Decision-making & Analytics
NUDGE THEORY
P olicymakers may have been the first to grasp the potential of ‘nudges’ as a cheap way to promote positive behaviour, but the corporate world was quick to follow suit. This has created an added challenge for those designing nudge interventions. For many businesses, it is no longer enough to nudge individuals towards behaviours that benefit them and their peers, such as losing weight or reducing their carbon footprint. They will also need nudges to generate a profit. A good example of this is ‘shrinkflation’. Cadbury has reduced the size of its family bars and multi-pack snacks so they contain less calories, cutting its own costs in the process. Companies may well view this as a win-win situation that delivers positive results for themselves, their consumers, and society more generally. The profit they generate as a by-product of the intervention ensures the company can afford to keep operating and nudging to create greater social benefit in future. But what if customers see things differently? Introducing profit into the equation potentially carries some risk for the nudger. There is some surprising evidence that this might be the case from another area involving prosocial behaviour – charity. When an act of altruism is associated with a self-interested outcome, research shows it can be viewed in a less favourable light. It can even be seen more negatively that an act of pure self-interest that offers no social benefit. For example, several studies have suggested that rewarding blood donors could change the way the
service is seen by the public. The donation could be viewed as a commercial transaction rather than an altruistic act. This might even dissuade people from donating. “People need to be satisfied that an organisation’s
the loss of any prosocial benefit. In addition to this, interventions that create a negative impression of nudging might undermine support for the practice more widely, eroding its effectiveness as a force for social good. To examine this problem further, we devised a set of experiments that centred on the meals that a university provided to its students. We began with two common types of nudge: one where healthy meals were the default choice unless students filled out a form in advance, requesting something different; the other where healthy meals were listed first on the menu. We created three versions of the scenario for each nudge – prosocial only, prosocial plus profit, and profit only. The first made it clear that the nudge was purely prosocial, motivated by a moral obligation to ensure that students ate healthily. The second detailed both the prosocial and financial benefits – that the healthy meals cost less to provide, reducing operating costs and allowing increased salaries for admin staff.
TO THE CORE
1. Businesses need nudges that generate profit as well as promoting beneficial behaviours. This can cause customers to view nudges less favourably. 2. People care about the way nudges are designed and communicated, and notice whether they have an element of self-interest. 3. The ‘tainting effect’ is greatest when customers know an organisation is being deceptive about its motives for using nudges. 4. Honesty appears to be the best policy. Businesses should be transparent about their motives and not try to play down or conceal the benefits they will gain from implementing nudges.
motives for nudging are good”
Adding an element of personal gain appears to taint our positive perception of the selfless behaviour. This matters for a number of reasons. Many nudges combine prosocial intentions with profit. If the latter is viewed negatively, those tainted interventions might damage the reputation – and consequently the performance – of the nudging organisation. That might dissuade it from nudging altogether, with
by Despoina Alempaki, Andrea Isoni & Daniel Read
wbs.ac.uk | Warwick Business School
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