#125 What Choice Architectures Am I Creating?

Choice architecture is the choice environment in which a decision is made. The term, coined by Richard Thaler and Cass Sunstein, brings awareness to the fact that humans do not always make the best decisions and that choice environments can be designed to nudge us in particular directions.

For example, the way products are arranged in a supermarket is a classic example of a choice environment. The placement of items on shelves, at eye-level versus bottom shelf, or the arrangement of sweets (candy) and magazines near the checkout, all influence our choices. In this environment, the supermarket is the choice architect designing the environment to nudge us towards certain purchasing decisions. You will see the same nudging pretty much wherever you go:

  • Restaurants (e.g., menu, wine glasses and list);
  • Online shops (“best-seller”, “limited offer”);
  • Healthcare setting (how doctors frame options); and
  • Increasingly in public policy (from tax on plastic bags to tax breaks and government nudge units).

The reality is that each and every situation in life is giving us cues to act in certain ways. Therefore, if we want to change a certain behaviour, we may need to change the cues or at the very least become aware of their effects. The Save More Tomorrow programme is a real-life example. Designed by Richard Thaler and Shlomo Benartzi, it leveraged the power of defaults and human tendencies towards inertia and status quo bias to nudge employees into saving more for retirement. In fact, in the original programme, the savings rates for participants went from 3.5% to 13.6% over the course of 40 months. Pretty impressive! Here are two of key changes introduced:

  • Automatic Enrolment: Rather than requiring employees to opt into the retirement savings plan, the programme made enrolment automatic although employees were still free to opt-out.
  • Automatic Escalation: The programme also included an automatic increase in the percentage of salary contributed to the plan each year. This was timed to coincide with annual pay raises, so take-home pay did not fall.

Whilst we can become aware of choice environments and, increasingly, how we are being nudged, we do not have much control over these environments. We do, however, have control over the choice environments we create. You may not see yourself as a choice architect and yet your home, and particularly your kitchen, is designed to promote certain behaviours. A big bowl of fruit on the counter versus a bowl of cookies? How do you feel you might promote healthier eating at home?

How about at work? For instance, how might you design your workspace and work practices to promote greater productivity? What are they currently promoting?

Just becoming aware of the choice architectures that we engage with each and every day and in turn of the ones we are creating can be a major first step in understanding our own biases and defaults.

Questions in the Image:

  • What choice architectures am I creating?
  • What am I truly nudging people to do?
  • What human biases are in play?

Want to Read More Around This Topic?

Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard H. Thaler and Cass R. Sunstein is a definitive text on choice architecture. In this book, the authors develop the concept of choice architecture and nudge theory, which is about how to present different options to help people make better decisions. The question really is for whom the decision is “better”.

Nurturing Curiosity – Daily Practice: This is part of the Nurturing Curiosity series of tools, insights and questions designed to help nurture curiosity as part of our daily practice. In point of fact, every interaction we have is an opportunity to question what we are observing and how we and others are seeing the world. Also remember that questions come in many forms throughout our day. Thinking about nudge theory and choice architecture brought up a number of questions – clearly humans have been doing this forever but now that we have better understanding, and a growing body of scientific work, of how our psyche can be hijacked, is it ethical to take advantage of human biases? Take a second to think this over. Now, was this question designed to nudge you to say No? Choice architecture and nudging are everywhere. The invitation is to keep this question in your back pocket: How am I not noticing how I am being nudged?

About Tom O’Leary

I coach, mentor and teach high performers to thrive by focusing on the choices we make.

In truth, our paths in life are paved by those choices. We can talk all day but to make our lot better we need to make the smartest decisions and then execute on them as best possible.

My view is that it is about slowing down to speed up. This means spending time being curious and contemplating what might be possible so that when we take action, we can bring all our energy and power to bear.

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