Why do people make choices against their best interests

“Freakonomics” was the book that made the public believe the dismal science has something interesting to say about how people act in the real world. But “Nudge” was the one that got policy wonks excited. The book, first published in 2008, is about the potential for behavioural economics to improve the effectiveness of government.

Behavioural economists have found that all sorts of psychological or neurological biases cause people to make choices that seem contrary to their best interests. The idea of nudging is based on research that shows it is possible to steer people towards better decisions…

Very interesting, especially with the results of these trials:

In one trial, a letter sent to non-payers of vehicle taxes was changed to use plainer English, along the line of “pay your tax or lose your car”. In some cases the letter was further personalised by including a photo of the car in question. The rewritten letter alone doubled the number of people paying the tax; the rewrite with the photo tripled it.

A study into the teaching of technical drawing in French schools found that if the subject was called “geometry” boys did better, but if it was called “drawing” girls did equally well or better.

Research into why people did not take up financial incentives to reduce energy consumption by insulating their homes found one possibility was the hassle of clearing out the attic. A nudge was designed whereby insulation firms would offer to clear the loft, dispose of unwanted items and return the rest after insulating it. This example of what behavioural economists call “goal substitution”—replacing lower energy use with cleaning out the attic—led to a threefold increase in take-up of an insulation grant.

In one trial, green arrows pointing to stairs were put next to railway-station escalators, in the hope of encouraging people to take the healthier option. This had almost no effect. The other experiment had a series of green footprints leading to rubbish bins. These signs reduced littering by 46% during a controlled experiment in which wrapped sweets were handed out.

via Free Exchange, The Economist

 

Maybe they can stop using the term “taxes” and call it “paying for the military so we don’t get bombed.”

 

Check out the book – Nudge: Improving decisions about health, wealth, happiness

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