Posts Tagged ‘default rules’

Nudging truckers

February 4, 2010

Marc Gunther at the Energy Collective reports on two interesting case studies of greening company truck fleets. The first strategy was to spark friendly competition

When Chris McKenna, who manages a fleet of trucks for Poland Spring, learned that the company’s drivers were racking up as much as 1,400 hours a month of idle time, he saw an opportunity to make a difference. Running truck engines in winter kept the cabs warm — the company is based in Maine — but it cost Poland Spring money and polluted the air.

To see which of the company’s 65 drivers were racking up the most idle time, McKenna ranked them, based on data from onboard computers. “All we did was talk to them about it, and put a list up in the break room,” he told me. “Human nature, no one wants to be at the bottom of the list.” To sweeten the deal, the 10 drivers with the lowest idling time got a gift card for fuel they could use for their own cars.

The results were dramatic. Idle time dropped from 1,400 hours in February 2007 to 1000 hours in February 2008 to just 380 hours in February 2009. Depending on fuel costs, cutting idle time has saved the company thousands of dollars a year—roughly $20,000 during 2008, for example.

The second strategy was to change the default rule.

I also spoke with fleet managers at Carrier, the global manufacturing firm that’s part of United Technologies, and at health-care firm Novo Nordisk. At all three companies, dedicated fleet managers came up with simple, win-win strategies that saved their companies money and reduced GHG emissions. Carrier took unnecessary parts and tools out of its repair vans, reducing weight. At Novo Nordisk, Donna Bibbo, manager of fleet and travel, made small changes to the list of company cars made available to sales people; those who wanted an SUV or minivan could still get one, but they needed approval from a supervisor. “For the whole year, I don’t think I ordered 25 minivans,” Bibbo says. In past years, she would order 300 to 350.

Assorted links

January 5, 2010

1) A high-tech substitute for the medical checklist.

Hat tip: Jason Bade.

2) Two manhole covers specifically for tourists. We could use these here in Chicago.

Hat tip: Danny Vincent.

3) More on the benefits of a nudge for long-term care insurance. The existing incentives aren’t strong enough to encourage long-term care purchases.

A decade ago, a handful of states—notably California, Connecticut, Indiana and New York—partnered with private insurers in an attempt to encourage people to purchase long-term care policies. As an incentive, these states allowed people to shield assets they might otherwise have to spend down in order to qualify for Medicaid. Since 2005, more than 30 states have taken similar steps.

Yet most observers have been disappointed by the results. “It’s not a model,” Feder says. “Even the most optimistic projections for the numbers of people it might cover over time don’t come remotely close to the coverage we have on health care—and we consider 16 percent uninsured a national disaster.” A 2005 study by the Congressional Research Service found that a majority of people who purchased these policies in California and Connecticut had more than $350,000 in assets—far more than the $55,000 held by the typical 55-year-old whom the program was hoping to reach.

4) The U.K. Natural History Museum has tacked on a voluntary tax-free donation of £1.50 to its £8 ticket price for online orders.

Hat tip: Jill Rutter.

5) Tweetwhatyoueat. Someone is really going to have to do a study on the effectiveness of all these twitter commitment strategies.

6) Don’t try to tackle all your new year’s resolutions at once. Spread them out over the course of the year.

Human routines are stubborn things, which helps explain why 88% of all resolutions end in failure, according to a 2007 survey of over 3,000 people conducted by the British psychologist Richard Wiseman.

Hat tip: Christopher Daggett.

A nudge for long-term care insurance

December 31, 2009

Included in the new health care legislation winding its way through Congress is a proposed government-run long-term care insurance program in which participating companies would automatically enroll their eligible employees. These employees would have the option to opt-out.

Long-term care insurance helps pay for nursing home care or other bills of aging people who need living and medical assistance. With most people saving too little for retirement, they are failing to budget enough for these twilight years expenses.

“No one thinks they need long-term care until two years after they need it,” says Richard Thaler, the other co-author of “Nudge.” ”The theme of our book is we should try to help people make decisions without telling them what they have to do.”

Nudges in action

December 15, 2009

1) Vail Resorts, partnering with the National Forest Foundation, adds $1 to each Vail Resorts season pass or overnight stay at a Vail Resorts property, which guests can ask to have deducted from their total. (Hat tip: Brandon Hough)

2) Whole Foods has a similar donation program called One Dime at a Time where customers can have the 10 cent refund they receive for each renewable bag be given to a local charity. Unlike the more popular opt-in programs, One Dime at a Time operates along a mandated choice paradigm where customers are asked if they’d like to donate their refund to charity. Of course, the social pressure that comes with publicly asking a customer if she would like to keep or give $0.30 on her $50 grocery bill to a local and worthy cause probably plays a role in encouraging donations.

3) Target turns the self-service checkout register into a game in order to encourage faster scanning by its customers. (Hat tip: Inge Kuijper)

4) In order to see the top free apps at Apple’s App Store, you have to see the top paid apps too.

5) The Australian mobile phone company Optus charges customers who want paper bills and doesn’t provide a direct link to the electronic bill in the monthly billing email it sends customers. Instead, customers have to navigate through a series of ads promoting Optus services to reach their bill. (Hat tips for 4 and 5: Jeromy Anglim)

Why aren’t dual flush valves the default choice in public bathrooms?

December 10, 2009

Tom Vanderbilt sends along this photo from a Stanford restroom. It’s a simple idea that seems like it should be everywhere.

Fed to banks: “Overdraft protection” isn’t a customer favorite. Change the default rule.

November 13, 2009

The Federal Reserve will prohibit banks from charging overdraft fees on automated teller machines or debit cards, unless a customer has agreed to pay extra charges for exceeding account balances. Financial companies will have to explain overdraft programs and fees, as well as choices available to consumers, the Fed said today in a statement announcing a rule that takes effect next year.

The rule comes after Fed research indicated that consumers don’t like to be automatically enrolled in overdraft protection programs. Of course, most consumers don’t even know they’ve been enrolled until they get hit with a fee after overdrawing their accounts. More at Bloomberg.

(Hat tip: Mort Goldman.)

Addendum: The new default rule won’t apply to old fashioned checks or regularly recurring debits from checking accounts. As more and more people pay their cable, phone, and utility bills automatically and electronically, a new round of debate about the default rule may still be ahead.

A nudge at the Patent and Trademark Office

October 30, 2009

Of interest to lawyers, the PTO has switched the default procedure with respect to the handling of what are called Requests for Continued Examination, which are essentially appeals to the patent board to keep considering an application. Dennis Crouch of the Patently-O blog reports on this change:

In the past, one benefit of RCEs was that they were quickly examined as part of the theory of compact-prosecution – in essence, RCE filings were treated almost just like an office action response. Under a new procedure, the PTO will now be placing RCE applications in the same queue as divisional and continuation applications. Although that category is identified as “special new,” cases are typically taken-up more slowly than ones already on the docket and in-prosecution. According to a memo from Director Kappos, “The change to the docketing of requests for continued examination means that examiners are no longer required to act on a request for continued examination within two months of the entry of the request for continued examination on their docket. This change to the docketing of requests for continued examination is being made to allow examiners greater flexibility in managing their workload and allocating their time among requests for continued examination and new applications.”

Switching the default rule to save state parks in Washington

October 21, 2009

Faced with a budget crunch and the possible closing of some state parks, Washington state legislators have switched the default rule on state park fees that drivers pay when they renew their license plates. Previously, paying the $5 fee had been an option for drivers. The state switched to an opt-out arrangement where drivers are charged the fee unless they ask not to pay it. For transparency, the state provides information to each driver explaining the reason behind the change. So far, the move has worked.

September’s $1.4 million total includes donations from people who paid their license tab fees early – in July and August – and from others who donated money using avenues other than the license-tab fee program. Some people are donating more than $5, Painter said, adding that “one person wrote a note saying that she was donating $50 to help make up for the people who don’t donate.”

The Olympian editorial board thinks the move is good for tough economic times, but isn’t sure it’s a long-term solution for the state park budget.

Hat tip: Jeff and Pam Marti

Consumer purchase battle over defaults

September 30, 2009

Barry Ritholtz takes note of an ongoing battle between retailers and credit card companies over the processing fee that credit card companies take from retailers with each consumer purchase.

An increasing number of stores have changed their default card settings to “Debit” from “Credit.”

I first noticed this during a visit to Target. I swiped my bank debit card — also a Visa — thru the machine. Sometime ago, the default setting was Credit, but now it seems the default setting was Debit.

So too is the default setting at the Supermarket. If you wanted cash back, you previously had to select Debit, than punch in a dollar amount. Now, the default is debit, and you are automatically asked if you want cash back (some consumer groups advocate sticking with credit over debit).

Addendum: @ Jon. Hilarious.

Addendum Too: Reader David Glenn passes this observation along: “Lately the price of gasoline advertised along I-95 in the northeastern U.S. can be a low (for here) $1.64. But when you pull up to the tank, the default price is a cash only price. The credit card price might be $1.79 or higher for regular. The default option has switched from credit to cash, but the advertised price has not kept up!”


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