Consumer purchase battle over defaults

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!”

Urnial flies aren’t just for grown-up guys

Julie Power, a Nudge blog reader with 7-year-old twins, knows that boys can be even messier than men. As she points out, “Most moms know nagging kids only backfires. They end up deaf to everything. And harassing boys about peeing straight is a losing battle.” Inspired by reading Nudge in her book club, Julie set out to adapt the urinal fly lesson to her home. She writes about the mission in the blog Moms to Work.

I wrote AIM in big red sharpie on the wall of the toilet bowl…in a spot cannily designed not to splash the seat or rim above.

It worked. The smell and odor has improved.

Spillage, not the word we use at home, has decreased markedly.

Only problem, my Sharpie pen keeps washing off. Next time, I’m going to try putting a sticker on the back of the toilet.

Richard Thaler on organ donation

Richard Thaler writes about opt-in vs. opt-out vs. mandated choice organ donation policies in this week’s Economic View column. Illinois follows a mandated choice policy.

Here is how it works: When you go to renew your driver’s license and update your photograph, you are required to answer this question: “Do you wish to be an organ donor?” The state now has a 60 percent donor signup rate, according to Donate Life Illinois, a coalition of agencies. That is much higher than the national rate of 38 percent reported by Donate Life America

The Illinois system has another advantage. There can be legal conflicts over whether registering intent is enough to qualify you as an organ donor or whether a doctor must still ask your family’s permission. In France, for example, although there is technically a presumed-consent law, in practice doctors still seek relatives’ approval. In Illinois, the First-Person Consent Law, which created this system, makes one’s wishes to be a donor legally binding. Thus, mandated choice may achieve a higher rate of donations than presumed consent, and avoid upsetting those who object to presumed consent for whatever reasons. This is a winning combination.

Assorted links

1) Has a Nudge blog reader ever used gmail’s “undo send” option? It’s a five second cooling off period after sending an email. Better act fast. (Hat tip: Adam Singer)

2) A former judge wants to see more ignition-interlock devices. (Hat tip: Devorah Segal)

3) What does the status quo bias have to do with Keeping Up with the Joneses? Hint: One man continued to get up and go to work after he got laid off. (Hat tip: Free Exchange)

4) The IMF profiles Daniel Kahneman, who recounts this fascinating story: (Hat tip: Amol Agrawal)

An early event in Nazi-occupied Paris that he remembers vividly left a lasting impression because of varied shades of meaning and implications about human nature. “It must have been late 1941 or early 1942. Jews were required to wear the Star of David and to obey a 6 p.m. curfew. I had gone to play with a Christian friend and had stayed too late. I turned my brown sweater inside out to walk the few blocks home. As I was walking down an empty street, I saw a German soldier approaching. He was wearing the black uniform that I had been told to fear more than others—the one worn by specially recruited SS soldiers. As I came closer to him, trying to walk fast, I noticed that he was looking at me intently. Then he beckoned me over, picked me up, and hugged me. I was terrified that he would notice the star inside my sweater. He was speaking to me with great emotion, in German. When he put me down, he opened his wallet, showed me a picture of a boy, and gave me some money. I went home more certain than ever that my mother was right: people were endlessly complicated and interesting.”

Nudge grants in action: Social norms and cutting carbon

Long time Nudge blog readers may remember the London borough of Barnet, which received money last year for nudge grants. One of those grants went toward a pilot project that taps into social norms to reduce residents’ carbon footprints by asking them to walk more, lower the heat, and take other simple steps that can protect the planet.

A traditional persuasive strategy would be based on stressing how this could benefit the environment. But the council is going further in testing out techniques of influence.

The residents are asked to make pledges in a face-to-face conversation with one of the canvassers who have been going door-to-door in this area.

They are only asked to make some limited pledges – to choose three out of nine options on the pledge card they are shown.

And posters on lampposts proclaim the number of households in that street who have agreed to participate.

The BBC just produced a 38-minute program, Persuading Us to Be Good, about this project and other nudge friendly ideas in the U.K. (Richard Thaler is featured in the program.) As Barnet Council leader Mike Freer says, “We’ve got to stop nagging. If nagging worked we’d all be skinny, we’d all be recycling and we’d all be walking to work.” Listen to it here.

By a show of gum

Tired of residents spitting out chewing gum on the street, the city of Luton, England, came up with a way to hasten clean-up and give people an opportunity to voice their opinions on some of the city’s most important questions. Well, the most entertaining questions, anyway.

The Gum Target does not seem to be in use anymore. Could your city use one?

Hat tip: Mark Harrison

The National University of Singapore nudges

Marcus Tay Guan Hock, Sustainability Executive at the National University of Singapore, writes in to say that Nudge “gives me hope as an environmentalist,” and explains how the school used principles of choice architecture to redesign its recycling program.

Here at the National University of Singapore (NUS), we designed our recycling bins to tackle the issue of contamination, applying what you called “Expect Error” from users.

When users throw the wrong things in the recycling bins, it wastes the efforts of those who recycled properly. For example, paper bins are often contaminated with food waste, rendering all of the paper unrecyclable.

This situation is rather serious in Singapore. A Straits Times Article on June 15, “What rubbish,” indicates non-recyclable waste found in all 80 recycling bins surveyed.

At NUS, we did the following two things. They have worked wonders.

At the point of disposal, we help people decide if the item can be recycled using proper and clear labels. These labels are designed so that before users can throw trash into the bin, they will see the labels which instruct them what can and cannot be thrown.

We give people an option not to throw garbage into the recycling bin if the garbage cannot be recycled by pairing every set of recycling bins with a trash bin as well. Because some people are not yet environmentally conscious, they just want to get rid of the rubbish in their hands, whether it can be recycled or not.

Latest urinal fly sighting – Santa Monica, California

At a public restroom along the ocean. Actually, it’s a bee.

Obama proposes savings nudges

In case you missed them over the weekend, the Obama administration announced ideas designed to boost saving by Americans. Readers were all over this story from the start (kindly sending the Nudge blog e-alerts). Nudgers will recognized many of the ideas, such as automatic enrollment in 401k plans, tax refunds in the form of U.S. Savings Bonds, and easy ways to move money earned through overtime and extra vacation days into retirement accounts. Read the full piece here.