Nudging: influence and intervention

By Nigel Hollis

Interventions in people’s choice architecture can nudge people into behaving in more desirable ways, either for their own good, for the good of society, or for the good of brands. Nudging takes advantage of systematic biases in our decision making. But what if the evidence for those biases is over-stated? And does nudging mean that we can forget about advertising? It turns out that nudges may not be effective unless aligned with people’s predisposition. So, effective marketing requires influence and intervention.

Heuristics: useful but error prone

Human decision making is subject to systematic biases that sometimes result in us choosing irrationally. Daniel Kahneman was awarded the Nobel Prize in Economic Sciences for his work explaining why people do not make economically rational choices and restates in his 2002 Nobel Prize lecture,

“people rely on a limited number of heuristic principles which reduce the complex tasks of assessing probabilities and predicting values to simpler judgemental operations. In general, these heuristics are quite useful, but sometimes they lead to severe and systematic errors.”

Those severe and systematic errors are called biases and seem to be a source of endless fascination for academics and practitioners alike. People are not rational? Shock! Horror! Opportunity!

I am biased, but does it matter?

Much of the academic literature pertaining to decision making focuses on errors or biases, why our decisions deviate from the rational choice. However, many of the experiments used to prove the existence of biases are essentially math tests. Take the example of the famous bat and ball problem.

“A bat and a ball cost $1.10 in total. The bat costs $1.00 more than the ball.

How much does the ball cost?”

Like many people, I incorrectly intuit the answer as 10 cents. The rational, correct answer is 5.

However, they are both small numbers compared to a dollar, so I would argue 10 is close enough for government work. If I am biased, it is to not waste time trying to solve problems like this. I did enough of that at school.

What a lot of biases we have!

The fascinating thing is that much of our understanding of biases is informed by experiments like the one above, and each bias seems to end up being itemized separately. As a result, according to the Cognitive Bias Codex, there are at least 180 cognitive biases. Oh my!

According to research by Victor Stango and Jonathan Zinman, on average, the typical person has 10 biases out of the 17 they included in their research (mostly related to financial decision making). They found substantial variation across individuals but almost everyone had more multiple biases. They also found that lower cognitive skills are associated with more behavioral biases, and that this results in a negative impact on well-being and financial condition.

(Why is it that I have sneaking feeling that better educated respondents might be more adept at answering? For instance, this Big Three question is designed to measure financial literacy,

“Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow?”

Answers on a postcard please. FYI, the authors assume education is an outcome of cognitive skills not the reverse. However, does education not train us to solve problems like these? And smart does not necessarily mean good at math…or so I tell myself.)

The study of bias has led to the practice of nudging

Books like Predictably Irrational (2008), Nudge (2009), and The Choice Factory (2018) have popularized the idea that the right nudge can lead to a change in behavior. As a result, nudging has become yet another silver bullet in the marketer’s arsenal. Simply put, the first step in the process is to identify how people make decisions, their choice architecture. Then, by reference to the appropriate bias, the second step is to identify the intervention that will best change people’s behavior in a predictable way, without the imposition of rules or incentives.

Nudging is an alluring idea because it seems so predictable. I do this, they do that. The results are usually apparent in the moment. And some of the best-known examples are highly effective and efficient (and dare I say cheap?). These examples usually rely on default choices (status quo bias) or social proof. A default choice would be the classic comparison of the high proportions of people who agree to be an organ donor when the choice is to opt-out, compared to low proportions when asked to opt-in. A social proof providing the information that 90% of people pay their taxes on time, which is proven to encourage more people to do so.

However, it turns out much of the academic work on biases is likely biased itself. (And not just because so much of research is reliant on our ability to solve math problems.) Maybe the apparent power of nudging rests on a few striking examples?

Academic research into biases is biased

A meta-analysis by Mertens et al, analyzing 447 effect sizes from 212 publications finds default choices to have the strongest average nudge effect (and notably strongest in the food domain).

However, Mertens et al identified evidence of publication bias and suggested that positive effects might be over-represented in their analysis. In other words, the filing drawer effect may be at work, whereby inconclusive or negative findings never get published. Worse, a subsequent analysis by Maier et al (using the same data as Mertens et al) found publication bias to be substantial, undermining the evidence in favor of nudges being effective tools for behavior change.

Maier’s analysis does not mean that nudging does not work at all, simply that the evidence from academic work may over-state the occasions on which it does. I think that the evidence in favor of default bias is strong, so too the evidence for social bias. However, the findings do start to make one wonder just how efficacious nudging might be. If nothing else, practitioners should follow Richard Shotton’s advice given at the end of The Choice Factory,

“I think behavioral science is the best way to understand human behavior.

But don’t take my word for it. Go and test it for yourself.”

Where nudging falls short

Why might nudging not be the silver bullet it is made out to be when it comes to making people behave differently? It really depends on what you are trying to achieve.

First, many nudges rely on an intervention in people’s choice architecture. Interventions are good at getting people to act a certain way once, in a specific context, but they may not produce a lasting change. For instance, you can get people to eat less food by giving them smaller portions to eat, but you must do that directly. So, it is a lot easier to intervene in a restaurant, fast food outlet, or university cafeteria than it is in people’s homes. Yes, you can set people up with an app like Noom to use at home, but for it to be effective, people must want to curtail their food consumption and not give way to temptation. And to make the new behavior stick, the intervention must be repeated enough times to make their behavior habitual.

Second, nudging is assumed to operate at an intuitive level, taking advantage of people’s cognitive flaws. This is not necessarily supported by research, but whatever model of thinking you prefer, this means the conscious mind can override a nudge if it so chooses. If you really, really fancy some fries with your meal, it will not matter that carrot sticks are presented at eye level and fries are on the bottom shelf in the cafeteria, you will seek them out. (Although it is highly likely that your pursuit of fries is predicated on the fact that you chose a burger immediately beforehand. So maybe we should remove burgers from the menu?) Several studies find that default nudging still works even when people know that an attempt is being made to influence their behavior, perhaps because people recognize that the outcome is in their or society’s best interests.

Nudging cannot overcome pre-existing preference

Leading on from the last point is the finding that nudging cannot overcome people’s pre-existing preferences. A review by Denise de Ridder et al raises the concept of nudgeability, the degree to which people are susceptible to being affected by a nudge and explores evidence from prior research into the topic. One conclusion made is that personal preference has a strong effect on the outcome of a nudge. If a nudge conflicts with personal preference it will be ignored. If personal preference is aligned with the nudge, then people will follow through on that preference irrespective of the nudge. (Not unlike the last click bias in attribution research, or crediting a sale to a promotion when people would have bought the same brand anyway.) Nudging may have the most effect on those indifferent about the choice at hand.

Does advertising nudge?

For those of you wondering how nudging might differ from traditional advertising, the answer is that given the right circumstances and execution, advertising can be a nudge. In Nudge, Thaler and Sunstein, review the efficacy of the State of Texas, “Don’t Mess with Texas!” advertising campaign designed to reduce littering by targeting young men with ads featuring players from the Dallas Cowboys team. In the Choice Factory, Richard Shotton identifies 25 biases relevant to advertising.

Most advertising works by nudging

Indeed, the belief that advertising works by nudging rather than explicit persuasion is a longstanding one. Let us go back in time to 1997 and the paper by Neil Barnard and Andrew S. C. Ehrenberg titled, Advertising: Strongly Persuasive or Nudging? Based on the still familiar evidence that people buy from a repertoire of brands, they conclude,

“Advertising can then play a part in influencing the make up of such brand portfolios or wider consideration sets. It helps consumers to do what they seem inclined to do anyway: choose from a limited range of habitual brands. Advertising can achieve this by what we have here called reinforcing and nudging: it can affect how many such split-loyal customers each brand has rather than how loyal they are to it.”

Annoyingly, this paper contributed to years of debate over whether advertising nudged or persuaded (In part egged on by differences in pre-testing methodology.) As with so many debates, the answer is both. Advertising nudges some people, it persuades others, but only if the messaging is new, differentiating, relevant, credible, and believable to the recipient. Given those requirements, it is hardly surprising that most advertising works by nudging: slowly building or reinforcing perceptions and preferences that support specific behaviors. In doing so, it leverages many of the same biases as do more direct interventions.

Influence and intervention

To my mind, there is a qualitative difference between the type of nudging created by advertising and that created by price anchoring or default choices.

Advertising influences choice by building predisposition – personal preferences – and does so by creating memorable and motivating impressions. Once built, these preferences last. They can continue to influence behavior for years to come.

By contrast, most interventions have a one-off impact. Interventions may have a lasting effect when it is a one-time decision, as in the case of people signing up for pension plans. However, with repeated behavior, you need multiple interventions to achieve a lasting effect. Think promotions, not advertising.

Please note that the title to this section is “Influence and Intervention.” I am not suggesting one is better than another or that this is an either/or choice. Again, it depends on the context and what you are trying to achieve. Neither one is guaranteed to be effective, so why rely on a one-off intervention when you can predispose people to choose your brand to choose your brand and make that intervention more effective? Yes, you nudge people into buying your brand through clever price anchoring, but it will be easier to do so if people want to choose your brand in the first place.

So maybe when you come to consider the choice architecture for your brand, the first question to ask is not what do people do? The first question is what do they want to do?