Nudging the way to change

‘Nudging’ the way to change

Having recently read the book ‘Nudge’ by Richard Thaler and Cass Sunstein, I became intrigued by the potential for ‘nudge’ solutions to environmental challenges, some of which are described in the book. ‘Nudging’ is a subset of behavioural science and economics, and is seen as a cost-effective strategy to changing people’s behaviour and implementing new policies (often in combination with other laws and incentive structures). It has a wide range of applications from government to private organisations.

‘Nudging’ is referred to by Thaler and Sunstein as ‘libertarian paternalism’ – the full array of choices is presented (libertarian), whilst changing the way in which these choices are structured in order to favour outcomes deemed to be preferable (paternalism). As further defined by Thaler and Sunstein:

 “A nudge is any aspect of the choice architecture that alters people’s behaviour in a predictable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates. Putting fruit at eye level counts as a nudge. Banning junk food does not.”

As alluded to in the above definition, the classic example of a nudge is the way in which food can be presented in a cafeteria (or a retail outlet for that matter). If we assume that most humans (unless you are a completely rational, and thus alien, being!) do not have full information, nor the self-control to consistently choose a plate of food according to the requirements of a healthy diet, then nudging can help. Prioritising the display of healthy foods – first, and at eye-level – has been shown to dramatically alter people’s choice of foods. This is a cheap policy option, is easily avoidable by those choosing the food, does not impose economic incentives, and the full array of choices is still available (i.e. peaches and cream can be found at foot-level at the end of the line!).

This is a basic example that illustrates the mechanism of a nudge, but the potential structure and applicability of nudges can run far deeper. I’ll not have space here to delve into the theory behind why nudges work, but will outline a few interesting and relevant examples and ideas to plant the ‘nudge’ seed.

 

The Toxic Release Inventory

The challenge of addressing almost all environmental issues is that they are presented as environmental externalities – the true environmental cost of production is rarely accounted for in the price of the final product (the environmental cost is excluded from the free market). The foremost approach by governments to addressing environmental issues is either through the use of economic instruments that incentivise the internalisation of environmental costs (e.g. carbon tax or emissions trading schemes), or through outright prohibition (e.g. the prohibited use of certain chemicals). However, a powerful and cost-effective alternative, or reinforcement, to such mechanisms can be that of feedback and disclosure. Thaler and Sunstein describe the Toxic Release Inventory under the US’s Emergency Planning and Community Right to Know Act (enacted in 1986 in response to the Chernobyl disaster). The law requires firms and individuals to disclose “the quantity of potentially hazardous chemicals that have been released into the environment”.  “The information is readily available on the EPA website to anyone who wants it. More than 23,000 facilities now disclose detailed information on more than 650 chemicals, covering more than 4.34 billion pounds of on-site and off-site disposal or other releases.” Originally designed as an uncontroversial bookkeeping measure for the US EPA (Environmental Protection Agency) to know who was using what chemicals, the law resulted in large reductions in toxic releases through a strong social nudge (thanks to the media and environmental groups), without enforcing behavioural change. Similar parallels can be drawn with that of addressing greenhouse gas emissions – think of a “Greenhouse Gas Inventory” listing the highest emitters.

In an agricultural context, consider the potential impact of a ‘pesticides inventory’, in which farming operations are listed according to their use of the most harmful pesticides. Displayed in the public domain, this would surely have a strong influence on the choice of pesticides used by farmers. Alternatively, a retailer could set up a similar list for the agricultural operations within their supply base. A list set up by a retailer would not necessarily need to be open to the public, just to the other agricultural operations within the same supply base.

 

Energy and Water

Issues around lack of self-control are particularly evident where the impact (or feedback) related to a course of action occurs a long time after the action has taken place. Consider, for example, the case of saving for retirement. The impact of failing to adequately save for retirement in one’s earlier years is only realised when retirement age is reached, and it is no longer possible to maintain the same standard of living.

Similar parallels can be drawn with water and energy use. Take the Western Cape’s current water crisis, for example – it takes considerable self-control and commitment to significantly reduce one’s domestic water consumption. If all of Cape Town’s residents reduced their water consumption as far as possible, we would likely have sufficient water to see us far beyond the next 100 days, as is now not the case (Times Live, 2017). Clearly the residents of the City of Cape Town lack the self control to reduce their water consumption sufficiently (note that this is just one major factors contributing to our current water crisis, but it is relatively ‘low hanging fruit’. Water storage and conveyance losses are another major contributing factor).

According to Thaler and Sunstein, improving feedback (i.e. moving it closer to the time of action) can result in dramatic changes in people’s behaviour. Thaler and Sunstein introduce the idea of devices that display real time energy use – “give people an Ambient Orb, a little ball that glows red when a customer is using lots of energy but green when energy use is modest. In a period of weeks, users of the Orb reduced their use of energy, in peak periods, by 40 percent.” What if a similar device could be developed to display an individual’s water use? Or perhaps display people’s level of water use through their social media profiles?

 

Waste Management

A few more subtle, and less complex, nudges can be implemented to alter individual waste management:

  • Waste disposal: footprints leading up to a dustbin, as have been used on the streets of Copenhagen, can alter the behaviour of littering in urban environments by ‘leading’ people to the dustbin.
  • Recycling: we all know that it’s a chore to separate and dispose of recyclables according to the appropriate bins (glass, metals, paper, plastic, etc.), and often default to disposing all waste together in the unnamed bin at the end of the line. What if this unnamed bin was labelled ‘landfill’? See Figure 2.
Fig. 1: Leading the way to disposal.

Fig. 1: Leading the way to disposal.

 

 

 

 

 

 

 

 

Landfill nudge

Fig. 2: Landfill nudge

 

 

 

 

 

 

 

 

 

 

These are just a few examples to illustrate the mechanisms behind nudges, and how effective they can be in altering behaviour for the better. I challenge you to give Thaler and Sunstein’s book ‘Nudge’ a read, and to try out some positive nudges in your own operating environment!

 

References

Thaler, R. and Sunstein, C. (2008). Nudge: Improving decisions about health, wealth and happiness. Penguin Books.

Times Live (2016). Cape Town only has enough water stored ‘for the next 100 days’. Here’s what’s about to happen. [Online]. Accessed 24 January 2017. http://www.timeslive.co.za/local/2017/01/18/Cape-Town-only-has-enough-water-stored-for-the-next-100-days.-Heres-whats-about-to-happen…

Is it a bird? (2016). The power of nudging to improve recycling. [Online]. Accessed 24 January 2017. http://isitabird.dk/cases-2/the-power-of-nudging-to-improve-recycling/