Grading the Choice Architecture of Presidential Candidates’ Donor Pages

maxresdefaultThis article was a two-part series for Richard Thaler’s “Misbehaving” blog. Part one is here. Part two is here.

The fundamental premise of Nudge is that small changes in context play an overlooked role in our decisions, and that there is no such thing as a neutral environment where people aren’t swayed in one direction or another. While this insight is often subtle—one famous nudge involves a sticker strategically placed at the bottom of urinals to help men aim better—it can be used to influence how much money we spend, what food we eat, and even which health insurance options we select.

The wisdom of Nudge is no longer in question. Last week, President Obama issued an executive order encouraging federal agencies to use behavioral science to make the government more efficient. If anything, the behavioral science principles Cass Sunstein and Richard Thaler extoll in Nudge may represent a new batch of business clichés, replacing “tipping points” with “invisible gorillas.” As Rory Sutherland jokes, we’ll know progress has been made when Daniel Kahneman’s tour bus is overrun by screaming Japanese schoolgirls.

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This article was co-written with Robert J. Neal (Qualia Agency)

Using Science to Make Government Work Better

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On September 15th, President Obama issued an executive order that acknowledges
something we have known for a long time: Human beings are not rational creatures who reliably fill out tax documents, enroll in savings programs, or apply for loans, as economic models assume they do. Instead, they systematically and predictably make decisions that run counter to their best interests, as centuries of observations suggest and behavioral science research now empirically confirms.

Obama’s order encourages government “to more fully realize the benefits of behavioral insights and deliver better results at a lower cost for the American people,” representing a fundamental shift in not just how we approach public policy but how we understand human nature.

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This article was co-written with Jon Jachimowicz (Columbia) and Dave Nussbaum (University of Chicago)

To Improve Employee Health, Design Workplaces To Reduce Stress

BSPA-FULL-Logo-471In August 2013, a 21-year-old intern at the Bank of America Merrill Lynch office in London was enduring a grueling week. The intern, Moritz Erhardt, a native of southern Germany, had worked three full days without sleeping.

Around 5am on the third day, he took a taxi from his office to his flat in East London to shower, change his clothes, and return to his desk. Erhardt never made it back to work. Near the end of the day, another intern raised an alarm, and officials discovered Erhardt’s body in his shower. The autopsy revealed that Erhardt died after suffering an epileptic seizure, possibly triggered by staying awake for 72 hours.

Erhardt’s death is not an isolated incident. Earlier this year, Sarvshreshth Gupta, an employee at Goldman Sachs, died in San Francisco after falling from his apartment building. A few months ago, a 29-year-old banker at Moelis & Company was found dead with drugs in his body after he fell from a building in New York City. Both complained about feeling overwhelmed at work.

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This article was co-written with Jon Jachimowicz (Columbia)

Governments Need to Nudge Citizens to Make Good Choices

photoOur decisions are constantly shaped by subtle changes in our environment. Even choices that feel deliberate and conscious can be swayed by cues that we may not even notice, such as social norms or the setting of a default option. Behavioral scientists use the phrase “choice architecture” to describe the ways in which the environment influences how we decide.

In the past five years several governments have begun to guide people toward making better choices—for themselves and for society—by using behavioral science research. Scientists refer to choice architecture interventions that push people toward a certain outcome as “nudges.” Since 2010, for instance, the U.K.’s Behavioral Insights Team, or “nudge unit,” has dramatically improved on-time tax payments simply by telling people about the large number of citizens who paid their taxes on time. The team has collected an estimated £210 million in revenue. Recently the World Bank issued an extensive report that highlighted similar behavioral science initiatives around the world, and President Barack Obama has launched a new behavioral unit, which is modeled after the U.K.’s version.

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This article was co-written with Columbia Ph.D. student Jon Jachimowicz

How Poor Choice Architecture Could Determine the Future of Greece and Europe

SPSP_LogoThis Sunday, nearly 10 million eligible Greek citizens will vote over the future of their country, potentially influencing the future of the European Union and the strength of the Euro. Alexis Tsipras, the Prime Minister of Greece, has placed his faith in the Greek population, insisting voters will follow his recommendation and reject the referendum. The alternative is accepting a proposal offered by the IMF, the European Central Bank, and the European Commission, which outlines terms Greece must follow to repay their debt.

Is Tsipras’ faith in his fellow Greeks warranted? Leading economists around the world, such as Joseph Stiglitz and Paul Krugman, disagree over which option is better. However, it’s worth wondering if the outcome of the vote will be determined not by political opinion or careful analysis but a seemingly irrelevant factor: the design of the referendum ballot.

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This article was co-written with Jon Jachimowicz (Columbia)