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.

Homeowners are thinking about walking away from their mortgages. Banks are thinking about which homeowners are most likely to walk away.

February 4, 2010

Richard Thaler recently asked why so few people have walked away from their mortgage. Today, the New York Times reported that more homeowners are thinking about it. They aren’t the only ones thinking about it. Banks are trying to figure out who is strategically defaulting.

Sometimes lenders go after borrowers walking away from their homes if they have other assets, according to Florida real estate attorney Larry Tolchinsky.

“Banks are pulling credit reports to see if it’s a strategic default,” he said. “If you’re behind on all your other payments, you’re okay. But if you’re not, they’ll come after you.”

The paradox of choice…now in 2D

February 3, 2010

As Nudge blog readers know well, the paradox of choice is the paralysis that accompanies decision making as the number of available options increases. It’s harder to pick a prescription drug plan when there are 60 plans than when there are four.

Three marketing researchers think there’s more to the paradox of choice than, well, choice. In the paper “Variety, Vice and Virtue: How Assortment Size Influences Option Choice,” they argue that the object consumers are making a decision about matters too. Through five experiments that explore choices involving ice cream and fruit, and MP3 players and printers, they find that increasing the number of available options leads people to choose the more sensible goods–the fruit instead of the ice cream, the printer instead of the MP3 player–because they are easier to justify.

Continue reading the post here.

Sendhil Mullainathan on behavioral economics and the hardest social problems

February 2, 2010

MacArthur winner and Harvard behavioral economist Sendhil Mullainathan talks about a tricky set of social problems — those we know how to solve, but don’t. We know how to reduce child deaths due to diarrhea, how to prevent diabetes-related blindness and how to implement solar-cell technology … yet somehow, we don’t or can’t. Why?

Assorted links

February 1, 2010

1) Richard Thaler and George Osborne in the Guardian. U.K. pilot recycling programs to replace fines with rewards are showing results.

2) A new study finds calorie labeling for a hypothetical McDonald’s meal reduces calorie consumption. One key difference from past studies: People aren’t ordering meals for themselves. Parents are ordering meals for their children. Hat tip: Patti Hunter.

3) Crayola’s law says that the number of Crayola colors doubles every 28 years. How much faster do children who color with the original box of crayons finish compared to those with the mega 120-color box? Hat tip: Christopher Daggett.

4) A web-based version of Dustin Hoffman’s mason jars. Hat tip: Elliot Crosby-McCullough.

Zoom-Shroom in the Mazda 5

January 27, 2010

Yale economist Dean Karlan reports on a nudge gone bad in the Mazda 5. Its choice architecture turned out to have serious consequences during a recent trip out west. Beware the car’s dashboard.

(The Mazda 5) has sensors to know whether it is dark out, to turn the lights on. But here is the kicker: it only turns the dashboard lights on, not the headlights! So my subconscious thought the headlights were on, and I didn’t turn them on. Until a cop pulled me over. And then said we fit his “profile”: one way rental from Phoenix to Tucson, 14k miles on the rental, licenses from the east, and two of us from different places which he says is an indication that we don’t know each other (I was with JZinman, and he didn’t seem to get it when I told him that if he doubts we know each other, he can google me and get the suggestion “karlan and zinman”). We didn’t even tell him we were daytripping to Nogales, Mexico, that clearly would have been the kicker. We just told him Tucson. Next step? K-9 unit arrives after 20 minutes (all this at 2 a.m.).

Here is the funny part: the dog found something! Clearly our rental car was recently used for a drug run. The dog was going nuts. But only residue, they never found anything. Took an hour for the cops to let us go. But then when we pulled out, I did remember to turn my headlights on despite the dashboard lights already being on.

Is “trash” keeping us from recycling?

January 26, 2010

Reader Jason Bade writes in with a comment about the power of labels on decision making about recycling.

Oftentimes, we are given two options when it comes to disposing of our refuse: “Recycle” and “Trash.” When one approaches a recycling receptacle, one is confronted by a set of rules that are rather easy to break, even if by accident (for example, I can recycle a plastic milk bottle, but not a plastic soap bottle). Because we, as humans, are lazy, we tend toward the option that carries with it no burden of rules–no risk of being wrong. There are no rules to throwing stuff in the trash, so it is the naturally appealing option. How, then, can we change this choice architecture to eliminate (or at least equalize) the risk of each option?

The reason this situation exists in the first place is that these choices are not mutually exclusive. In theory, aluminum can could be put in either receptacle without breaking any “rules.” Although I am unsure of this empirically, I would venture that a change in garbage can lingo could increase recycling rates, if it were more specific and put the choice in absolute terms. Take the label “trash,” or “garbage,” which implies “everything we don’t want.” If we relabeled garbage cans as “Non-Recyclables” (or the trash cans next to compost bins as “Non-Compostables”), it might make people think a lot harder about what to put in which bins. Recycling bins could still be labeled “Recyclables” but trash bins might also be labeled “Non-Recyclables.” This not only would give every single discardable item only one legitimate destination, but it would also put the decision to recycle on par with throwing it away.

Addendum: Jason is an undergraduate at Stanford who is starting a group called BEAST–-Behavioral Economists at Stanford. BEAST’s purpose, he writes, is “to investigate behavioral problems, implement controlled `nudge’ experiments around campus and in the greater community to remedy them, and then publish the results online and in the greater community for implementation elsewhere.” The group isn’t up and running yet, but if you’re at Stanford and interested in nudging, try and check it out.

Assorted links

January 26, 2010

1) The New Yorker interview with Richard Thaler.

2) London’s mayor wants to start a recycling bank program that gives people shopping vouchers for their recyclables.

3) Another plug this past weekend for the automatic tax return. California says it costs $2.59 to process a paper return, but only 34 cents to process its version of the automatic tax return, ReadyReturn. The makers of Turbo Tax have been trying to end the program, most recently this fall.

4) Calorie postings at Starbucks led to lower calorie consumption by six percent–except around the holidays. Hat tip: Farnam Street.

5) Will Obama mention the automatic IRA in his State of the Union speech Wednesday?

Nudge-friendly transparency by the U.S. government

January 25, 2010

As part of a pledge to democratize data, the White House recently ordered every department to post at least three sets of never-before-disclosed “high-value” data. Everything released will be available on data.gov.

Open government groups are supportive.

“There’s recognition that public equals online,” said Ellen Miller, executive director at Sunlight Foundation, a nonprofit group focusing on the use of technology for greater government transparency.

Miller said the effort represents “a sea change in government’s attitude,” with newfound support for the idea that government data belongs in the hands of citizens instead of locked away in the basement of a federal agency.

Full story here.