Design for policy and public services

Curated on Posted on by Stefaan Verhulst

The Centre for Public Impact: “Traditional approaches to policymaking have left policymakers and citizens looking for alternative solutions. Despite the best of intentions, the standard model of dispassionate expert analysis and subsequent implementation by a professional bureaucracy has, generally, led to siloed solutions and outcomes for citizens that fall short of what might be possible.

The discipline of design may well provide an answer to this problem by offering a collection of methods which allow civil servants to generate insights based on citizens’ needs, aspirations and behaviours. In doing so, it changes the view of citizens from seeing them as anonymous entities to complex humans with complex needs to match. The potential of this new approach is already becoming clear – just ask the medical teams and patients at Norway’s Oslo University Hospital. Women with a heightened risk of developing breast cancer had previously been forced to wait up to three months before receiving an appointment for examination and diagnosis. A redesign reduced this wait to just three days.

In-depth user research identified the principal issues and pinpointed the lack of information about the referral process as a critical problem. The designers also interviewed 40 hospital employees of all levels to find out about their daily schedules and processes. Governments have always drawn inspiration from fields such as sociology and economics. Design methods are not (yet) part of the policymaking canon, but such examples help explain why this may be about to change….(More)”Screen Shot 2016-03-07 at 8.52.52 AM

Our finances are a mess – could behavioral science help clean them up?

Curated on Posted on by Stefaan Verhulst

Katy Davis at the Conversation: “Typical approaches to solving problematic finances are either to “educate” people about the need to save more or to “incentivize” savings with monetary rewards.

But when we look at traditional financial education and counseling programs, they have had virtually no long-term impact on behavior. Similarly, matched savings programs are expensive and have shown mixed results on savings rates. Furthermore, these approaches often prioritize the need for savings while treating debt repayment as a secondary concern.

Education and incentives haven’t worked because they are based on problematic assumptions about lower-income consumers that turn out to be false….

The good news is that a range of simple, behaviorally informed solutions can easily be deployed to tackle these problems, from policy innovations to product redesign.

For instance, changing the “suggested payoff” in credit card statements for targeted segments (i.e., those who were already paying in full) could help consumers more effectively pay down debt, as could allowing tax refunds to be directly applied toward debt repayment. Well-designed budgeting tools that leverage financial technology could be integrated into government programs. The state of California, for example, is currently exploring ways to implement such technologies across a variety of platforms.

But the public and private sectors both need to play a role for these tools to be effective. Creating an integrated credit-and-saving product, for example, would require buy-in from regulators along with financial providers.

While these banking solutions may not close the economic inequality gap on their own, behaviorally informed design shifts can be the missing piece of the puzzle in these efforts to fix major problems.

Our research indicates that people already want to be doing a better job with their finances; we just need to make it a little less difficult for them….(More)”

Private Provision of Public Goods via Crowdfunding

Curated on Posted on by Stefaan Verhulst

Paper by Robert Chovanculiak and Marek Hudík: “Private provision of public goods is typically associated with three main problems: (1) high organization costs, (2) the assurance problem, and (3) the free-rider problem. We argue that technologies which enable crowdfunding (the method of funding projects by raising small amounts of money from a large number of people via the internet), have made the overall conditions for private provision of public goods more favorable: these technologies lowered the organization costs and enabled to employ more efficient mechanisms which reduce the assurance and free-rider problems. It follows that if the reason for government provision of public goods is higher efficiency as suggested by the standard theory, then with the emergence of crowdfunding we should observe a decline of the government role in this area….(More)”

The Future of Behavioural Change: Balancing Public Nudging vs Private Nudging

Curated on Posted on by Stefaan Verhulst

2nd AIM Lecture by Alberto Alemanno: “Public authorities, including the European Union and its Member States, are increasingly interested in exploiting behavioral insights through public action. They increasingly do so through choice architecture, i.e. the alteration of the environment of choice surrounding a particular decision making context in areas as diverse as energy consumption, tax collection and public health. In this regard, it is useful to distinguish between two situations. The first is that of a public authority which seeks to steer behaviour in the public interest, taking into account one or more mental shortcuts. Thus, a default enrollment for organ donation leverages on the power of inertia to enhance the overall prevalence organ donors. Placing an emoticon (sad face) or a set of information about average consumption on a prohibitive energy bill has the potential to nudge consumers towards less energy consumption. I call this pure public nudging. The second perspective is when public authorities react to exploitative uses of mental shortcuts by market forces by regulating private nudging. I call this ‘counter-nudging’. Pure public nudging helps people correct mental shortcuts so as to achieve legitimate objectives (e.g. increased availability of organs, environmental protection, etc.), regardless of their exploitative use by market forces.
It is against this proposed taxonomy that the 2nd AIM Lecture examines whether also private companies may nudge for good. Are corporations well-placed to nudge their customers towards societal objectives, such as the protection of the environment or the promotion of public health? This is what I call benign corporate nudging.
Their record is far from being the most credible. Companies have used behavioural inspired interventions to maximize profits, what led them to sell more and in turn to induce citizens into more consumption. Yet corporate marketing need not always be self-interested. An incipient number of companies are using their brand, generally through their packaging and marketing efforts, to ‘nudge for good’. By illustrating some actual examples, this lecture defines the conditions under which companies may genuinely and credibly nudge for good. It argues that benign corporate nudging may have – unlike dominant CSR efforts – a positive long-term, habit-forming effect that influences consumers’ future behaviour ‘for good’….(More)”

 

The Power of the Nudge to Change Our Energy Future

Curated on Posted on by Stefaan Verhulst

Sebastian Berger in the Scientific American: “More than ever, psychology has become influential not only in explaining human behavior, but also as a resource for policy makers to achieve goals related to health, well-being, or sustainability. For example, President Obama signed an executive order directing the government to systematically use behavioral science insights to “better serve the American people.” Not alone in this endeavor, many governments – including the UK, Germany, Denmark, or Australia – are turning to the insights that most frequently stem from psychological researchers, but also include insights from behavioral economics, sociology, or anthropology.

Particularly relevant are the analysis and the setting of “default-options.” A default is the option that a decision maker receives if he or she does not specifically state otherwise. Are we automatically enrolled in a 401(k), are we organ donors by default, or is the flu-shot a standard that is routinely given to all citizens? Research has given us many examples of how and when defaults can promote public safety or wealth.

One of the most important questions facing the planet, however, is how to manage the transition into a carbon-free economy. In a recent paper, Felix Ebeling of the University of Cologne and I tested whether defaults could nudge consumers into choosing a green energy contract over one that relies on conventional energy. The results were striking: setting the default to green energy increased participation nearly tenfold. This is an important result because it tells us that subtle, non-coercive changes in the decision making environment are enough to show substantial differences in consumers’ preferences in the domain of clean energy. It changes green energy participation from “hardly anyone” to “almost everyone”. Merely within the domain of energy behavior, one can think of many applications where this finding can be applied:  For instance, default engines of new cars could be set to hybrid and customers would need to actively switch to standard options. Standard temperatures of washing machines could be low, etc….(More)”

Five Studies: How Behavioral Science Can Help in International Development

Curated on Posted on by Stefaan Verhulst

 in Pacific Standard: “In 2012, there were 896 million people around the world—12.7 percent of the global population—living on less than two dollars a day. The World Food Programestimates that 795 million people worldwide don’t have enough food to “lead a healthy life”; 25 percent of people living in Sub-Saharan Africa are undernourished. Over three million children die every year thanks to poor nutrition, and hunger is the leading cause of death worldwide. In 2012, just three preventable diseases (pneumonia, diarrhea, and malaria) killed 4,600 children every day.

Last month, the World Bank announced the launch of the Global Insights Initiative (GINI). The initiative, which follows in the footsteps of so-called “nudge units” in the United Kingdom and United States, is the Bank’s effort to incorporate insights from the field of behavioral science into the design of international development programs; too often, those programs failed to account for how people behave in the real world. Development policy, according to the Bank’s 2015 World Development Report, is overdue for a “redesign based on careful consideration of human factors.” Researchers have applauded the announcement, but it raises an interesting question: What can nudges really accomplish in the face of the developing world’s overwhelming poverty and health-care deficits?

In fact, researchers have found that instituting small program changes, informed by a better understanding of people’s motivations and limitations, can have big effects on everything from savings rates to vaccination rates to risky sexual behavior. Here are five studies that demonstrate the benefits of bringing empirical social science into the developing world….(More)”

Fudging Nudging: Why ‘Libertarian Paternalism’ is the Contradiction It Claims It’s Not

Curated on Posted on by Stefaan Verhulst

Paper by Heidi M. Hurd: “In this piece I argue that so-called “libertarian paternalism” is as self-contradictory as it sounds. The theory of libertarian paternalism originally advanced by Richard Thaler and Cass Sunstein, and given further defense by Sunstein alone, is itself just a sexy ad campaign designed to nudge gullible readers into thinking that there is no conflict between libertarianism and welfare utilitarianism. But no one should lose sight of the fact that welfare utilitarianism just is welfare utilitarianism only if it sacrifices individual liberty whenever it is at odds with maximizing societal welfare. And thus no one who believes that people have rights to craft their own lives through the exercise of their own choices ought to be duped into thinking that just because paternalistic nudges are cleverly manipulative and often invisible, rather than overtly coercive, standard welfare utilitarianism can lay claim to being libertarian.

After outlining four distinct strains of libertarian theory and sketching their mutual incompatibility with so-called “libertarian paternalism,” I go on to demonstrate at some length how the two most prevalent strains — namely, opportunity set libertarianism and motivational libertarianism — make paternalistically-motivated nudges abuses of state power. As I argue, opportunity set libertarians should recognize nudges for what they are — namely, state incursions into the sphere of liberty in which individual choice is a matter of moral right, the boundaries of which are rightly defined, in part, by permissions to do actions that do not maximize welfare. And motivational libertarians should similarly recognize nudges for what they are — namely, illicitly motivated forms of legislative intervention that insult autonomy no less than do flat bans that leave citizens with no choice but to substitute the state’s agenda for their own. As I conclude, whatever its name, a political theory that recommends to state officials the use of “nudges” as means of ensuring that citizens’ advance the state’s understanding of their own best interests is no more compatible with libertarianism than is a theory that recommends more coercive means of paternalism….(More)”

Build digital democracy

Curated on Posted on by Stefaan Verhulst

Dirk Helbing & Evangelos Pournaras in Nature: “Fridges, coffee machines, toothbrushes, phones and smart devices are all now equipped with communicating sensors. In ten years, 150 billion ‘things’ will connect with each other and with billions of people. The ‘Internet of Things’ will generate data volumes that double every 12 hours rather than every 12 months, as is the case now.

Blinded by information, we need ‘digital sunglasses’. Whoever builds the filters to monetize this information determines what we see — Google and Facebook, for example. Many choices that people consider their own are already determined by algorithms. Such remote control weakens responsible, self-determined decision-making and thus society too.

The European Court of Justice’s ruling on 6 October that countries and companies must comply with European data-protection laws when transferring data outside the European Union demonstrates that a new digital paradigm is overdue. To ensure that no government, company or person with sole control of digital filters can manipulate our decisions, we need information systems that are transparent, trustworthy and user-controlled. Each of us must be able to choose, modify and build our own tools for winnowing information.

With this in mind, our research team at the Swiss Federal Institute of Technology in Zurich (ETH Zurich), alongside international partners, has started to create a distributed, privacy-preserving ‘digital nervous system’ called Nervousnet. Nervousnet uses the sensor networks that make up the Internet of Things, including those in smartphones, to measure the world around us and to build a collective ‘data commons’. The many challenges ahead will be best solved using an open, participatory platform, an approach that has proved successful for projects such as Wikipedia and the open-source operating system Linux.

A wise king?

The science of human decision-making is far from understood. Yet our habits, routines and social interactions are surprisingly predictable. Our behaviour is increasingly steered by personalized advertisements and search results, recommendation systems and emotion-tracking technologies. Thousands of pieces of metadata have been collected about every one of us (seego.nature.com/stoqsu). Companies and governments can increasingly manipulate our decisions, behaviour and feelings1.

Many policymakers believe that personal data may be used to ‘nudge’ people to make healthier and environmentally friendly decisions. Yet the same technology may also promote nationalism, fuel hate against minorities or skew election outcomes2 if ethical scrutiny, transparency and democratic control are lacking — as they are in most private companies and institutions that use ‘big data’. The combination of nudging with big data about everyone’s behaviour, feelings and interests (‘big nudging’, if you will) could eventually create close to totalitarian power.

Countries have long experimented with using data to run their societies. In the 1970s, Chilean President Salvador Allende created computer networks to optimize industrial productivity3. Today, Singapore considers itself a data-driven ‘social laboratory’4 and other countries seem keen to copy this model.

The Chinese government has begun rating the behaviour of its citizens5. Loans, jobs and travel visas will depend on an individual’s ‘citizen score’, their web history and political opinion. Meanwhile, Baidu — the Chinese equivalent of Google — is joining forces with the military for the ‘China brain project’, using ‘deep learning’ artificial-intelligence algorithms to predict the behaviour of people on the basis of their Internet activity6.

The intentions may be good: it is hoped that big data can improve governance by overcoming irrationality and partisan interests. But the situation also evokes the warning of the eighteenth-century philosopher Immanuel Kant, that the “sovereign acting … to make the people happy according to his notions … becomes a despot”. It is for this reason that the US Declaration of Independence emphasizes the pursuit of happiness of individuals.

Ruling like a ‘benevolent dictator’ or ‘wise king’ cannot work because there is no way to determine a single metric or goal that a leader should maximize. Should it be gross domestic product per capita or sustainability, power or peace, average life span or happiness, or something else?

Better is pluralism. It hedges risks, promotes innovation, collective intelligence and well-being. Approaching complex problems from varied perspectives also helps people to cope with rare and extreme events that are costly for society — such as natural disasters, blackouts or financial meltdowns.

Centralized, top-down control of data has various flaws. First, it will inevitably become corrupted or hacked by extremists or criminals. Second, owing to limitations in data-transmission rates and processing power, top-down solutions often fail to address local needs. Third, manipulating the search for information and intervening in individual choices undermines ‘collective intelligence’7. Fourth, personalized information creates ‘filter bubbles’8. People are exposed less to other opinions, which can increase polarization and conflict9.

Fifth, reducing pluralism is as bad as losing biodiversity, because our economies and societies are like ecosystems with millions of interdependencies. Historically, a reduction in diversity has often led to political instability, collapse or war. Finally, by altering the cultural cues that guide peoples’ decisions, everyday decision-making is disrupted, which undermines rather than bolsters social stability and order.

Big data should be used to solve the world’s problems, not for illegitimate manipulation. But the assumption that ‘more data equals more knowledge, power and success’ does not hold. Although we have never had so much information, we face ever more global threats, including climate change, unstable peace and socio-economic fragility, and political satisfaction is low worldwide. About 50% of today’s jobs will be lost in the next two decades as computers and robots take over tasks. But will we see the macroeconomic benefits that would justify such large-scale ‘creative destruction’? And how can we reinvent half of our economy?

The digital revolution will mainly benefit countries that achieve a ‘win–win–win’ situation for business, politics and citizens alike10. To mobilize the ideas, skills and resources of all, we must build information systems capable of bringing diverse knowledge and ideas together. Online deliberation platforms and reconfigurable networks of smart human minds and artificially intelligent systems can now be used to produce collective intelligence that can cope with the diverse and complex challenges surrounding us….(More)” See Nervousnet project

The Power of Nudges, for Good and Bad

Curated on Posted on by Stefaan Verhulst

Richard H. Thaler in the New York Times: “Nudges, small design changes that can markedly affect individual behavior, have been catching on. These techniques rely on insights from behavioral science, and when used ethically, they can be very helpful. But we need to be sure that they aren’t being employed to sway people to make bad decisions that they will later regret.

Whenever I’m asked to autograph a copy of “Nudge,” the book I wrote with Cass Sunstein, the Harvard law professor, I sign it, “Nudge for good.” Unfortunately, that is meant as a plea, not an expectation.

Three principles should guide the use of nudges:

■ All nudging should be transparent and never misleading.

■ It should be as easy as possible to opt out of the nudge, preferably with as little as one mouse click.

■ There should be good reason to believe that the behavior being encouraged will improve the welfare of those being nudged.
As far as I know, the government teams in Britain and the United States that have focused on nudging have followed these guidelines scrupulously. But the private sector is another matter. In this domain, I see much more troubling behavior.

For example, last spring I received an email telling me that the first prominent review of a new book of mine had appeared: It was in The Times of London. Eager to read the review, I clicked on a hyperlink, only to run into a pay wall. Still, I was tempted by an offer to take out a one-month trial subscription for the price of just £1. As both a consumer and producer of newspaper articles, I have no beef with pay walls. But before signing up, I read the fine print. As expected, I would have to provide credit card information and would be automatically enrolled as a subscriber when the trial period expired. The subscription rate would then be £26 (about $40) a month. That wasn’t a concern because I did not intend to become a paying subscriber. I just wanted to read that one article.

But the details turned me off. To cancel, I had to give 15 days’ notice, so the one-month trial offer actually was good for just two weeks. What’s more, I would have to call London, during British business hours, and not on a toll-free number. That was both annoying and worrying. As an absent-minded American professor, I figured there was a good chance I would end up subscribing for several months, and that reading the article would end up costing me at least £100….

These examples are not unusual. Many companies are nudging purely for their own profit and not in customers’ best interests. In a recent column in The New York Times, Robert Shiller called such behavior “phishing.” Mr. Shiller and George Akerlof, both Nobel-winning economists, have written a book on the subject, “Phishing for Phools.”

Some argue that phishing — or evil nudging — is more dangerous in government than in the private sector. The argument is that government is a monopoly with coercive power, while we have more choice in the private sector over which newspapers we read and which airlines we fly.

I think this distinction is overstated. In a democracy, if a government creates bad policies, it can be voted out of office. Competition in the private sector, however, can easily work to encourage phishing rather than stifle it.

One example is the mortgage industry in the early 2000s. Borrowers were encouraged to take out loans that they could not repay when real estate prices fell. Competition did not eliminate this practice, because it was hard for anyone to make money selling the advice “Don’t take that loan.”

As customers, we can help one another by resisting these come-ons. The more we turn down questionable offers like trip insurance and scrutinize “one month” trials, the less incentive companies will have to use such schemes. Conversely, if customers reward firms that act in our best interests, more such outfits will survive and flourish, and the options available to us will improve….(More)

Web design plays a role in how much we reveal online

Curated on Posted on by Stefaan Verhulst

European Commission: “A JRC study, “Nudges to Privacy Behaviour: Exploring an Alternative Approach to Privacy Notices“, used behavioural sciences to look at how individuals react to different types of privacy notices. Specifically, the authors analysed users’ reactions to modified choice architecture (i.e. the environment in which decisions take place) of web interfaces.

Two types of privacy behaviour were measured: passive disclosure, when people unwittingly disclose personal information, and direct disclosure, when people make an active choice to reveal personal information. After testing different designs with over 3 000 users from the UK, Italy, Germany and Poland, results show web interface affects decisions on disclosing personal information. The study also explored differences related to country of origin, gender, education level and age.

A depiction of a person’s face on the website led people to reveal more personal information. Also, this design choice and the visualisation of the user’s IP or browsing history had an impact on people’s awareness of a privacy notice. If confirmed, these features are particularly relevant for habitual and instinctive online behaviour.

With regard to education, users who had attended (though not necessarily graduated from) college felt significantly less observed or monitored and more comfortable answering questions than those who never went to college. This result challenges the assumption that the better educated are more aware of information tracking practices. Further investigation, perhaps of a qualitative nature, could help dig deeper into this issue. On the other hand, people with a lower level of education were more likely to reveal personal information unwittingly. This behaviour appeared to be due to the fact that non-college attendees were simply less aware that some online behaviour revealed personal information about themselves.

Strong differences between countries were noticed, indicating a relation between cultures and information disclosure. Even though participants in Italy revealed the most personal information in passive disclosure, in direct disclosure they revealed less than in other countries. Approximately 75% of participants in Italy chose to answer positively to at least one stigmatised question, compared to 81% in Poland, 83% in Germany and 92% in the UK.

Approximately 73% of women answered ‘never’ to the questions asking whether they had ever engaged in socially stigmatised behaviour, compared to 27% of males. This large difference could be due to the nature of the questions (e.g. about alcohol consumption, which might be more acceptable for males). It could also suggest women feel under greater social scrutiny or are simply more cautious when disclosing personal information.

These results could offer valuable insights to inform European policy decisions, despite the fact that the study has targeted a sample of users in four countries in an experimental setting. Major web service providers are likely to have extensive amounts of data on how slight changes to their services’ privacy controls affect users’ privacy behaviour. The authors of the study suggest that collaboration between web providers and policy-makers can lead to recommendations for web interface design that allow for conscientious disclosure of privacy information….(More)”