Imagine you have two competing products on the market – boxes of cereal, for example. One box tells you that by eating this product, you will gain all the B12 vitamin you need for an entire day along with 10 grams of protein per bowl. The other makes no such claims and instead focuses on the flavour, using loaded words that are commonly associated with sugar. Which, do you think, would the average consumer pick? The ‘healthy’ choice seems like a no-brainer, right? Now if we were to tell you the ingredients of both products are almost identical (health benefits and all), and the same company makes both products, does your perspective change?
Above we used an example of a company’s attempt to shape their customers’ decisions by guiding them towards an obvious choice. There are various reasons a company would want to do this: they may be attempting to improve their brand reputation by being seen as promoting healthy lifestyles, or they could have found a cheaper alternative to manufacture what is essentially the same product. Either way, it’s in their interest for consumers to make the switch and they have employed nudge theory to make it happen.
Nudge Theory: Dark Art or An Extension of Age-old Marketing Comms?
Richard Thaler, Professor of Behaviour Science and Economics at the University of Chicago Booth School of Business created nudge theory. Nudging is all about influencing behaviour by creating an environment in which the choices people have to make are clear (or creating an architecture of choice). In the example above, we used a corporation to show how nudging can work, but the practice is used by institutions like the NHS and the government. Organ donation in many countries is now opt-out, meaning that everyone will donate their organs after they die unless they explicitly opt-out of the scheme. An example at work here in the UK is the opt-in pension schemes that your employer automatically enters you into – to leave the pension scheme, you must take action. There is a choice, and one involves simply continuing.
Problems arise when we consider our increasingly acute understanding of the brain; if we know how people react to specific cues through nudging, won’t we be negating their free will through manipulation? Regarding government initiatives, nudging has also been criticised for being somewhat paternalistic; one of the objectives of the UK government’s Behavioural Insights Team (BIT – otherwise known as their nudge unit) is “enabling people to make ‘better choices for themselves.’” Far from paternal, that phrase would not sound out of place if spoken by The Simpsons character Fat Tony.
If you find nudging tactics somewhat unsettling, you’re in good company; helping people make the choice that benefits a specific purpose feels decidedly totalitarian. And what if it’s in the government’s interest to make us do the wrong thing? Here in the UK that could be our problematic relationship with alcohol that, unlike smoking, has not been tackled with legislation.
An article by the Guardian from 2013 (three years after the BIT was created) explained the purpose of the nudge unit as a means of shaping choices that are in the interest of the people who often act against their best interest:
“By looking closely at how they [the general public] make their choices and then testing small changes in the way the choices are presented, the unit tries to nudge people into leading better lives, and save the rest of us a fortune.”
One example saw the general public not taking advantage of a government subsidy for loft insulation, which would decrease energy costs. The BIT found that the barrier blocking people from taking advantage was the clutter in their lofts, and accordingly changed the subsidy to cover loft clearance. People ended up paying more, but the uptake tripled. When done well, nudging works, and it can help people make better choices, but there are some sinister examples of nudging that are being employed by companies in the UK.
Online Banking: An Easy Choice or A Nudge Too Far?
Online banking and a cashless future is an inevitability. It’s more convenient, you can mobilise your money in an instant, and you don’t have to count out the correct change (or queue to deposit checks). Case closed – it’s obvious the people have no need for cash, and if that means local bank branches and ATMs are closed, so be it. But wait. Could banks be employing nudging to make online banking seem like the easy choice? Choice implies customers have an alternative, but that is quickly becoming a fantasy as more and more local bank branches close. This is aggressive nudging, and it, unfortunately, leaves behind many of those who are reliant on using cash and banking locally. As author Brett Scott wrote for the Guardian:
“Twenty years ago nobody believed that cash was “inconvenient”, but every time I walk into London Underground I see adverts that address me as if I was a person who finds cash inconvenient. The objective is to reverse-engineer a belief within me that it is inconvenient, and that cashlessness is in my interests.”
But is it in the interest of the consumer? More choice is great, but the result of this move appears to be taking away choice. The benefits for consumers in this cashless age are minimal when compared with those the banks stand to gain from this aggressive nudge. The benefits of a cashless society for emerging economies, developing nations and third world countries are significant – gender equality directly correlates with financial independence – yet in Europe, cashless payments encourage spending, alienates those outside of the system, and make tracking your buying habits that much easier. The public has not been consulted on the impacts of a cashless society, yet the wheels appear already in motion.
Now you know about nudging, why not tell us what you think about the increasingly prevalent practice? Is nudging worrying, or just the same old marketing tactics refined with new technology?
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