Wednesday Edition
I love the book Nudge—the content's pretty good, the title even better! But I hate—literally hate—the title of the genre. Namely, "behavioral economics."
Oh for God's sake.
Behavioral economics?
Translation?
Psychology!
(Or as I like to call the field, "Economists discover humans.")
But that's actually not the topic of this post.
As I write I sit in a beautiful British Airways Club Class lounge in Heathrow's opulent Terminal 5.
The lounge is big.
The lounge is well appointed.
There are two parts.
There is no distinction between the two parts in terms of access.
The "half" you come into has the food and drink, and the loos.
The other half has no amenities aside from a flight info screen.
The two halves are separated by a glass wall, with a simple door.
Push the door and, voilà, go from one half to the other.
(No signs, no labels, no designations at all.)
Punchline:
The half you enter, now, at 10 a.m., has a ratio of approximately (I counted but may be off a bit) three full seats to every entry seat—it is obviously "crowded."
The other half has a ratio of 6 empty seats to every full seat! (And ... the space between rows of seats is much greater.)
The simple (and totally transparent) dividing wall did it!
Three-to-one versus one-to-six.
Maybe the folks in the entry side like crowds? Not likely, since you see new entrants apparently looking for places with more privacy.
Maybe it's no food and drink? Nope, the food and drink area is just as close to me, in the nearly empty side, as it is for those on the entry side; there just happens to be a door in the middle.
Etc.
That is, there's no "sensible" explanation for the radically greater share of free space on "my side" other than something like the assumption, "It's on the 'far side' of the wall—I don't belong there."
The fun (and seriousness) of the nudge-behavioral economics-psychology "thing" is that the differences, like this one in the BA lounge, are often as not extreme. Not a ten percent difference. Or a twenty-five percent difference. (Which would, in fact, be a damn big deal.) But a 180+ degree flip: 3:1 vs. 1:6.
I could go on and on!
I love this stuff!
(Human psychology, that is—I'm not too keen on economics.)
Let me conclude with one pragmatic point: If you become a "nudgist" and a practitioner of "nudgery," the good news is that you don't have to be a Big Boss. These are, in 9 cases out of 10, "below the radar" phenomena. That is, most are unaware of the behavioral consequences of little nudges—and hence anybody at any level who takes the initiative is effectively allowed to play.
Bottom bottom line: This is very-wildly-insanely powerful stuff!!
Before blogging became all the rage, Tom was posting book reviews and Observations (essentially early blog posts) to this site. You can find the archives below.
What we're talking about
on the front page.
Comments
The first question that comes to mind is "what does BA get out of the dividing line?" It seems unlikely that an organization like BA would commit nudgery for nudgery's sake.
Posted by Matt at October 29, 2009 9:55 AM
Beautiful little post and thanks for the recommend. As for Heathrow...sure it wasn't a class division :-0 ?
All the best from Brighton,
Mark
http://integrationtraining.blogspot.com/
Posted by Leadership Training Mark at October 29, 2009 11:34 AM
Maybe you are being fooled by randomness.
Posted by zorro at October 29, 2009 12:53 PM
You have a seat, you have food, you can afford the flight, you are burning more carbon than a small country (again!) and your are worrying about a glass wall with a door in it? Tom, whilst I am a nudgist by nature, please some perspective here, you are 67 (I believe) make a carbon neutral commitment to 2010, lead that way! Do everything on-line, make that commitment as an organisation, give your book away for free, why not! But please, please no more entries about glass doors, seats and random ratio's masquerading as insight, you are so much better than this...
Posted by Patrick at October 29, 2009 1:20 PM
Carbon neutral Patrick? Heck, I'm making a commitment to leave twice the carbon footprint next year in order to help make the statement that I will NOT be hornswoggled by the global warming crowd. Said crowd is comprised 100% of those who are either too ignorant to understand the weather or have a vested interest in forcing their warped world vision on the rest of us.
The door is there for a very good reason and it most likely has to do with ventilation, AC, or some such.
Posted by Red Island Rhodes at October 29, 2009 1:28 PM
"Beautiful little post."
I wholeheartedly agree.
"If you become a 'nudgist' and a practitioner of 'nudgery,' the good news is that you don't have to be a Big Boss."
I especially love this as everyone can make things happen. This focuses us on our own actions, essentially how we do what we do for best results.
This is a beautiful reminder. Thanks, Tom!
Posted by Judith Ellis at October 29, 2009 3:20 PM
Coming from one that could learn a lot more about nudging...
Looking for insight into how to nudge better!!
Posted by Stephen Garner at October 29, 2009 5:18 PM
(1) Absolutely no class distinction between the halves. Thyat's a guarantee.
(2) I do believe in the main the case for global warming; though extremists overstate--true of everything.
(3) Sorry, I have no intention of goving up face-to-face anything. I surely support the eventual arrival of the much delayed Dreamliner, 20% more fuel efficient. I support tough mileage standards. I believe that VERY green buildings work--and have rapid payback. I believe that the cleantech venture money flooding Silicon Valley is a very good thing. I, a sometimes NIMBY, am on the fence about wind towers along the mountaintop near me in VT--there are better places; solve with innovation transmission loss, and stick 'em in West Texas as Boone Pickens tried. I support efficient light bulbs--if they can make the damn things unshakey and bright enough to read by--at the moment I'm stockpiling the oldies if improvement is not forthcoming (GE says it is). Etc. But elimination of face to face--what the hell is the point of being a human being?
Posted by tom peters at October 29, 2009 5:31 PM
Tom; evening....hmmmmmmmm
As a management extreemist for the past "x" years does this mean you have been guilty of "over stating the case" as you say we all do.
I am not saying eliminate face to face but plant a few more trees for every plane you catch!
I appreciate you are trying to use more media to get yourself across to more people, but please as I sit here by the light of a more than acceptable energy efficient bulb I don't get it, you use technology all day every day (Don't go down the pencil argument please!)yet you'll stock pile the inefficient and the costly just because you can?, surely the nudgist in you says every nudge even to a green agenda helps?
I know for one my kids would appreciate you taking on a greener agenda because you can choose to nudge that too?
One final thought as I review your comments I worked for Vestas briefly in Denmark, Vest who? Do I hear, the worlds largest producer of wind turbines (I believe), these are peppered all the way across Denmark, is Denmark spoiled as a result, are they open to new ideas and thinking, yes, are the NIMBY, not that I saw! It will become the acceptable norm it will be nudged their overtime, some just nudge quicker than others!
I suppose I am challenging you to think differently on how you get face to face, how you might want to nudge differently against a green agenda?
Its not like I am asking you to be a Vegetarian, but why not even that has green house gas reduction credentials these days, I am so glad to have been ahead of my time !!!!!!!!!!!
Seriously though the point of being human for me is to care and to care enough to make those small but significant improvements that a nudge will bring, I am green nudging for my kids, period.
Posted by patrick at October 29, 2009 7:01 PM
Red
Good evening
To borrow the phrase of my ex blind change manager colleauge....
"That is simply wrong!"
I have no vested interests, there is value in living within your means and in simpler ways, we have just gone through putting the future in hock for our kids, why not pile on with a whole heap of eco challenges, bless them they haven't got enough to worry about or sort as a result of our profligate ways?
So back to what Tim used to say "Red that is simply just wrong...."
Have a great day
Patrick
Posted by patrick at October 29, 2009 7:09 PM
I don't know what BA's reason was and should not have speculated. Point is the unadorned reality: simple wall, totally transparent, no indication of anything. and Radical Nuidgery.
This is trivial?
Total baloney!
This is the essence of change.
(E.g., the by now oft repeated experiment, patients see greenery outside their window, recover up to 20% faster than not-green sample.)
(I'd say, without doing the math, tha this was very unlikely to have been random.)
(I was among those put off by it. Checked out the empty room, curious, walked toward the door, definitely hesitated, woman 10 feet ahead of me going in, I asked her, "Any reason I can't go in there?" She responds more or less, "I don't think so," so I wander in.)
Posted by tom peters at October 29, 2009 7:38 PM
Stephen asks: "Looking for insight into how to nudge better!!"
My wife is an expert nudger of me, relatives, friends, everyone she encounters: "Have you tried this?", "Have you heard about that?", "Have you seen the new video?", "Did you know that Stevia is sweeter than sugar, organic with no calories!", and on she goes. Nudge! Nudge!
Posted by Mike L. at October 29, 2009 10:45 PM
Hmm? Are women typically better at nudging? Does nudging come more natural to them? Can nudging can be perceived as nagging? Naw, I guess the former produces positive results and the latter negative ones. I guess it is also all a matter of how it's done.
Posted by Judith Ellis at October 29, 2009 11:08 PM
Wow, this takes me back. My thesis at college in the 70s was on The Psychology of Interior Design - orientation, personal space, intrinsic information, availability of choice, and the like. All the tiny arrangements in our environment that can alter the way we feel, behave and interact, of which this is a perfect example. Deliberate by BA? Possibly, but it might just as easily be a legacy from an earlier design iteration which made a clearer distinction of purpose between the two areas. Or maybe the designer just wanted to have some glass for aesthetic effect, or make the place feel less vast. Whatever, I think it's unlikely that BA intended it to have the effect you describe. Which brings us to the area of unintended consequences.
Posted by RobCH at October 30, 2009 2:40 AM
We're talking about a different nudge, my friends. This definition of nudge is: "trivial" action [simple transparent wall which was not intended to be a barrier to occupancy] leading to "monumental" impact [one side empty, one side full].
By my lights, it is also illustrative of a subset of nudgery, the power of "simple" space configuration decisions to dramatically alter behavior--eg in terms of faace-t-face communicaion frequency, once you are more than 100 feet apart, you might as well be 100 miles apart--literally.
Posted by tom peters at October 30, 2009 2:48 AM
I enjoyed Nudge, and while when you reflect on it the concepts are obvious, the book does show how to make nudging more effective.
It's really about choice architecture. How you structure choices can influence the decisions people will tend to make. In the example above, the wife saying "have you read X" isn't really a nudge. A nudge would be arranging the books she thinks you should read on the middle of the bookshelf, while the ones that weren't so good on the very bottom (hard to reach). So when you go to pick a new book, you're drawn to the easiest to reach and more likely to read the books she placed there.
BA created a reverse nudge if you will (why doesn't seem clear). By putting in the glass wall and door, many will choose not to enter without explicit permission. Thus more people are drawn to the first waiting area than the second. Why is not clear, but they have made a change that alters choices without many really thinking about it.
Posted by Bruce at October 30, 2009 9:44 AM
Brilliant, Bruce. Thank you. (RobCH too! Thanks.) There seems to be a bit of the heard mentality implied in structure that I typically try to avoid like the plague. I would probably begin at the bottom of the books being suggested. But I clearly understand the value in knowing how people typically respond in order to extract value and eliminate waste. The space at BA seemed like a waste and perhaps causes less efficiency in some other areas. I probably would have been the lone person sitting on the other side.
Understanding the basic psychology of the masses in any environment, although this changes in various part of the world even in various regions of any country, seems important for advertising and marketing. For me, what the nudge simply says is that I am fully aware of my environment and will arrange situations so that the experience will be best. This is felt and duplicated by the customer’s sense of comfort or dread (what’s on the other side) even if they have not understood it intricately. Tom, being a keen observer seems to simply shed light on the obvious. This is why he does what he does so very well.
Last night I saw a great discussion on Charlie Rose with eminent brain researchers discussing the functions of the brain. (I watched it twice, once on TV and the other online shortly thereafter.) What nudging seems to do is to create no new paths but enables us to follow on the same road as others. For marketers and advertisers, this is important for obvious reasons. Nudging seems to be about ordering our existence on purpose. I like this. The beauty in the post was partially the reminder to just make things simpler and be more conscious of how we arrange things, even our various thoughts which will materialize.
All of the scientists on Charlie Rose had wonderful discoveries to share. But Cornelia Bargmann was most outstanding in the delivery of her brilliant research. She studies worms in order to understand the functioning of the human brain. There are many similarities of wiring and function. Dr. Bargmann said many things of interest, but one thing struck me profoundly: "A thought that you have is turned into a biological physical reality by your brain." Our genes, which are genetically the same, create the physicality of our thoughts. Our inclination to follow nudges seems to have to do with both genetics and socialization. How both are determined, the ripple effect, is also interesting and valuable in life and business. This seems to be Tom's basic point as I understand it.
Nudging seems to determine thoughtfulness or the lack thereof, who will benefit most from it, and the intended effect or unintended consequences as Rob CH addressed. Tom, this is a "beautiful little post," indeed. The post itself is a nudge.
Posted by Judith Ellis at October 30, 2009 11:37 AM
McDonalds were deisgned (starting in the 1970's) at one time to be a bit uncomfortable (loud colors, lousy accoustics etc)
so people wouldn't hang around. They are changing that so people will hang around to compete with the likes of Starbucks.
I don't see a glass wall with a door in it as a nudge. Its just not subtle enough. The fact that people ask if it OK to go through the door shows that people are very much aware of it. In the case of old-school McDonalds, people leave when they are done with thier meal because they are a bit uncomforatable, but they are probably not aware of why they are uncomforable.
Posted by zorro at October 30, 2009 11:48 AM
In case you missed the Cool Friend interview with Nudge coauthor Richard Thaler, you can find it here:
http://www.tompeters.com/cool_friends/content.php?note=010570.php
Also of interest is the Cool Friend interview with Dan Ariely, author of Predictably Irrational:
http://www.tompeters.com/cool_friends/content.php?note=010513.php
Posted by Shelley Dolley at October 30, 2009 1:04 PM
Zorro, subtle or not, most public thresholds are enjoyably complex "nudge" areas, whether they are real or virtual. They introduce minute but significant questions of: purpose ("What does this threshold signify? Is the space beyond for something that I want or don't want [eg quiet/smoking]?"); status or permission ("Am I supposed/ allowed to go in here?"); distance ("Do I want to go any further from where I started?"); escape limitation ("Will there be another way out?"); association ("Will I like/dislike the sort of people in there?); appearance ("Will I look stupid if I go in and then come straight back out again?"); and balance of benefit ("Do the unknown benefits beyond the threshold outweigh the known benefits of where I am now?") among many others. So the introduction of a threshold in this case, deliberate or not, establishes a moment of hesitation, which amongst the general unsettlement involved in the airport experience, would be more than enough to skew the ratios as Tom describes.
Every time you drive past a "Last filling station for 50 miles" sign and, even though your tank is still half full, you wonder if maybe you should just fill up anyway, you're having a threshold moment.
Posted by RobCH at October 30, 2009 1:17 PM
Nudge concept, super, unless you have the wrong overall concept and goal!
Glass partitions in airport waiting areas?
I've seen them ever since airlines/terminal owners decided to separate smokers from non-smokers by erecting the glass partitions.
Just saw them in Venice (VCE) and Salt Lake City last week - now they're powerful social mystery spaces!
Posted by Randy at October 30, 2009 1:17 PM
RobCH -
I'm just thinking of what the word nudge means to me - and its usually a subtle suggestion that
changes how you behave or think - walls (transparent or not) just don't fall into the category of subtle for me.
Posted by zorro at October 30, 2009 1:32 PM
Zorro, fair enough. Each to his own nudge.
Posted by RobCH at October 30, 2009 1:39 PM
"Nudge concept, super, unless you have the wrong overall concept and goal!"
That's a great thought, Randy. Just had a converstaion with one of my very thoughtful and incredibly evolved brothers about the Charlie Rose show. I mentioned the scripture, "As a man thinks in his heart, so is he." His response: "That can be both a positive or a negative."
Posted by Judith Ellis at October 30, 2009 2:01 PM
Thanks, Shelley. I read them but I'll do so again. Great!
Posted by Judith Ellis at October 30, 2009 2:03 PM
Tom - did you really read Nudge?
Your example is trivial and unimportant.
Here's what they say at the Books website
"Every day, we make decisions about how to invest our money, where
to send our children to school, and what to put on our dinner plates.
Unfortunately, we often make poor choices - and look back at them with bafflement! We do this because as human beings, we all are susceptible to a wide array of routine biases that can lead to an equally wide array of embarrassing blunders in education, personal finance, health care, mortgages and credit cards, happiness, and even the planet itself.
Our errors are what make us human, but up till now, they have been largely ignored by those around us, whether they make a complex public policy or sell us a plain old bottle of wine.
In this ground-breaking collaboration, two extraordinary, if ultimately human, thinkers, economist Richard Thaler and legal scholar Cass Sunstein, invite us into an alternative world, one that takes our humanness as a given. They show that by knowing how people think, we can design choice environments that make it easier for them to choose what is best for themselves, their families, and their society. "
Heres is a tiny excerpt from the book.
A longer one is available here
http://www.nudges.org/thebook.cfm
There is good evidence why its called behavioral economics.
--------------------------------
9. Dollar a day. Teenage pregnancy is a serious problem for many girls,
and those who have one child, at (say) eighteen, often become pregnant
again within a year or two. Several cities, including Greensboro, North
Carolina, have experimented with a “dollar a day” program, by which
teenage girls with a baby receive a dollar for each day in which they are not
pregnant.3 Thus far the results have been extremely promising. A dollar a
day is a trivial cost to the city, even for a year or two, so the plan’s total cost
is extremely low, but the small recurring payment is salient enough to encourage
teenage mothers to take steps to avoid getting pregnant again.
And because taxpayers end up paying a significant amount for many children
born to teenagers, the costs appear to be far less than the benefits.
Many people are touting “dollar a day” as a model program for helping reduce
teenage pregnancies. (Surely there are more such programs to be invented.
Consider that a nudge to think of one.)
Posted by zorro at October 30, 2009 6:37 PM
Just read the Cool Friends interview again with Richard Thaler and it's great! Yeah, I had forgotten most of it and I have not as of yet read the book. I'll get it for sure. I love the broad application from politics to economics. As psychology has various branches, I assume that "behavioral economics" can be considered among these. I clearly understand the term as a subset of psychology relevant to why and how we spend.
The credit card example that Thaler gives for full disclosure as a way of regulating markets is great. I agree that the Fed's role in this regard could be lessened rather fundamentally. New rules, though necessary, are often continuums of the same, although many times things remain the same. A nudge in this regard seems most certainly relevant and necessary for the change we now need. I suspect that this will also not be the only change needed. But it seems monumental to me and fundamental to our self-regulating. Self-deception is difficult with such disclosures.
I agree with Thayer that with "this small, nearly costless change we could revolutionize the way we regulate credit markets." He continues, "This would essentially deregulate credit markets because there would be much less need for rules and regulations." It's a great interview! I'm stopping now, but there are so many more things to discuss. Thanks, erik, for the interview! Now, I'll order the book.
Posted by Judith Ellis at November 1, 2009 12:30 PM
Judith - personally, I thought Mr. Thaler's credit card idea was naive. Firstly, it wasn't about regulation but about stepping back, not legislating and letting the market sort itself out. Secondly, well, haven't we just seen what happens when we leave global derivative markets to regulate themselves. (OK, in principle there were rules but let's not kid ourselves!)
I agree we need to de-clutter the statute books and stop politicians legislating on the most trivial, micro-management basis. But I also think we need some inspired legislation that lays down basic operating rules, basic liquidity tests (lender and borrower alike) and then polices the rules effectively.
Posted by Mark JF at November 2, 2009 9:15 AM
Good to see you, Mark. Any action that makes us more aware and more responsible for our actions, I wholeheartedly support. Thaler seems to be proposing self-responsibility by means of full economic disclosure. So, the amount of interest paid, for example, as opposed to the principal would be a full disclosure to credit card or mortgage holders. I am with you in that federal legislation is needed. I'm not sure if Thaler himself is proposing that this nudge alone will solve the problem. He even addresses this in the interview.
Thaler seems to simply say that various political parties use his ideas to support their various causes. So, it has broad appeal. For me, however, it's purely a means of getting us to be more responsible and to avoid self-deception. (I do think that what Thaler proposes helps aggregately over time.) By self-deception I mean we will have before us the reality of our decisions so if we decide to sign a contract we are doing so with full awareness of the consequences. Many people were simply not aware. We can talk about whose responsibility this is, but to avoid another such crisis we need to make some changes now all around, personally and legislatively. There can be a combination of solutions, no?
There are many predatory lenders and credit card companies and this would limit their actions. As a person who once sold real estate (my brother was also a successful owner of a mortgage company), I will tell you that many of my most clients were astute businessmen and women and they didn’t have a clue as to how interest rates were calculated. Taking them through an amortization chart was challenging. But I did so anyway although this could have meant not making the sale as this was not my responsibility. I was on the sales end, not the mortgage end. Many agents and loan officers could have cared less. For many clients what was most was important was whether they could afford to pay the monthly note.
The problem with what happened with these various loans was that many of them were ARMs (Adjustable Rate Mortgages) and once the adjustment kicked in they could no longer pay the note, not to mention that they were already essentially renting the house as there was so little reduction in the principal. I can only imagine what less astute people were doing. My market was the very high end market. In fact, middle class people, the working poor (no doc loans they were called), and minorities were targeted for predatory loans. There are class action lawsuits right now in the courts for this reason. Again, I’m with you on the need for legislation too. But this nudge is a beautiful thing indeed.
Posted by Judith Ellis at November 2, 2009 10:36 AM
In The Devil Wears Prada, the a high-level example of this is illustrated in the scene where Anne Hathaway snickers while Meryl Streep and company are choosing colours/fabrics/styles for the coming year.
Meryl delivers a cultural influence monologue explaing to Anne that by the time she "chose" to wear the old blue cable-knit sweater she happens to have on, a good many decisions had already been made for her by people like the ones at whom she had just snickered.
Posted by Milton Friesen at November 2, 2009 11:36 AM
Excellent point, Milton. Thanks! The question I guess is who's doing the choosing? In government it sure does not seem to be the people who are choosing and on Wall Street bankers are most certainly on with the next damming derivatives. So, who's choosing? Special interests, that's who!!! "The Devil Wears Prada" is a great movie and Streep is a god!
Posted by Judith Ellis at November 2, 2009 12:09 PM
Tom, I'm glad to see you enjoy human psychology and the study of why people make the choices they do. For any student advancing past Econ 101, that is economics. The Economist (if she is true to her art) observes that the clear majority of people constrain themselves to one side of the lounge and comes up with an explanation as to Why. Not why the partition exists, but why the people stay confined. I would wager that if there were multiple glass partitions the seating distribution would be very different. My guess is people see the wall and hesitate. In my experience of airports, it is relatively easy to be in the "wrong" place. However, if there were multiple walls then it is no longer a barricade; but rather a partition similar to a library with multiple reading rooms.
Posted by Peter at November 2, 2009 4:32 PM
The concept of Nudge in subtly persuading people to make right decisions is quite powerful. I am toying lately with the idea of using 'nudges' for excellence in organizations, like say better quality; removing tardiness or absenteeism. Let's see if I can get something out (will post it once I have it @http://subabo.wordpress.com)
Anyway, agree it's quite powerful and can be tried out to very many areas.
Posted by suba at November 4, 2009 5:39 AM