The Last Mile: Creating Social and Economic Value from Behavioral Insights


New book by Dilip Soman: “Most organizations spend much of their effort on the start of the value creation process: namely, creating a strategy, developing new products or services, and analyzing the market. They pay a lot less attention to the end: the crucial “last mile” where consumers come to their website, store, or sales representatives and make a choice.

In The Last Mile, Dilip Soman shows how to use insights from behavioral science in order to close that gap. Beginning with an introduction to the last mile problem and the concept of choice architecture, the book takes a deep dive into the psychology of choice, money, and time. It explains how to construct behavioral experiments and understand the data on preferences that they provide. Finally, it provides a range of practical tools with which to overcome common last mile difficulties.

The Last Mile helps lay readers not only to understand behavioral science, but to apply its lessons to their own organizations’ last mile problems, whether they work in business, government, or the nonprofit sector. Appealing to anyone who was fascinated by Dan Ariely’s Predictably Irrational, Richard Thaler and Cass Sunstein’s Nudge, or Daniel Kahneman’s Thinking, Fast and Slow but was not sure how those insights could be practically used, The Last Mile is full of solid, practical advice on how to put the lessons of behavioral science to work….(More)”

Policy makers’ perceptions on the transformational effect of Web 2.0 technologies on public services delivery


Paper by Manuel Pedro Rodríguez Bolívar at Electronic Commerce Research: “The growing participation in social networking sites is altering the nature of social relations and changing the nature of political and public dialogue. This paper contributes to the current debate on Web 2.0 technologies and their implications for local governance, identifying the perceptions of policy makers on the use of Web 2.0 in providing public services and on the changing roles that could arise from the resulting interaction between local governments and their stakeholders. The results obtained suggest that policy makers are willing to implement Web 2.0 technologies in providing public services, but preferably under the Bureaucratic model framework, thus retaining a leading role in this implementation. The learning curve of local governments in the use of Web 2.0 technologies is a factor that could influence policy makers’ perceptions. In this respect, many research gaps are identified and further study of the question is recommended….(More)”

Who Are You Calling Irrational?


New paper by Aneil Kovvali: “Cass Sunstein is the leading advocate of “nudges” – small policy interventions that yield major impacts because of behavioral quirks in the way that people process information. Such interventions form the core of Sunstein’s philosophy of “libertarian paternalism,” which seeks to improve on individuals’ decisions while preserving their freedom to choose. In “Why Nudge?”, Sunstein forcefully defends libertarian paternalism against John Stuart Mill’s famous Harm Principle, which holds that government should only coerce a person when it is acting to prevent harm to others. Sunstein urges that unlike more coercive measures, nudges respect subjects’ goals, even as they reshape their choices. Using an analogy to voting paradoxes, this review shows that reconciling multiple, inconsistent goals is a fundamentally challenging problem; the challenge leaves even deliberative individuals vulnerable to manipulation through nudges. The fact of inconsistent goals means that government regulators who deploy nudges select and impose their own objectives, instead of merely advancing the goals of the regulated. The analogy also highlights that multimember legislative bodies are subject to many of the same quirks as individuals, raising questions about the government’s ability to improve on individuals’ choices….(More)”

 

From Mechanism to Virtue: Evaluating Nudge-Theory


Paper by van der Heijden, Jeroen and Kosters, Mark: “Ever since Thaler and Sunstein published their influential Nudge, the book and the theory it presents have received great praise and opposition. Nudge-theory, and more particularly, nudging may be considered an additional strategy providing some novel instruments to the already rich governance toolbox. But what is its value? The current debates on Nudge-theory are often highly normative or ideologically driven and pay limited attention to more practical aspects of the theory: Whether and how is nudging evaluable as a theory and a practice? Whether there is solid evidence available of nudge success over other governance interventions? What is to be considered a nudge success at all? What data and evaluative techniques may assist in evaluating nudging beyond individual cases? The current article seeks to explore these questions… (More)”

 

When America Says Yes to Government


Cass Sunstein in the New York Times: “In recent years, the federal government has adopted a large number of soft interventions that are meant to change behavior without mandates and bans. Among them: disclosure of information, such as calorie labels at chain restaurants; graphic warnings against, for example, distracted driving; and automatic enrollment in programs designed to benefit employees, like pension plans.

Informed by behavioral science, such reforms can have large effects while preserving freedom of choice. But skeptics deride these soft interventions as unjustified paternalism, an insult to dignity and a contemporary version of the nanny state. Some people fear that uses of behavioral science will turn out to be manipulative. They don’t want to be nudged.

But what do Americans actually think about soft interventions? I recently conducted a nationally representative survey of 563 people. Small though that number may seem, it gives a reasonable picture of what Americans think, with a margin of error of plus or minus 4.1 percentage points.

The remarkable finding is that most Americans approve of these reforms and want a lot more of them — and their approval generally cuts across partisan lines….(More)

Please, Corporations, Experiment on Us


Michelle N. Meyer and Christopher Chabris in the New York Times: ” Can it ever be ethical for companies or governments to experiment on their employees, customers or citizens without their consent?

The conventional answer — of course not! — animated public outrage last year after Facebook published a study in which it manipulated how much emotional content more than half a million of its users saw. Similar indignation followed the revelation by the dating site OkCupid that, as an experiment, it briefly told some pairs of users that they were good matches when its algorithm had predicted otherwise.

But this outrage is misguided. Indeed, we believe that it is based on a kind of moral illusion.

Companies — and other powerful actors, including lawmakers, educators and doctors — “experiment” on us without our consent every time they implement a new policy, practice or product without knowing its consequences. When Facebook started, it created a radical new way for people to share emotionally laden information, with unknown effects on their moods. And when OkCupid started, it advised users to go on dates based on an algorithm without knowing whether it worked.

Why does one “experiment” (i.e., introducing a new product) fail to raise ethical concerns, whereas a true scientific experiment (i.e., introducing a variation of the product to determine the comparative safety or efficacy of the original) sets off ethical alarms?

In a forthcoming article in the Colorado Technology Law Journal, one of us (Professor Meyer) calls this the “A/B illusion” — the human tendency to focus on the risk, uncertainty and power asymmetries of running a test that compares A to B, while ignoring those factors when A is simply imposed by itself.

Consider a hypothetical example. A chief executive is concerned that her employees are taking insufficient advantage of the company’s policy of matching contributions to retirement savings accounts. She suspects that telling her workers how many others their age are making the maximum contribution would nudge them to save more, so she includes this information in personalized letters to them.

If contributions go up, maybe the new policy worked. But perhaps contributions would have gone up anyhow (say, because of an improving economy). If contributions go down, it might be because the policy failed. Or perhaps a declining economy is to blame, and contributions would have gone down even more without the letter.

You can’t answer these questions without doing a true scientific experiment — in technology jargon, an “A/B test.” The company could randomly assign its employees to receive either the old enrollment packet or the new one that includes the peer contribution information, and then statistically compare the two groups of employees to see which saved more.

Let’s be clear: This is experimenting on people without their consent, and the absence of consent is essential to the validity of the entire endeavor. If the C.E.O. were to tell the workers that they had been randomly assigned to receive one of two different letters, and why, that information would be likely to distort their choices.

Our chief executive isn’t so hypothetical. Economists do help corporations run such experiments, but many managers chafe at debriefing their employees afterward, fearing that they will be outraged that they were experimented on without their consent. A company’s unwillingness to debrief, in turn, can be a deal-breaker for the ethics boards that authorize research. So those C.E.O.s do what powerful people usually do: Pick the policy that their intuition tells them will work best, and apply it to everyone….(More)”

Beating the news’ with EMBERS: Forecasting Civil Unrest using Open Source Indicators


Paper by Naren Ramakrishnan et al: “We describe the design, implementation, and evaluation of EMBERS, an automated, 24×7 continuous system for forecasting civil unrest across 10 countries of Latin America using open source indicators such as tweets, news sources, blogs, economic indicators, and other data sources. Unlike retrospective studies, EMBERS has been making forecasts into the future since Nov 2012 which have been (and continue to be) evaluated by an independent T&E team (MITRE). Of note, EMBERS has successfully forecast the uptick and downtick of incidents during the June 2013 protests in Brazil. We outline the system architecture of EMBERS, individual models that leverage specific data sources, and a fusion and suppression engine that supports trading off specific evaluation criteria. EMBERS also provides an audit trail interface that enables the investigation of why specific predictions were made along with the data utilized for forecasting. Through numerous evaluations, we demonstrate the superiority of EMBERS over baserate methods and its capability to forecast significant societal happenings….(More)”

Flawed Humans, Flawed Justice


Adam Benforado in the New York Times  on using …”lessons from behavioral science to make police and courts more fair…. WHAT would it take to achieve true criminal justice in America?

Imagine that we got rid of all of the cops who cracked racist jokes and prosecutors blinded by a thirst for power. Imagine that we cleansed our courtrooms of lying witnesses and foolish jurors. Imagine that we removed every judge who thought the law should bend to her own personal agenda and every sadistic prison guard.

We would certainly feel just then. But we would be wrong.

We would still have unarmed kids shot in the back and innocent men and women sentenced to death. We would still have unequal treatment, disregarded rights and profound mistreatment.

The reason is simple and almost entirely overlooked: Our legal system is based on an inaccurate model of human behavior. Until recently, we had no way of understanding what was driving people’s thoughts, perceptions and actions in the criminal arena. So, we built our institutions on what we had: untested assumptions about what deceit looks like, how memories work and when punishment is merited.

But we now have tools — from experimental methods and data collection approaches to brain-imaging technologies — that provide an incredible opportunity to establish a new and robust foundation.

Our justice system must be reconstructed upon scientific fact. We can start by acknowledging what the data says about the fundamental flaws in our current legal processes and structures.

Consider the evidence that we treat as nearly unassailable proof of guilt at trial — an unwavering eyewitness, a suspect’s signed confession or a forensic match to the crime scene.

While we charge tens of thousands of people with crimes each year after they are identified in police lineups, research shows that eyewitnesses chose an innocent person roughly one-third of the time. Our memories can fail us because we’re frightened. They can be altered by the word choice of a detective. They can be corrupted by previously seeing someone’s image on a social media site.

Picking out lying suspects from their body language is ineffective. And trying then to gain a confession by exaggerating the strength of the evidence and playing down the seriousness of the offense can encourage people to admit to terrible things they didn’t do.

Even seemingly objective forensic analysis is far from incorruptible. Recent data shows that fingerprint — and even DNA — matches are significantly more likely when the forensic expert is aware that the sample comes from someone the police believe is guilty.

With the aid of psychology, we see there’s a whole host of seemingly extraneous forces influencing behavior and producing systematic distortions. But they remain hidden because they don’t fit into our familiar legal narratives.

We assume that the specific text of the law is critical to whether someone is convicted of rape, but research shows that the details of the criminal code — whether it includes a “force” requirement or excuses a “reasonably mistaken” belief in consent — can be irrelevant. What matters are the backgrounds and identifies of the jurors.

When a black teenager is shot by a police officer, we expect to find a bigot at the trigger.

But studies suggest that implicit bias, rather than explicit racism, is behind many recent tragedies. Indeed, simulator experiments show that the biggest danger posed to young African-American men may not be hate-filled cops, but well-intentioned police officers exposed to pervasive, damaging stereotypes that link the concepts of blackness and violence.

Likewise, Americans have been sold a myth that there are two kinds of judges — umpires and activists — and that being unbiased is a choice that a person makes. But the truth is that all judges are swayed by countless forces beyond their conscious awareness or control. It should have no impact on your case, for instance, whether your parole hearing is scheduled first thing in the morning or right before lunch, but when scientists looked at real parole boards, they found that judges were far more likely to grant petitions at the beginning of the day than they were midmorning.

The choice of where to place the camera in an interrogation room may seem immaterial, yet experiments show that it can affect whether a confession is determined to be coerced. When people watch a recording with the camera behind the detective, they are far more likely to find that the confession was voluntary than when watching the interactions from the perspective of the suspect.

With such challenges to our criminal justice system, what can possibly be done? The good news is that an evidence-based approach also illuminates the path forward.

Once we have clear data that something causes a bias, we can then figure out how to remove that influence. …(More)

Nudges Do Not Undermine Human Agency


Cass R. Sunstein in the Journal of Consumer Policy: “Some people believe that nudges undermine human agency, but with appropriate nudges, neither agency nor consumer freedom is at risk. On the contrary, nudges can promote both goals. In some contexts, they are indispensable. There is no opposition between education on the one hand and nudges on the other. Many nudges are educative. Even when they are not, they can complement, and not displace, consumer education….(More)”.

Tracking Employment Shocks Using Mobile Phone Data


Paper by Jameson L. Toole et al.: “Can data from mobile phones be used to observe economic shocks and their consequences at multiple scales? Here we present novel methods to detect mass layoffs, identify individuals affected by them, and predict changes in aggregate unemployment rates using call detail records (CDRs) from mobile phones. Using the closure of a large manufacturing plant as a case study, we first describe a structural break model to correctly detect the date of a mass layoff and estimate its size. We then use a Bayesian classification model to identify affected individuals by observing changes in calling behavior following the plant’s closure. For these affected individuals, we observe significant declines in social behavior and mobility following job loss. Using the features identified at the micro level, we show that the same changes in these calling behaviors, aggregated at the regional level, can improve forecasts of macro unemployment rates. These methods and results highlight promise of new data resources to measure micro economic behavior and improve estimates of critical economic indicators….(More)”