Nudge in the Right Direction
March 30, 2009
BY MICHAEL KRAUSS
dream of making small changes to their products and services that
have big impact for their customers and their company’s
professor of behavioral science and economics and director of
the Center for Decision Research at the Booth School of Business
at the University of Chicago, thinks marketers can do more than
people know a lot in their gut,” Thaler says, “but
they haven’t systematized it. They know that part of the
reason people buy a [particular] car is that it helps establish
their identity. It’s not a cold calculation. It’s
a hot calculation. I don’t think that marketers know how
to formally incorporate those ideas into a systematic analysis.”
new book with co-author and University of Chicago law professor
Cass Sunstein, Nudge: Improving Decisions About Health, Wealth
and Happiness, provides breakthrough insights for marketers
that can lead to the design of more scientific and systematic
according to Thaler, “is some small feature in the environment
that attracts our attention and alters our behavior.” As
marketers, we all constantly try to nudge our customers toward
examples of opportunities for favorably nudging buyers, and describes
ways to improve what he calls the choice architecture—the
environment in which decisions are structured and buying choices
are made. In the process, he illustrates how executives can assume
greater responsibility for creating scenarios where both customers
and organizations prosper. One of his favorite examples relates
to improving unpleasant public bathroom facilities through a slight
was a sanitation problem at the men’s room at the Amsterdam
International Airport,” Thaler says. “It turns out
that men, when they are doing their business in the rest room,
aren’t all that careful.
could post signs exhorting neatness and cleanliness, but those
would not be clever nudges. Instead, airport management etched
an image of a fly at the bottom of the urinals,” Thaler
says. “By giving men something to aim at, it reduced spillage
by 80%, creating a cleaner environment for travelers and reducing
sanitation and maintenance costs,” Thaler adds. It also
spawned an online business. Now everyone can buy the little fly
decals online and add them to urinals instead of etching the porcelain.
fly creates a context and gives the bathroom user a default option
and a nudge as to where to aim.
who designs an environment in which people choose is a choice
architect,” Thaler says. He sees the role of choice architect
as an increasingly important position in the years to come.
you’re working at a restaurant and your job is to write
the menu, you are a choice architect. Even if the chef tells you
what he’s cooking, you have to decide how to organize the
menu,” he says.
the cold appetizers and the hot appetizers be in separate categories?
Should the items appear in order of price, or should the meat
and fish dishes be separate? One conclusion from the study of
the psychology of decision-making can be summarized as, ‘everything
matters,’ ” Thaler says.
have been savvy choice architects for years by placing fast-moving,
high-margin products at eye level. Thaler says snack makers like
Nabisco practice smart choice architecture by offering 100-calorie
snack packs with solid profit margins while nudging consumers
to make healthier choices.
He sees an
opportunity for better choice architecture in the marketing of
financial services products, in helping employees decide how to
invest their 401k dollars, in making healthcare decisions, in
designing school lunch menus and even in how we manage organ donation
thousands of lives could be saved each year though better design
of the choice architecture associated with organ donation. Today,
prospective donors must opt-in to the donor program. He argues
that lives could be saved if the default option for organ donation
was automatic inclusion of all licensed drivers, and a requirement
for those who desire not to serve as organ donors to actively
Sunstein are putting empirical evidence to work to demonstrate
what many marketers have always known in their gut, which is if
we can establish the environment in which a buyer makes decisions,
we can influence that buyer for better or worse.
Thaler believes designing the context in which information about
products or services is shared will grow increasingly important
for marketers as more information is available online.
the world changes to having people shop online, where they can
conveniently do [multiple] comparisons, the way you design and
describe your product must change dramatically,” he says.
point is that online buyers have more information at their fingertips.
They can compare 20 alternatives the way buyers once could compare
only two. The person who designs the Web site that compares and
contrasts that data—the choice architect—will have
considerable power and influence. He will have the ability to
nudge buyers in one direction or another based on how the data
an understanding of choice architecture “will change the
way people think about their jobs.” Marketers should be
first in line to make that change.
Krauss is president of Market Strategy Group, based in Chicago,
and can be reached at Michael.Krauss@Mkt-strat.com