University of Zurich: “Nudging is a well-known and popular concept in behavioral economics. It refers to non-coercive interventions that influence the choices people make by changing the way a situation is presented. A well-known example of this is placing the salad bar near the cafeteria entrance to promote a healthy diet. It has been shown that simple change has an effect on the food people choose to eat for lunch. However, is a light salad really the best option from the employee’s perspective, or is it their employer who will benefit from staff who perform better in the afternoon? And, is improving the decisions we make really that simple?
Measuring the quality of a decision
Whether a nudge ultimately results in a person making decisions that are better suited to their needs is an important factor in assessing the effectiveness of nudges. This is the starting point of the research work of Nick Netzer and Jean-Michel Benkert from the Department of Economics at the University of Zurich. How do you measure whether a nudge improves a decision in the eyes of the person being nudged? “We can’t determine whether a nudge improves the choices a person makes until we understand how they reach their decisions,” says Nick Netzer, putting the hype surrounding nudging into perspective. “Depending on which behavioral model we take as a starting point, it is possible to measure the effectiveness of nudges — or not.”
Traditional economics assumes that a person’s preferences can be inferred from their decisions and behavior. According to the rational behavior model, a person’s decision to have a salad or a steak for lunch is based on which meal meets their needs. When it comes to assessing nudges, however, this model is problematic, since nudging manipulates precisely the behavior that is supposed to shed light on a person’s preferences. The researchers