment effect. If it were the only psychological factor at work, you’d be reluctant to sell both losers and winners simply because they’re already tucked into your portfolio.

Cowen’s story is incomplete, and therefore unfair, even to old behavioral economists. In the scenario Cowen describes, two biases, each reinforcing the other, would be in effect: The endowment effect and loss aversion. The endowment effects for both stocks (assuming you bought them at the same price) would cancel each other out, but this would not necessarily mean investor paralysis. For more than twenty years, behavioral economists have been citing something called the disposition effect, which is an implication of prospect theory and the component of loss aversion). The status quo purchase price serves a reference point. Gains and losses are perceived relative to some other aspirational level different from the status quo – say, what you thought the stock would rise to. As the winner is closer to this aspiration, you, as the investor, become more risk-averse and therefore more likely to sell it, while holding on to the loser in the hopes of a roaring comeback, even one with a small probability.

But this isn’t the only explanation for identical behavior. An alternative is a commonly mistaken belief among average investors that stocks will revert to their mean. Stocks that have risen will fall; stocks that have fallen will rise. This story also predicts the selling of winners on the expectation that it will fall. Yes, Cowen’s scenarios says you, the ordinary investor, would expect the winning stock to keep rising. Old behavioral economics says you’d be quite extraordinary for believing this. Both of these potential explanations are laid out in Terrance Odean’s classic paper “Are Investors Reluctant to Realize Their Losses?” His data does allow him to distinguish which of the two stories makes more sense.

Addendum: Cowen’s column is actually an appreciation of a paper by Nicholas C. Barberis and Wei Xiong with yet another explanation for why investors sell winners and hold onto losers: That it’s the pleasure of actual (or what stock traders would called realized) gains – the good feeling you get from making a seemingly smart decision – and the pain of actual losses that leads to selling winners. Read the full paper.

Recycling bins work better when they have holes in them

January 29, 2009

34 percent better says Rutgers psychology professor Sean Duffy. Why?

We have several speculations. First, people generally discard waste while in the process of doing something else, like talking on the phone. Perhaps the little hole increases the salience of the bin, the visual equivalent of screaming, “Yo! I’m a recycling bin.” Or maybe there’s something fun and childlike about dropping an object through a tiny hole. Why it works is unclear, but the important thing is that it works; and if you are designing or purchasing new recycling bins, I suggest that if you don’t like picking through trash, buy the one with the little hole.

Hat tip: Monica Hamburg.

What choice architects can learn from a new medical checklist

January 28, 2009

A new study on another medical checklist is out, this one conducted on noncardiac surgery in eight hospitals in eight cities around the world to ensure a diverse range of clients. As with the now-famous previous checklist – call it Checklist I – this one produced decreases in death and infection rates. What is most interesting about this checklist – call it Checklist II – is that is undercuts one of the supposed insights of Checklist I, namely that shorter was better.

Checklist II is long. Very long. Totaling 19 items. (Recall that Checklist I uses only six.) Does this mean checklist designers need not worry about keeping the number of items to remember to a minimum? Though it would tempting to draw this conclusion, it would be as foolhardy as pronouncing the absolute virtues of brevity based solely on the findings from Checklist I. What is more likely is that checklist length matters less than the overall environment in which each step is taken; the mechanisms in place for enforcing each step are what matter most. This enforcement is all the more necessary since human memory is not reliable enough to count on recalling every step. Indeed, the authors of the Checklist II study point out that, in spite of the medical improvements, “omission of individual steps was still frequent.”

Designers of Checklist II broke the 19 steps into three subcategories, administering the steps at different points in the surgical process. The number of steps and points of administration make the identification of key steps difficult. But the authors explain the overall choice architecture this way:

Use of the checklist involved both changes in systems and changes in the behavior of individual surgical teams. To implement the checklist, all sites had to introduce a formal pause in care during surgery for preoperative team introductions and briefings and postoperative debriefings, team practices that have previously been shown to be associated with improved safety processes and attitudes and with a rate of complications and death reduced by as much as 80%. The philosophy of ensuring the correct identity of the patient and site through preoperative site marking, oral confirmation in the operating room, and other measures proved to be new to most of the study hospitals.

After devising the steps, determining the appropriate points in the surgical process to implement them was the key challenge. For example, the designers encouraged administering antibiotics in operating rooms instead of preoperative wards, “where delays are frequent.”

The paper’s authors are unsettled about the potential of a Hawthorne effect – in which an improvement in performance is the result of doctors’ knowledge of being observed – in the overall results. At the risk of carelessness, for now, this concern is perhaps best left to the academics. Building in an observant whose presence leads to changes in behavior is a perfectly acceptable option for someone who is not so worried about the exact contribution of each casual mechanism. As social scientists know, even trying to isolate the effect of observation can be futile, for in some cases observation is one way to enforce particular social norms, making the combination of the two what influences behavioral change. So while the Hawthorne effect has confounded social scientists for years, everyday choice architects may need not worry so much. After all, the Hawthorne effect itself is just another nudge.

A little healthy parental competition can lead to healthier kids

January 27, 2009

The contest to devise medical nudges is going well over at the Changemakers site. Already, 13 nudges from four different countries have been submitted. The Changemakers staff has come across an interesting nudge in India that has turned into a successful rural health program. Special recognition to Paul Ryder for tracking down and writing up the details.

Nudge Case Study: Engaging Fathers in Their Children’s Health

A nudge as simple and elegant as posting individual health statistics for a village’s children on a health clinic door can go a long way toward eliminating the three leading causes of infant mortality in a developing world village: chronic starvation, diarrhea and respiratory infections. To the surprise of many, this doesn’t always require highly trained doctors or drugs.

By tapping the natural competitive instincts of fathers, Drs. Raj and Mabelle Arole designed a nudge that persuades both parents from families representing every caste background in a village to get actively involved in measures that ensure the healthy development of their children.

Continue reading the post here.

A reader spots a convenience store nudge

January 26, 2009

Paul Sweeney writes in about a retail store sales manager:

A friend of mine stopped selling lighters and only stocked matches. When asked why he said, “It stops the riff raff from coming in,” which of course means less need to stock low, low cost beers in the front of shop, opening up new stock, and increasing the safety in the shop.

Assorted links

January 26, 2009

1) Pepsi is calculating the carbon footprints of popular food products like Tropicana orange juice, Quaker granola bars, and Pepsi cola. No plans yet to put those footprints on its boxes, a la Sapporo.

2) More on credit cards. Companies will change interest rates depending on where you shop. They call it behavioral financing. The minimum payment acts as an anchor, but companies don’t want to anchor you on such a low number that you pile up so much interest that you go bankrupt. They want to push your debt load right up to the penultimate straw that breaks the camel’s back. Ahem, yours.

3) A Council of Economic Advisers? How about a Council of Psychological Advisers, says one psychologist.

4) A German group adapts the fly-in-the-urinal idea to Bulimia. Reducing it, that is. Hat tip: John Hsu.

Econs on Star Trek? Absolutely! They’re called Vulcans.

January 23, 2009

Some faithful readers of the Nudge blog have pointed out that Econs may not exist on Planet Earth, but they are part of the Star Trek universe, specifically on the Planet Vulcan.

In the classic Star Trek episode “Journey to Babel,” the half-Human, half-Vulcan Spock is joined by his Human mother Amanda and his Vulcan father Sarek. A side plot in the episode involves Spock donating blood to save his ill father. At the end, following an exasperated plea by Amanda to be more Human, Spock and his father lightly mock her emotion and their rationality.

Spock: Emotional, isn’t she?
Sarek: She has always been that way.
Spock: Indeed – why did you marry her?
Sarek: At the time, it seemed the logical thing to do.

We can’t embed the video because it is controlled by Viacom on YouTube, but you can watch the scene directly on the site. Fast forward to 47:57. (You’ll have to wait through an advertisement at the beginning of the epsiode – but it’s worth it.)


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