Framing and Nudges

Framing and Nudges

“Framing works because people tend to be somewhat mindless, passive decision makers,” write Cass Sunstein and Richard Thaler in their book Nudge. “Their Reflective System does not do the work that would be required to check and see whether reframing the question would produce a different answer.”

 

Framing is an important rhetorical tool. We can frame things as gains or losses, reference numbers as percentages or as whole numbers, and compare phenomena to small classes or to larger populations. Framing can include elements of good or evil, morality or sin, responsibility toward ones family or individual greed. Depending on what we want people to do or how we want them to behave, we can adjust the way we frame a situation or decision to influence people in certain ways. Framing is not a 100% effective way to make people do what we want, but it can be a helpful way to nudge people toward certain decisions.

 

Sunstein and Thaler present an example of using framing to nudge people to conserve energy. They write,

 

“Energy conservation is now receiving a lot of attention, so consider the following information campaigns: (a) If you use energy conservation methods, you will save $350 per year; (b) If you do not use energy conservation methods, you will lose $350 per year. It turns out that information campaign (b), framed in terms of losses, is far more effective than information campaign (a). If the government wants to encourage energy conservation, option (b) is a stronger nudge.”

 

It is not the case that everyone who sees a message touting the money saved by conserving energy will do nothing while everyone who sees a message about the money they lose will take action. Some people will be motivated to take action by the message to save $350 per year, and some people won’t be motivated by the $350 loss aversion. However, on average, more people with the loss averse message will decide to take action. People tend to feel losses to a greater extent then they seek gains, so framing energy conservation methods as preventing a loss will motivate more people than framing energy conservation methods as leading to a gain.

 

This small shift in framing alters the perspective of buying energy efficient light bulbs or resealing windows from costly investments to practical strategies for avoiding further losses. Framing in this example is a simple nudge that isn’t a form of mind control, but plays into existing human biases and encourages people to make decisions that are better for them individually and for society collectively. I would argue that framing is a necessary and unavoidable choice. Messages are necessarily context dependent, and trying not to include any particular framing can make a message useless – at that point you might as well not have a message at all. Given that framing is necessary and that there are preferable outcomes, choice architects should think about framing and employ frames in a way to encourage the best possible decisions for the most people possible.
Nudges for Unrealistic Optimism

Nudges for Unrealistic Optimism

Our society makes fun of the unrealistic optimist all the time, but the reality is that most of us are unreasonably optimistic in many aspects of our life. We might not all believe that we are going to receive a financial windfall this month, that our favorite sports team will go from losing almost all their games last year to the championship this year, or that everyone in our family will suddenly be happy, but we still manage to be more optimistic about most things than is reasonable.

 

Most people believe they are better than average drivers, even though by definition half the people in a population must be above and half the people below average. Most of us probably think we will get a promotion or raise sometime sooner rather than later, and most of us probably think we will live to be 100 and won’t get cancer, go bald, or be in a serious car crash (after all, we are all above average drivers right?).

 

Our overconfidence is often necessary for daily life. If you are in sales, you need to be unrealistically optimistic that you are going to get a big sale, or you won’t continue to pick up the phone for cold calls. We would all prefer the surgeon who is more on the overconfident side than the surgeon who doubts their ability and asks us if we finalized our will before going into the operating room. And even just for going to the store, doing a favor for a neighbor, or paying for sports tickets, overconfidence is a feature, not a bug, of our thinking. But still, there are times where overconfidence can be a problem.

 

2020 is an excellent example. If we all think I’m not going to catch COVID, then we are less likely to take precautions and are more likely to actually catch the disease. This is where helpful nudges can come into play.

 

In Nudge, Cass Sunstein and Richard Thaler write, “If people are running risks because of unrealistic optimism, they might be able to benefit from a nudge. In fact, we have already mentioned one possibility: if people are reminded of a bad event, they may not continue to be so optimistic.”

 

Reminding people of others who have caught COVID might help encourage people to take appropriate safety precautions. Reminding a person trying to trade stocks of previous poor decisions might encourage them to make better investment choices then trying their hand at day trading. A quick pop-up from a website blocker might encourage someone not to risk checking social media while they are supposed to be working, saving them from the one time their supervisor walks by while they are scrolling through someone’s profile. Overconfidence may be necessary for us, but it can lead to risky behavior and can have serious downfalls. If slight nudges can help push people away from catastrophic consequences from unrealistic optimism, then they should be employed.
Nudges Are Unavoidable - Joe Abittan

Nudges Are Unavoidable

American capitalism makes a mistake in assuming that people have all the information they need to make a rational choice. As anyone who has ever purchased a car knows, consumers do not always have all the valuable information they need to make a good decision in an exchange, and often, one party has far more information than another. We can become experts at selecting avocados pretty easily, but it is fairly unlikely that we will become experts at selecting the best used car. We become avocado experts because we can buy them weekly and get reliable and immediate feedback when we get home and cut into them. A used car, however, is not something we buy on a regular basis, and we might make it months or years before we have a catastrophic break down.

 

Because we are not experts in everything and because there are some decisions we have to make where we don’t get reliable and timely feedback and can’t practice enough to truly know what to look for, we are subject to forces large and small that influence our decision-making. Buying a used car because you like the sales person, because the price feels right, and because of brand loyalty are examples of cognitive errors or biases where subtle nudges by the dealership or brand can influence us. Whether a salesman intends it or not, there are many factors that nudge our behavior, and they can’t be eliminated.

 

In Nudge, Cass Sunstein and Richard Thaler write, “In many situations, some organization or agent must make a choice that will affect the behavior of some other people. There is, in those situations, no way of avoiding nudging in some direction, and whether intended or not, these nudges will affect what people chose.”

 

The car dealership example is a somewhat nefarious and depressing view of nudges. However, the reality of Sunstein and Thaler’s quote can also be a powerful force to help improve people’s lives and not just overcharge them for a lemon. Carfax is a company that helps nudge people in the right direction, by getting them to consider the vehicle’s collision history before making a decision based on how shiny the car looks. Other nudges can be helpful for people, and if we accept that nudges are unavoidable, then we can actively step in to help design decision situations in a way that will allow people to make good decisions. An example I can think of would be visual aids to help people understand how much they can afford for a monthly car payment, mortgage, or rent. Most housing agencies suggest that people shouldn’t spend more than 33% of their monthly income on rent/mortgage. A calculator tool with a green smiley face, and a red frown face could help nudge people away from mortgages or rents that they really can’t afford, helping people make difficult and more reasonable housing decisions. Small actions can help people better understand their decisions and can serve as guides that help people do what is actually in their best interest as they themselves would understand it.
Do People Make the Best Choices?

Do People Make the Best Choices?

My wife works with families with children with disabilities and for several years I worked in the healthcare space. A common idea between our two worlds was that the people being assisted are the experts on their own lives, and they know what is best for them. Parents are the experts for their children and patients are the experts in their health. Even if parents to don’t know all the intervention strategies to help a child with disabilities, and even if patients don’t have an MD from Stanford, they are still the expert in their own lives and what they and their families need.

 

But is this really true? In recent years there has been a bit of a customer service pushback in the world of business, more of a recognition that the customer isn’t always right. Additionally, research from the field of cognitive psychology, like much of the research from Daniel Kahneman’s book Thinking Fast and Slow that I wrote about, demonstrates that people can have huge blind spots in their own lives. People cannot always think rationally, in part because their brains are limited in their capacity to handle lots of information and because their brains can be tempted to take easy shortcuts in decision-making that don’t always take into account the true nature of reality. Add to Kahneman’s research the ideas put forth by Robin Hanson and Kevin Simler in The Elephant in the Brain, where the authors argue that our minds intentionally hide information from ourselves for political and personal advantage, and we can see that individual’s can’t be trusted to always make the best decisions.

 

So while no one else may know a child as well as the child’s parents, and while no one knows your body and health as well as you do, your status as the expert of who you are doesn’t necessarily mean you are in the best position to always make choices and decisions that are in your own best interest. Biases, cognitive errors, and simple self-deception can lead you astray.

 

If you accept that you as an individual, and everyone else individually, cannot be trusted to always make the best choices, then it is reasonable to think that someone else can step in to help improve your decision-making in certain predictable instances where cognitive errors and biases can be anticipated. This is a key idea in the book Nudge by Cass Sunstein and Richard Thaler. In defending their ideas for libertarian paternalism, the authors write, “The false assumption is that almost all people, almost all of the time, make choices that are in their best interest or at the very least are better than the choices that would be made by someone else. We claim that this assumption is false – indeed, obviously false.”

 

In many ways, our country prefers to operate with markets shaping the main decisions and factors of our lives. We like to believe that we make the best choices for our lives, and that aggregating our choices into markets will allow us to minimize the costs of individual errors. The idea is that we will collectively make the right choices, driving society in the right direction and revealing the best option and decision for each individual without deliberate tinkering in the process. However, we have seen that markets don’t encourage us to save as much as we should and markets can be susceptible to the same cognitive errors and biases that we as individuals all share.  Markets, in other words, can be wrong just like us as individuals.

 

Libertarian paternalism helps overcome the errors of markets by providing nudges to help people make better decisions. Setting up systems and structures that make saving for retirement easier helps correct a market failure. Outsourcing investment strategies, rather than each of us individually making stock trades, helps ensure that shared biases and panics don’t overwhelm the entire stock exchange. The reality is that we as individuals are not rational, but we can develop systems and structures that provide us with nudges to help us act more rationally, overcoming the reality that we don’t always make the choices that are in our best interest.
The Power of Inertia - Joe Abittan

The Power of Inertia

For Richard Thaler and Cass Sunstein, inertia plays a critical role in the idea of using nudges to influence people toward making good decisions. Particularly in regard to default choices, inertia matters a lot. People accept defaults, and making any change, whether it is trivial, important, time consuming, or very simple, is stubbornly resisted by many people. Think about how likely you are to change your desktop background, to change your phone’s ringtone, to order something new at your usual Tuesday night restaurant, to fix the broken windshield visor in your car, or to change your weekend morning routine.

 

Once people develop a status quo, once a default has been set, the power of inertia sets in. Sunstein and Thaler in Nudge write, “First, never underestimate the power of inertia. Second, that power can be harnessed.”

 

Harnessing the power of inertia can be sinister, but for Sunstein and Thaler, that is not the point. When a company offers you a free three month trial if you use a credit card to sign-up, they are counting on making money off your inertia. However, when a state organ donation program auto-enrolls every who applies for a drivers license, they are counting on inertia to help save lives. Inertia can be leveraged not just to make money off lazy and forgetful people, but to help make life simpler, easier, and even longer for people. In our individual lives we can harness inertia to build a workout routine, to stop buying cookies at the store, and to eat an apple during our 15 minute break every morning. For public officials, inertia can be harnessed when public programs make it easy for people to register to vote, to automatically receive social services, and to pay taxes.

 

Companies who count of people forgetting to cancel a subscription after a free trial and companies who expect that people won’t spend time shopping for alternatives once they sign up for monthly services give the power of inertia a bad reputation. They make it hard for public agencies and elected officials to credibly discuss programs designed to take advantage of or at least acknowledge people’s inability to escape inertia. But this should be a serious discussion in public policy. It is important to think about whether people will make changes in their lives to adopt measures that will help them be more safe, live healthier, and cooperate better. When we see a clear preference in how we want people to interact, we should discuss ways to help people behave as we wish they would, if we can recognize a particular decision is what people would chose for themselves if they were to make the effort of choosing anything at all. We don’t have to eliminate choices or bar people from behave otherwise, but we can use nudges, defaults, and the power of inertia to help people make and stick with better choices.
The Necessity of Paternalistic of Choice Architects

The Necessity of Paternalistic Choice Architects

One of my favorite experiments to think about is a fabled study about people and jam. In an experiment, people at a store were able to sample jam. In one situation, there were only a few jams to sample, and in the other situation there was a huge selection of jams. Shoppers could try them all before making a purchase. The natural expectation (at least for me) is to assume that those who get to try more jams will be more happy with their final selection. After all, they have more jams to try and are more likely to find a jam that best suited their taste preferences. The results, however, suggest that people who only had a few jams to sample more happy with their final jam choice than the people with a bunch of jams to try.

 

This experiment reveals something interesting about how our mind works. Unlimited freedom and choice means that we are never truly satisfied with the decisions we make. We will always have a lingering doubt, and we will live with the regret of possibly making the wrong choice. The more options we have, the more likely we will feel as though we may have made the wrong decision. We might feel compelled to go beyond the standard default choice, selecting against a strawberry to go with huckleberry, even though we know we would have been perfectly content getting our regular strawberry jam.

 

The results of the jam experiment have important implications for choice architects. A choice architect is anyone who is in a position to organize, design, shape, administer, or deliver a choice to another person. Parents are choice architects when they give their children different options for toys, sports, or how to generally spend their time and attention. Your human resources benefits manager is a choice architect when they determine which health care plan types will be offered to employees. Very few of our decisions are truly free from a choice architect of one sort.

 

These choice architects have important decisions to make. In the book Nudge, authors Cass Sunstein and Richard Thaler make an argument for libertarian paternalism, the idea that choice architects can nudge people into making the decisions that will be best for them. They write, “The paternalistic aspect lies in the claim that it is legitimate for choice architects to try to influence people’s behavior in order to make their lives longer, healthier, and better.” It can seem naïve and elitist to believe that  one person can make such decisions for another person, but in reality, it is imperative that people believe and act as if it is possible, and the jam experience helps show why this is necessary.

 

None of us know exactly how much each person needs to save for retirement, which health insurance plan will truly be the best possible plan for ourselves or someone else, or which jam is really going to be the one for someone else. But we can generally identify the right direction in each choice for most people. We know people typically don’t save as much for retirement as they should, so defaulting them into a retirement savings plan at 8% is better than defaulting them into no retirement savings plan or a plan that sets aside 3% of their paycheck. Young and healthy people may not believe they need health insurance, but we can auto enroll them into a standard high deductible plan if they don’t actively make a choice for themselves, ensuring they have some type of coverage in the case of a car crash or ski accident. We know most people eat jam with toast or maybe on pancakes, so most people probably aren’t that interested in purchasing a jalapeno jam during their typical weekend grocery store trip. The strawberry can stay at eye level while the jalapeno jam can stay on the top shelf and maybe get a temporary end-cap spot for the holidays.

 

The jam study also shows that people don’t want to be presented with too many options. They will have trouble making a choice and won’t be satisfied with their final decision. Narrowing the range of choices can help people better manage their decisions, and can help ensure they don’t select a plan that is wildly off course for their best interest. This is a basic first step for a choice architect, and reveals the value that choice architects can provide with only a minimal level of paternalistic interference. Choice architects can take things a step further, as Sunstein and Thaler encourage throughout Nudge, but taking a step backward, eliminating the paternalism in choice architecture, doesn’t encourage flourishing by maximizing freedom of choice, it creates paralysis, doubt, and too many options for a person to reasonably consider, especially when dealing with topics more complex than jam.
Paternalistic Choice Architects

Paternalistic Choice Architects

The idea of paternalism in the United States is full of contradictions, challenges, and conflicting opinions. Many people in the country don’t want to be told what to do by anyone, and don’t want to appear as though they are accepting paternalistic messages or nudges. Some people fully buy into the idea of paternalism, looking for prescribed rules and ways of living. And most of us have a mixture of people we view as leaders and role models, from whom we expect paternalistic messages.

 

In the book Nudge, Richard Thaler and Cass Sunstein write, “In our understanding, a policy is paternalistic if it tries to influence choices in a way that will make choosers better off, as judged by themselves” [emphasis in original]. This is the definition I am working with for paternalism. The idea is that someone else can know what is best for us, even if we don’t see it ourselves.

 

I believe that a lot of conflict in the United States today stems from the people and authority figures we are willing to accept paternalistic messages from. Some people in the United States, I include myself in this group, will accept paternalistic messages from university professors, while others will reject their messages. Leaders who we will accept messages from can be religious leaders, community elders, parents, successful business people, or even celebrities. For all of us, there is a set of people that we look to for guidance and advice. A set of people that we believe knows what might be best for us. The fact that our set of leaders can be very different and in some instances be completely discredited by others can lead to a lot of friction across our populace.

 

Nevertheless, what all these figures have in common is that they all can be in a position to be a choice architect. As Thaler and Sunstein write, “A choice architect has the responsibility for organizing the context in which people make decisions.” Business leaders shape the decision context for people’s healthcare, retirement savings, and many other daily choices. Religious leaders can shape the way people think about charitable giving and volunteering. Community leaders can influence the same choices and university professors can influence the way people think about certain situations. In all of these contexts, the way that choices are framed, the choices that are presented as viable options, and how people understand their agency can be influenced by a choice architect.

 

By nature then, choice architects are paternalistic. They are in charge of the form you use to sign up for healthcare, the range of volunteer and charitable activities that are available to you for consideration, and the responses that are considered appropriate for you when thinking about politics, society, and individual behaviors. Someone else presents you with options and decisions they believe are best for you.

 

Choice architects are very important because the way they frame a choice or decision can greatly influence the behaviors of many people. Presumably, choice architects want to maximize the good outcomes that arise from the choices they shape. This means that how they structure decisions, what they consider viable alternatives, and how they build decision frameworks can have huge consequences for what people actually do. A good health benefits sign-up form can influence whether people select a healthcare plan that actually fits their needs. A good sense of where volunteering can do the most good can drive a pastor or community leader to engage their followers in a meaningful way, and a university professor who can frame thoughts and decisions in a meaningful direction can help people think about problems in new and ways. Of course, in each setting, the choice architect could be wrong, and could mislead people, could make an error that hurts people financially, leads to wasted time, or frustrates people. It may be paternalistic to think that a choice architect knows what is best and can guide people toward what is best for them, but the alternative, having the choice architect pull back and not accept this paternalistic responsibility, can have even more serious consequences.
The Remembering Self

More on the Remembering Self

Daniel Kahneman in Thinking Fast and Slow describes the remembering self as a tyrant, ruling what we do in the present moment by controlling our thoughts of the past. My last few posts have focused on how poorly we remember events from our past, and how we can be thought of as having an experiencing self and a remembering self. The experiencing self, the one that actually has to wake-up and get out of bed to face the day, is the one that actually lives our life. The remembering self only reflects back on what we have done. It doesn’t remember how awful writing all those school assignments was, it doesn’t remember how tired we were going to the gym for the fourth day in a row, and it doesn’t remember how pleasant it was to just relax for a whole day in front of the TV. Its memory is faulty, plagued by errors and biases in thinking, giving it a false sent of past experiences.

 

The remembering self doesn’t accurately remember the past, and it isn’t aware of itself or its separation from the experiencing self. It behaves and thinks much differently from the experiencing self, but within our minds, we don’t notice when we slip between the experiencing and remembering self, and we don’t realize how much we forget when we look back at our experiences. This creates problems when we think about how we should live, what we would like to do with our lives, and what our experiences have been. Kahneman writes,

 

“Confusing experience with the memory of it is a compelling cognitive illusion – and it is the substitution that makes us believe a past experience can be ruined. The experiencing self does not have a voice. The remembering self is sometimes wrong, but it is the one that keeps score and governs what we learn from living, and it is the one that makes decisions. What we learn from the past is to maximize the qualities of our future memories, not necessarily of our future experience. This is the tyranny of the remembering self.”

 

In my life, I want to look back and remember that I have done a lot of running. Many days, I don’t actually feel like getting out on a jog, but I know that in the future I will want to remember that I ran X number more miles in December of 2020 than I did in December of 2019. The experience of cold toes, of headlamp impressions on my forehead, and the hard work of running in the dark early mornings doesn’t matter to my remembering self. Those things will be diminished in my memory compared to the memory of having done something difficult and impressive. The fact that my remembering self has different priorities than my experiencing self is healthy with regard to running (as long as I don’t go overboard), but it can also be costly and even dangerous in our lives. The father who spends all his time working and neglects his children is being ruled by the remembering self in a similar way. He wants to remember himself as being hard working, as sacrificing for his family, and as being a successful high-earner. He gives up time he may enjoy hanging out with his kids, because the remembering self won’t remember that enjoyment as positively as the economic gains will be remembered from the extra hours of work, or as strongly as the social media pictures posted online. This example isn’t perfect, but it does contrast the way in which our remembering self can drive us toward unhealthy behaviors stemming from the remembering self’s more selfish take on our lives.
Defaults Matter

Defaults Matter

I will discuss defaults in depth when I begin writing about Nudge by Cass Sunstein and Richard Thaler, but it is important to think about our responses to default choices in the context of Daniel Kahneman’s research in Thinking Fast and Slow. Kahneman argues that we can think of our brains as having two different operating systems. System 1 is the fast and automatic system. It scans the environment, takes in the salient information around us, filters out the unimportant information, and makes quick judgements without putting too much power into the thinking process. System 2 is where System 1 sends the more difficult problems that it can’t handle on its own. System 1 takes the information it can absorb, packages that information with a particular reference frame, and sends it to System 2 for slower, more energy intensive thought. And this is where the defaults matter.

 

System 1 will fall back on the default when System 2 doesn’t want to engage with a problem. Because System 2 is energy intensive we only use it when we need to (like when we are cooking a new recipe, trying to complete our taxes, or trying to win scrabble). For most decisions, we can just fall back on the default and be fine. Instead of making a tough decision, we can rely on simple standard choices without having to consider alternatives or justify why we made a particular choice. Kahneman shows how powerful the default can be by examining the rates at which people register to be organ donors in different states and countries. He writes, “The best single predictor of whether or not people will donate their organs is the designation of the default option that will be adopted without having to check a box.”

 

For most decisions and thoughts, System 1 scans the environment and makes a quick judgment as to whether or not we need to do anything. If it determines that there is a need for more comprehensive thought, then it engages System 2, but it only packages the information it could take in during its quick scan. So while our System 2 is powerful and can work through lots of information, it can only work on the information from System 1’s quick scan. That quick scan includes the default option, but doesn’t include the various other options that were not immediately available. This can create anchoring effects and limit the categories we consider for possible alternatives from the default. When someone yells an answer in Family Feud and everyone else comes up with similar answers in the same category, we are seeing people anchor to a default category for responses. When your company enrolls you in a 401K and automatically sets your contribution limit, any change that you make is likely to be a small deviation from that preset level, you are not very likely to change all the way to 0 or make a huge deviation from that default anchor. Indeed, if you have ever been stopped in freeway traffic and only after stopping realized that you could have taken numerous different routes to avoid the traffic jam, you have seen how limiting our lives can be when we stick to a simple default and fail to consider the various other possibilities available to us.

 

The reason that defaults matter so much is because we are lazy, because System 2 doesn’t do much work if it doesn’t have to, and because System 2 gets a limited set of information from System 1. Our perspectives, opinions, and the world of possibilities available to us is anchored around the default. When I write about Nudge I will get more in depth with thinking about the importance of various defaults in different areas of our lives.
Frame Bound vs Reality Bound

Frame Bound vs Reality Bound

My wife works with families with children with disabilities and one of the things I learned from her is how to ask children to do something. When speaking with an adult, we often use softeners when requesting that the other person do something, but this doesn’t work with children. So while we may say to a colleague, a spouse, or a friend, “can you please XYZ,” or “lets call it a night of bowling after this frame, OK?” these sentences don’t work with children. A child won’t quite grasp the way a softener like “OK” is used and they won’t understand that while you have framed an instruction or request as a question you are not actually asking a question or trying to give someone a choice. If you frame an instruction as a choice the child can reply with “no” and then you as a parent are stuck fighting them.

 

What happens in this situation is that children reject the frame bounding that parents present them with. To get around it, parents need to be either more direct or more creative with how they tell their children to do things. You can create a new frame for your child that they can’t escape by saying, “It is time to get ready for dinner, you can either put away your toys, or you can go set the table.” You frame a choice for the child, and they get to chose which action they are going to take, but in reality both are things you want them to do (my wife says this also works with husbands but I think the evidence is mixed).

 

In Thinking Fast and Slow, Daniel Kahneman writes, “Unless there is an obvious reason to do otherwise, most of us passively accept decision problems as they are framed and therefore rarely have an opportunity to discover the extent to which our preferences are frame-bound rather than reality-bound.”

 

The examples I gave with talking to children versus talking to adults helps demonstrate how we passively accept the framing for our decisions. We don’t often pause to reconsider whether we should really purchase an item on sale. The discount that we are saving outweighs the fact that we still face a cost when purchasing the item. Our thinking works this way in office settings, in politics, and on the weekends when we can’t decide if we are going to roll out of bed or not. The frame that is applied to our decisions becomes our reality, even if there are more possibilities out there than what we realize.

 

A child rejecting the framing that a parent provides, or conversely a parent creating new frames to shape a child’s decisions and behaviors demonstrates how easily we can fall into frame-bound thinking and how jarring it can be when reality intrudes on the frames we try to live within. Most of the times we accept the frames presented for us, but there can be huge costs if we just go along with the frames that advertisers, politicians, and other people want us to adopt.