A parent’s nudge for her daughter’s study habits

Reader Dawn Jacksland has created a nudge to make sure her daughter does her homework.

In order to help our teenage daughter remember to do homework before computer time, we add a login to her password login. It asks her first if she has finished her homework and if the answer is yes then she can get to her password login. Simple. Easy. Effective. By having to answer yes or no she is thinking about it every time she wants to use the computer. Many times we have seen her stop and head to her desk. She had forgotten some work that she needed to do.

What would the Nudge cafeteria look like?

Some readers who have liked the cafeteria metaphor at the beginning of Nudge, have wondered what an actual Nudge cafeteria would look like. Here are a few possibilities:

1) Tables for two. People tend to eat more in groups than when they are alone because they mimic the eating habits of others. But there is some evidence that the amount of food someone consumes is a linear function of the number of people sitting with them.

2) A discount for calling in your order from upstairs (or wherever your office happens to be). Calling in your order serves as a commitment strategy for eating healthy, rather than being tempted by the french fries or the cookies as you try to find the salad bar. The discount would simply be added as a traditional incentive to entice more people to take advantage of it. To limit impulse checkout purchases, pick-up would probably have to be at a separate window.

3) Brighter lights. Environmental factors of all kinds like noise, smells, temperature, and lighting are known to affect food consumption. Brighter lights limits limit the length of time people spend at a meal, but they are superior (in terms of discomfort) to alternatives like foul odors or loud music. People might be more likely to take their food back to their desk, which might even increase their daily productivity.

4) Keep the popular desserts, lose the unpopular ones. One of behavioral economists’ favorite violations of classical economic theory is how a choice between A and B if affected by the introduction of alternative C. Classical economists say C, whether it is there or not, shouldn’t matter when someone chooses between A and B. This frequently seems not to be the case. The more enticing unhealthy alternatives there are at the dessert bar competing with hot and cold lunch items, the lower the value of the salad compared to the burger, thus making the healthy decision less likely. So as not to incite too many charges of heavy-handed paternalism, only the least popular desserts would be removed from the menu. It is hard to know whether the unpopular items were flatly unappetizing or just unappetizing compared to other desserts. To help find out, dessert policy would be open to continuous revision through good feedback loops.

The wisdom of crowds isn’t working very well for this wikipedia entry

Last summer, June 10 to be exact, a Slate writer published a piece about the fallacy of an economic theory called the wealth effect, which essentially states that when people are objectively wealthier, or subjectively think or feel wealthier, their spending rises.

In the behavioral economics setting, the wealth effect has come up prominently in the famous mug trading experiments supporting the endowment effect. Some economists initially worried that the experiment’s results were driven by a wealth effect in which those given mugs were wealthier than those without mugs leading them to value mugs more than money. But back to the point about crowd wisdom.

Zubin Jelveh wrote a response to the Slate piece, linking to statistics and papers showing some evidence of the wealth effect during the past housing boom. At the time, he noted that wikipedia’s entry on the wealth effect contained only one reference citation on the subject – to the Slate article debunking it! – and pleaded, “Wisdom of crowds don’t fail us now.” Seven months later, not much has changed. Jelveh’s piece is now listed at the very bottom of the page, under external links, not references. In the entry itself, the only sentences about the theory’s validity claim “it is not observable in economic data,” before going on to cite some points from the Slate piece. 

A financial psychologist’s version of the 80/20 rule

Nudge readers know all about the two-sides of the human brain theory, System 1 the intuitive side prone to making snap decisions based on emotions and heuristics, and System 2, which relies on slow, cool logic. How many of our decisions each side is responsible for may not be knowable, but a financial psychologist named Brad Klontz is willing to make an estimate.

“It’s a scary time,” Mr. Klontz said. “The emotional part of the brain makes 80 percent of the decisions, and when it really gets activated, it shuts off rational decision-making. It’s lemmings going over a cliff.”

Monkeys behaving fairly

A clip from the BBC documentary about the famously honorable capuchins has popped up on youtube.

Hat tip: The Situationist.

Nudges abound

Over the last few days, lots of links and brief observations have poured into the blog. Some highlights are below.

Parking: Paul Sweeney observes that the parking spaces in Florence are the size of a smart car, making them unwelcome to hulking sedans and trucks. (Of course the streets are much narrower too!) If cities want to reduce driving in their urban cores, why not paint the parking space lines closer together?

Alarm clocks: Who knew all the ways these would turn out to be nudges? First, there was the alarm clock that hides under the bed when it goes off; then there was the alarm clock that donates to an organization you despite each time you hit the snooze button; now there is the alarm clock that won’t stop buzzing until you do thirty reps with it. It’s shaped like a dumbbell. Maybe it will one day come in different weights. (Hat tip: Adora Tsang)

Spending: We’re not sure nudging spending by anyone carrying around massive credit card debt should be a government policy goal, but Dan Newman thinks federal tax cuts/rebates/refunds – pick your favorite description – should come as debit cards ($2,000, he says) instead of checks. That way, none of it could be socked away in a bank. The Obama administration has considered this idea, but thinks it is not yet logistically feasible. It was tried after Katrina, but getting cards out to tens of thousands in a few cities is much different than getting them to tens of millions in cities everywhere.

Vending machines: The University of Virginia has created a vending machine that uses the traffic light system to label various food options. The machine still sells junk food like chips and soda, but it adds a 5-cent surcharge for each one, which is donated to a children’s fitness clinic. The University’s provost told Governing magazine that year-to-year sales of green light items increased by more than 16 percent, while red light items fell by 5 percent. Apparently the clinic got the proceeds, $7,000, in nickels.

Star Trek: Ok, so this one isn’t a nudge. We weren’t the only ones who drew a link between Econs and Vulcans. So did Princeton political economy professor Uwe Reinhardt, who calls traditional economics Spockonomics.

Robert Shiller’s lecture on behavioral finance

Robert Shiller, who has organized a behavioral finance workshop with Richard Thaler since 1991, lectures on the subject in his Financial Markets class. Runs about an hour.

Should the U.S. government create a default rule that cuts down on the amount of ink used in printing? It already has.

A company called SPRANQ is promoting a free ecofont that it says reduces the amount ink used for a given word by as much as 20 percent. The font, which saves ink by stamping holes in each letter, is not aesthetically pleasing, making it better suited for internal documents. Who needs a draft print-out to look polished, anyway? Perhaps the U.S. government could adopt this as the default font for certain memos and documents?

If adopted, it wouldn’t be the first time the government set a default rule for printing that saves ink. In 1994, Congress passed the Vegetable Ink Printing Act, requiring government printers (and private printers hired through federal contracts) to use vegetable-based inks, which are primarily soy-based these days. The fine print on how much vegetable ink to use in different kinds of printed products, and when exceptions can be made is in the U.S. Code. (For example, for “news ink,” the minimum requirement is 40 percent vegetable ink.)

One of the arguments for the change was that a gallon of vegetable ink was more efficient than a gallon of the old stuff. Coincidentally, documents published with it were said to use as much as 20 percent less ink than petroleum ink.

The initial cost of the vegetable ink is higher, (the premium is 33 percent; 60 cents/pound versus 80/pound according to this report), but proponents say there is an overall net savings because of the costs of clean-up, disposal, and amount of paper waste produced during a press run are lower with vegetable ink. Besides, the cost of ink is a minor bit compared to the costs of printing labor and equipment. Either way, the ink is much more environmentally friendly than petroleum ink.

The head of printing at the U.S. Geological Service put the benefit this way: “So ‘yes’, soy ink makes us compliant with the Vegetable Printing Act as well as (Environmental Protection Agency) and (Occupational Safety and Health Administration) regulations. It’s also technically superior and more efficient, but the bottom line is that we produce a better map.”

Just how did this default rule come about? This being the work of Congress, the decision was imbued with political nudging. The American Soybean Association is happy to take credit, claiming in an annual report that it, along with state soybean organizations, “successfully lobb(ied) Congress” to pass the bill. If this 1994 hearing before a subcommittee of the House Committee on Government Operations is any indication, it wasn’t tough sledding. The Government Printing Office had no objections, and pretty much everyone else on the witness list either represented soybean growers or represented a state with soybean growers. The oil-based ink folks were left out. Ultimately, the bill passed on a voice vote in the House and Senate.

What kind of an effect did a change in the default rule have?

In 1992, two years before the Act passed, the federal government’s consumption of vegetable ink, both in-house and via private printer, was less than 400,000 pounds, out of a total of about 2.4 million pounds of ink. At the time, for technological reasons, many government printing presses were unable to handle vegetable ink, the bulk of which was from flax oil, not soy beans, then.

In 1995, the year after the Act passed, 169,000 pounds of vegetable inks were used for in-house printing, while 2 million more pounds were used by private contractor printers. Assuming, that the amount of materials printed in both years was approximately the same, which is reasonable, that’s quite an achievement for such a simple switch.

Richard Thaler on the future of saving in America

Question: Should we become a nation of savers like Japan where the savings rate has been consistently over 10 percent in the last few decades, hitting a high of 18 percent in 1981. (It is dropping now.)

Thaler: “I think the most we can hope for is that we become less a nation of debtors.  The national savings rate for the last few years has been essentially zero. In December it jumped to 2 or 3 percent. This is not Japan…I think we are going to see a period of a few years of retrenchment in consumer spending and that may prolong this recession…But that is necessary. We can’t sustain an economy where we spend $102 out of every $100 we make.”

Question: Do periods of economic crisis lead to permanent behavioral changes?

Thaler: “If you look at the data say in 1980, people who were going into retirement at that time had no mortgage debt to speak of. People would take out a mortgage and they would pay it off. And certainly in my parents generation, paying off the mortgage was one of the big goals in life. That seems to have completed vanished in the last 20 years. You see people in their sixties taking out new 30-year mortgages. So I think we do need to establish a new, or old if you will, set of norms where people do strive to pay off their mortgages before they retire so at least they have their home equity to help finance their retirement.”

Full interview on Day to Day.