Monday, April 14, 2008

Libertarian paternalism and choice architecture

Nudge: Improving Decisions about Health, Wealth and Happinessis a new book by Richard Thaler and Cass Sunstein. The Freakonomics blog gives it a thumbs-up, and so does the Situationist blog. The book's authors themselves provide a summary in a recent op-ed [via Mark Thoma]:

[Choice architecture is] the organization of the context in which people make decisions. Choice architects are everywhere. If you design the ballot that voters use to choose candidates, you are a choice architect. If you are a doctor and must describe the alternative treatments available to a patient, you are a choice architect. If you design the form that new employees fill out to enroll in the company healthcare plan, you are a choice architect. If you are a parent, describing possible educational options to your son or daughter, you are a choice architect. If you are a salesperson, you are a choice architect (but you already knew that).

There are many parallels between choice architecture and more traditional forms of architecture. A crucial parallel is that there is no such thing as a "neutral" design. Cognitive psychology and behavioral economics have shown that small and apparently insignificant contextual details can have a major effect on people's behavior. Researchers tell us that if a candidate is listed first on the ballot, he may well get a 4% increase in votes. If a doctor says 90% of patients are alive five years after a certain operation, far more people will have the operation than if the doctor says 10% of patients are dead five years after having it.

One memorable example of the power of choice architecture comes from the men's rooms at Schiphol airport in Amsterdam. There the authorities have etched the image of a black housefly into each urinal. It seems that men usually do not pay much attention to where they aim, which can create a bit of a mess, but if they see a target, their attention and accuracy improve. Spillage at the airport decreased by 80%!