A Short Course in Behavioural Economics

Via MetaFilter, here is a really super interesting series of writeups from a Master Class given by Richard Thaler and Nobel Laureate Daniel Kahneman. I’ve only read a bit of it so far, but I had a real “Ooh! Ooh! YES!” moment when reading this piece, where they talk about a ‘nudge’.

The idea is really deep, and I’ve seen it in a bunch of other places, but always looking at the idea somewhat askance, or simplified, or only partially. You start with the understanding that for a bunch of things, you have to meddle, because you have to make a choice, and that choice will affect things. You can’t not meddle; you can’t not make a choice. There’s no abstaining, or being neutral, or whatever. Look around the room you’re in right now. Someone had to decide where to put the door. They couldn’t not decide where to put the door. Even deciding not to have a door would have been a choice. Where they put the door affects how you can use it, which way it opens, how you can place furniture in the room, and so on. So what you should be doing when making a choice like this is, at the very least, not making a bad one. You should be avoiding obviously bad design decisions, like putting the door on the ceiling.

Ok? Cool. So the next step is getting even smarter than that, and making decisions that encourage, or ‘nudge’ people towards desirable behavior, whatever you decide is desirable. Doing this well requires you to understand how people actually use stuff, rather than what they think they do and what they say they do. People don’t know what they really do, or they know and lie for some reason. There’s an awesome example of a urinal with an image of a fly, just one, baked into it. It reduces the rather disgusting ‘overspray’ in airport mens rooms because apparently men aim at the fly, so they miss the bowl less. There’s no forcing here, no imperious little passive-aggressive notes on the wall chastising you to aim better, just this simple little thing designed in that elicits the desired behavior, as if by magic. Yet if you ask a bunch of men if they aim into the bowl well, I’m sure they’ll all tell you they’re pretty good. Of course they’re not one of those disgusting people who miss the bowl, and how dare you suggest they might be!

I’ve long been a fan of the idea of ‘sensible defaults’, and designing things so that it’s easier to get things right than to get them wrong. The concept discussed above, and in the article, is an extension, or possibly the bedrock, of the idea of sensible defaults. I see so many things in the companies I consult for where they could be making better use of these ideas to make their employees lives easier and more productive. There are so many stupid forms, processes, procedures, methods, etc. that are over-complex and don’t have sensible defaults. Worse, they often actively discourage desirable behavior by making it hard to get things right. The second link has an example of the magnetic stripe on the travel card thing for the Paris subway system (Le Metro). You can’t put the card in the wrong way. There are 4 ways you can insert the card into a turnstile, and they all work. We’ve got a magnetic card thing for our trains here in Melbourne too, and there are the same 4 ways to put the card in, but only 1 works. So, you have only a 25% chance of getting it right if you’re not actively trying to get it right. The people designing the system could have designed it for 100% chance, like Le Metro, but they didn’t.

Things like that really shit me.

There are a bunch of other examples of this idea in that link, so I highly recommend you go read it. It’s really fascinating, exciting stuff.


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