Understanding the Power of Nudging

What is nudging? Nicole Robitaille, assistant professor of marketing at Smith School of Business, says nudging is a strategic application of behavioural science that guides people to make decisions that are in their best interests. “It’s a toolkit,” she says. 

In this video, Robitaille explores how marketers can employ nudging and how nudges are all around us. (That default tipping option at restaurants? That’s a nudge.) When done correctly, nudging can have a profound impact on society. Robitaille’s research into organ donation reveals how incorporating subtle nudges during the driver’s licence registration process can yield meaningful increases in donor participation, ultimately saving lives. 

Robitaille also addresses key nudging issues. Ethical implementation, for example. She urges marketers to wield nudges responsibly. And she dispels common misconceptions about nudging, emphasizing its limitations to easily solve complex problems. 

[MUSIC PLAYING]

Nicole Robitaille:

00:08: What is nudging?

As a behavioural scientist, one of the things I’m really interested in is how we can affect people’s behaviour. So nudging is the idea of rather than trying to change people’s behaviour by changing the rules or mandating something or taking choices away, or changing their behaviour by adding incentives or penalties, the idea with nudging is we can use psychology to gently guide people to make decisions that are in their best interests. 

00:34: What are some examples of nudging? 

So, we encounter nudges all the time. One of the most famous examples is the use of what’s called a default option. A default option is when something’s pre-selected for you, but you have the option if you want to change it. So when you go to a restaurant, if you’ve ever seen they have pre-selected options for what different tips could be, that’s a nudge. 

It's going to make you more likely to select those pre-set options as opposed to putting in your own amount. 

00:59: Why is nudging effective? 

Nudging is effective because it applies what we understand about how people make decisions and psychology to their advantage. And when we have a really good understanding of the way people are going to respond to certain information, we can actually make predictions of how they’re going to respond when we implement a policy change. For example, if we’re going to make things easier, we know they’re more likely to follow through, and we can use that information to make effective policy change. 

01:26: How much of an impact can nudging have? 

One of the really exciting things about nudging is that sometimes even small, costless changes can have huge impacts. One example that I think illustrates this really nicely is my research on organ donation. With some really small changes, we were able to more than double registrations. 

What’s really interesting about organ donation as a problem is that most people actually support organ donation. More than 95 per cent of the people in North America support it, say they’re willing to register. But at the time of the study, less than 24 per cent of people were registered. This is a huge gap between people’s intentions and their action. 

And so, what we wanted to do was see whether we could actually have an impact with nudging. One of the first things we wanted to look at was, Could we make the form simpler? The current form was very complex. It had a lot of legalese on it. It had a lot of information that it was asking people to fill in that wasn’t required for the process. So, could we just create a simpler form? 

Also, what about when we give the form? Typically, with what they were doing is they were mailing it to people with their driver’s licence, or in the middle of the transaction [at the government service centre], they would interrupt you and ask if you’d like to register today. But what if we gave it to people when they walked into a Service Ontario centre — they’re waiting, they have nothing to do — what if we gave them a few minutes to think about this decision and give them time to contemplate? What if we added to that form a nudge? What if we asked people: “If you needed a transplant today, would you have one? Help save lives.” And if we ask people to think about this, like “Yeah, if I needed a transplant, I would have one.” And just with those small changes, essentially costless, they’re already giving out a form, we more than doubled registrations. And this can have a huge impact. 

If we look at doubling registrations in a single service centre, if we scaled that up, you’d be looking at 225,000 new registrations annually. And what was really exciting about this project is Ontario listened. They [the government] created a new version of the form. And we went from 24 per cent registration at the time of the study to now we’re up to 35 per cent registered in Ontario. 

But what made this project particularly exciting to me is, I remember the day that the data came in for this project [and] it occurred to me that I was not just increasing some numbers on a spreadsheet, but I had increased the number of people who registered as an organ donor. And that this work might not only inform policy, but it might save lives. And it was the first time I cried when I saw data. 

03:45: What are some ethical considerations around nudging? 

One of the reasons many behavioural scientists don’t support changing the default organ donation policy is there’s a number of people who might not be informed of that change or might not be able to give informed consent. Defaults sometimes can be really strong motivators and almost strong-arm people into doing things. 

There’s a great paper on dark defaults that showed that in a political campaign, one politician was automatically enrolling donors into a continuous donation cycle. It’s really important that firms do not take advantage of the way people make decisions to profit against them. It’s important that we nudge for good. 

04:25: What are some major misconceptions around nudging? 

I would say that there are three common misconceptions to nudging. Nudging is not one thing. There’s not just a nudge. Nudging is an application of behavioural science and a really strong understanding of psychology and economics. And it’s a toolkit. 

Another misconception is something that worked in one context is going to work for me. So we know that social norms worked here, it’s going to work there. That’s a huge misconception. You really need to understand the context. 

In our tax work, prior work had shown that telling nine out of 10 people to pay their taxes on time works really well. That does work well for individuals. But we were looking at nudging organizations. And organizations have different goals. And so there we found that they already have the motivations to pay; there’s lots of financial incentives there. But if we could give them a nice planning prompt and a clear step-by-step guide of what to do, that was going to be really effective there. 

It’s also important to realize that nudges can’t fix every problem. If a form is too difficult to complete or the process is too difficult, adding a catchy message on the form itself is not going to have any impact. Sometimes you need to change the policy. Sometimes there’s systemic problems. Sometimes you need new rules, new regulations. So sometimes a nudge isn’t going to be the fix.