Paper by Sanchayan Banerjee and Peter John: “Nudging has been used to make public policies widely, in various fields such as personal finance, health, education, environment/climate, privacy, law, and human well-being. Nonetheless, with an increase in the applications of nudging, the toolkit of nudges also expanded massively, which ultimately led to multiple different conceptualisations and definitions of the nudge. In this entry, we review developments to nudge and nudging in public policy. First, we briefly discuss the political philosophy and psychological paradigm behind the conventional nudge, and examples of economically modelling nudge applications. Then, we highlight the role of nudges in behavioural public policy, an emerging subdiscipline of public policy which uses insights from behavioural sciences to develop new policies. We review the many definitions of nudge and introduce alternative toolkits of behaviours change, such as thinks, boosts, nudge+. We conclude with a discussion on the limitations of nudging in public policy and future research in behavioural public policy….(More)”.
How games can make behavioural science better
Article by Bria Long et al: “When US cognitive scientist Joshua Hartshorne was investigating how people around the world learn English, he needed to get tens of thousands of people to take a language test. He designed ‘Which English?’, a grammar game that presented a series of tough word problems and then guessed where in the world the player learnt the language. Participants shared their results — whether accurate or not — on social media, creating a snowball effect for recruitment. The findings, based on data from almost 670,000 people, revealed that there is a ‘critical period’ for second-language learning that extends into adolescence.
This sort of ‘gamification’ is becoming a powerful research tool across fields that study humans, including psychology, neuroscience, economics and behavioural economics. By making research fun, the approach can help experiments to reach thousands or millions of participants. For instance, experiments embedded in a video game demonstrated that the layout of the city where a child lives shapes their future navigational ability. Data from a digital word search showed that people who are skilled at the game do not necessarily give better advice to those trying to learn it. And a dilemma game involving millions of people revealed that most individuals have reliable moral intuition.
Gamification can help to avoid the pitfalls of conventional laboratory-based experiments by allowing researchers to study diverse populations, to conduct more-sophisticated experiments and to observe human behaviour in naturalistic environments. It can improve statistical power and reproducibility, making research more robust. Technical advances are making gamification cheaper and more straightforward, and the COVID-19 pandemic has forced many labs to move their human experiments online. But despite these changes, most have not yet embraced the opportunities gamification affords.
To reach the full potential of this approach, researchers must dispel misconceptions, develop new gamification technologies, improve access to existing ones and apply the methods to productive research questions. We are researchers in psychology, linguistics, developmental science, data science and music who have run our own gamified experiments. We think it’s time for science to get serious about games…(More)”.
Behavioural Economics and the Environment
Book edited by Alessandro Bucciol, Alessandro Tavoni and Marcella Veronesi: “Humans have long neglected to fully consider the impact of their behaviour on the environment. From excessive consumption of fossil fuels and natural resources to pollution, waste disposal, and, in more recent years, climate change, most people and institutions lack a clear understanding of the environmental consequences of their actions. The new field of behavioural environmental economics seeks to address this by applying the framework of behavioural economics to environmental issues, thereby rationalizing unexplained puzzles and providing a more realistic account of individual behaviour.
This book provides a complete and rigorous overview of environmental topics that may be addressed and, in many instances, better understood by integrating a behavioural approach. This volume features state-of-the-art research on this topic by influential scholars in behavioural and environmental economics, focussing on the effects of psychological, social and cognitive factors on the decision-making process. It presents research performed using different methods and data collection mechanisms (e.g. laboratory experiments, field experiments, natural experiments, online surveys) on a variety of environmental topics (e.g. sustainability, natural resources)…(More)”.
Storytelling Will Save the Earth
Article by Bella Lack: “…The environmental crisis is one of overconsumption, carbon emissions, and corporate greed. But it’s also a crisis of miscommunication. For too long, hard data buried environmentalists in an echo-chamber, but in 2023, storytelling will finally enable a united global response to the environmental crisis. As this crisis worsens, we will stop communicating the climate crisis with facts and stats—instead we will use stories like Timothy’s.
Unlike numbers or facts, stories can trigger an emotional response, harnessing the power of motivation, imagination, and personal values, which drive the most powerful and permanent forms of social change. For instance, in 2019, we all saw the images of Notre Dame cathedral erupting in flames. Three minutes after the fire began, images of the incident were being broadcast globally, eliciting an immediate response from world leaders. That same year, the Amazon forest also burned, spewing smoke that spread over 2,000 miles and burning over one and a half football fields of rain forest every minute of every day—it took three weeks for the mainstream media to report that story. Why did the burning of Notre Dame warrant such rapid responses globally, when the Amazon fires did not? Although it is just a beautiful assortment of limestone, lead, and wood, we attach personal significance to Notre Dame, because it has a story we know and can relate to. That is what propelled people to react to it, while the fact that the Amazon was on fire elicited nothing…(More)”.
Storytelling allows us to make sense of the world.
When do “Nudges” Increase Welfare?
Paper by Hunt Allcott, Daniel Cohen, William Morrison & Dmitry Taubinsky: “Policymakers are increasingly interested in non-standard policy instruments (NPIs), or “nudges,” such as simplified information disclosure and warning labels. We characterize the welfare effects of NPIs using public finance sufficient statistic approaches, allowing for endogenous prices, market power, and optimal or suboptimal taxes. While many empirical evaluations have focused on whether NPIs increase ostensibly beneficial behaviors on average, we show that this can be a poor guide to welfare. Welfare also depends on whether the NPI reduces the variance of distortions from heterogenous biases and externalities, and the average effect becomes irrelevant with zero pass-through or optimal taxes. We apply our framework to randomized experiments evaluating automotive fuel economy labels and sugary drink health labels. In both experiments, the labels increase ostensibly beneficial behaviors but also may decrease welfare in our model, because they increase the variance of distortions…(More)”.
Active Urbanism and choice architecture: Encouraging the use of challenging city routes for health and fitness
Paper by Anna Boldina, Paul H. P. Hanel & Koen Steemers: “Inactivity is one of the major health risks in technologically developed countries. This paper explores the potential of a series of urban landscape interventions to engage people in physical activity. Online surveys were conducted with 595 participants living in the UK by inviting them to choose between conventional pavement or challenging routes (steppingstones, balancing beams, and high steps) using photorealistic images. Across four experiments, we discovered that 80% of walkers claim they would pick a challenging route in at least one of the scenarios, depending on perceived level of difficulty and design characteristics. Where a challenging option was shorter than a conventional route, this increased the likelihood of being chosen by 10%, and the presence of handrails by 12%. This suggests that people can get nudged into physical activities through minor changes to the urban landscape. We discuss implications for policy makers and urban designers…(More)”.
Critical Ignoring as a Core Competence for Digital Citizens
Paper by Anastasia Kozyreva, et al: “Low-quality and misleading information online can hijack people’s attention, often by evoking curiosity, outrage, or anger. Resisting certain types of information and actors online requires people to adopt new mental habits that help them avoid being tempted by attention-grabbing and potentially harmful content. We argue that digital information literacy must include the competence of critical ignoring—choosing what to ignore and where to invest one’s limited attentional capacities. We review three types of cognitive strategies for implementing critical ignoring: self-nudging, in which one ignores temptations by removing them from one’s digital environments; lateral reading, in which one vets information by leaving the source and verifying its credibility elsewhere online; and the do-not-feed-the-trolls heuristic, which advises one to not reward malicious actors with attention. We argue that these strategies implementing critical ignoring should be part of school curricula on digital information literacy. Teaching the competence of critical ignoring requires a paradigm shift in educators’ thinking, from a sole focus on the power and promise of paying close attention to an additional emphasis on the power of ignoring. Encouraging students and other online users to embrace critical ignoring can empower them to shield themselves from the excesses, traps, and information disorders of today’s attention economy…(More)”.
Shared Models in Networks, Organizations, and Groups
Paper by Joshua Schwartzstein & Adi Sunderam: “To understand new information, we exchange models or interpretations with others. This paper provides a framework for thinking about such social exchanges of models. The key assumption is that people adopt the interpretation in their network that best explains the data, given their prior beliefs. An implication is that interpretations evolve within a network. For many network structures, social learning mutes reactions to data: the exchange of models leaves beliefs closer to priors than they were before. Our results shed light on why disagreements persist as new information arrives, as well as the goal and structure of meetings in organizations…(More)”.
Behavioral Economics and the Energy Crisis in Europe
Blog by Carlos Scartascini: “European nations, stunned by Russia’s aggression, have mostly rallied in support of Ukraine, sending weapons and welcoming millions of refugees. But European citizens are paying dearly for it. Apart from the costs in direct assistance, the energy conflict with Russia had sent prices of gas soaring to eight times their 10-year average by the end of September and helped push inflation to around 10%. With a partial embargo of Russian oil going into effect in December and cold weather coming, many Europeans now fear an icy, bitter and poorer winter of 2023.
European governments hope to take the edge off by enacting price regulations, providing energy subsidies for households, and crucially curbing energy demand. Germany’s government, for example, imposed limits on heating in public offices and buildings to 19 degrees Celsius (66.2 Fahrenheit). France has introduced a raft of voluntary measures ranging from asking public officials to travel by train rather than car, suggesting that municipalities swap old lamps for LEDs and designing incentives to get people to car share…
As we know from years of experiments at the IDB in using behavioral economics to achieve policy goals, however, rules and recommendations are not enough. Trust in fellow citizens and in the government are also crucial when calling for a shared sacrifice. That means not appealing to fear, which can lead to deeper divisions in society, energy hoarding, resignation and indifference. Rather, it means appealing to social norms of morality and community.
In using behavioral economics to boost tax compliance in Argentina, for example, we found that sending messages that revealed how fellow citizens were paying their taxes significantly improved tax collection. Revealing how the government was using tax funds to improve people’s lives provided an additional boost to the effort. Posters and television ads in Europe showing people wearing sweaters, turning down their thermostats, insulating their homes and putting up solar panels might similarly instill a sense of common purpose. And signals that governments are trying to relieve hardship might help instill in citizens the need for sacrifice…(More)”.
Simple Writing Pays Off (Literally)
Article by Bill Birchard: “When SEC Chairman Arthur Levitt championed “plain English” writing in the 1990s, he argued that simpler financial disclosures would help investors make more informed decisions. Since then, we’ve also learned that it can help companies make more money.
Researchers have confirmed that if you write simply and directly in disclosures like 10-Ks you can attract more investors, cut the cost of debt and equity, and even save money and time on audits.
A landmark experiment by Kristina Rennekamp, an accounting professor at Cornell, documented some of the consequences of poor corporate writing. Working with readers of corporate press releases, she showed that companies stand to lose readers owing to lousy “processing fluency” of their documents. “Processing fluency” is a measure of readability used by psychologists and neuroscientists.
Rennekamp asked people in an experiment to evaluate two versions of financial press releases. One was the actual release, from a soft drink company. The other was an edit using simple language advocated by the SEC’s Plain English Handbook. The handbook, essentially a guide to better fluency, contains principles that now serve as a standard by which researchers measure readability.
Published under Levitt, the handbook clarified the requirements of Rule 421, which, starting in 1998, required all prospectuses (and in 2008 all mutual fund summary prospectuses) to adhere to the handbook’s principles. Among them: Use short sentences. Stick to active voice. Seek concrete words. Shun boilerplate. Minimize jargon. And avoid multiple negatives.
Rennekamp’s experiment, using the so-called Fog Index, a measure of readability based on handbook standards, provided evidence that companies would do better at hooking readers if they simply made their writing easier to read. “Processing fluency from a more readable disclosure,” she wrote in 2012 after measuring the greater trust readers put in well-written releases, “acts as a heuristic cue and increases investors’ beliefs that they can rely on the information in the disclosure…(More)”.