Keeping behavioural science on the straight and narrow

As we see behavioural science being applied all around us, we are left with more questions than answers

Behavioural science has well and truly left obscurity and entered the mainstream. Governments – if they haven’t already done so – are following in the footsteps of the UK and setting up nudge units, and companies are using all the behavioural tricks in the box to market their wares to consumers. But is all that done responsibly? And if not, what should we do to make sure it is?

Those questions formed the backdrop of the March meeting of the London Behavioural Economics Network (LBEN). To celebrate its fifth anniversary, they had a panel of seasoned practitioners pondering the ethics and the responsible application of behavioural science.

Behavioural economics and its close cousin, behavioural science, have of course been in existence for much longer than five years. Amos Tversky and Daniel Kahneman published their famous Econometrica paper on the Prospect Theory more than 35 years ago. But for much of the time since then it all remained well outside the mainstream.

Even ten years ago, as people began to apply concepts from behavioural science, it was pretty obscure – you needed to convince your boss that you were not a lunatic, as Greg Davies, one of the panellists, remarked. But things are very different now. The popularity of the domain is rising, and with it, the suspicion that it is being abused.

Richard Thaler, another pioneer of behavioural economics and co-author of Nudge, is well aware of that:

 

Some people are distrustful of any nudges – good or bad – because nudges are by definition manipulative. And they have a point: nudges change people’s behaviour without their being aware of this. Yet ‘libertarian paternalists *’ maintain that as long as nudges are not sneaky, don’t restrict the choices of the people being nudged and are in their interest, things are OK.

The behaviouralists’ angst

Nonetheless the ongoing suspicion and criticism causes behavioural economists a fair amount of angst. Cass Sunstein has taken up the defence of nudges, and Pelle Guldborg Hansen has explored the criticism of nudges and attempted to nail down the definition of a nudge.

But as Leigh Caldwell, another panellist observed, one of the questions that this debate sidesteps is of course: “what do people really want?” Of course, you can ask people directly. For instance, people who struggle to manage their finances may state quite explicitly that they need help. Nudges to help them keep their spending under control could hardly be viewed as unethical.

Still, many assumptions are made that don’t stand up all that well to scrutiny. “Is it in someone’s interest to be nudged to save for their retirement rather than buy a new pair of shoes?” wondered panellist Emily Haisley. Usually the choice we would make in a ‘cold’ state of mind, free from immediate temptation, is regarded as the right one. Decisions made in the ‘hot’ state, when our impulsive System 1 is in control, are generally assumed to be the ones that we’ll regret later on. But is that really so? After several minutes of debate, the panel didn’t manage to come to a conclusion.

panelchairs

…and soon the chairs would be engulfed in engrossing debate!

What about the criticism that behavioural science is all about manipulation? Panellist Oli Payne dug into his own experience and responded by pointing at an inconvenient truth. Manipulation may not be in the eye of the beholder, but we certainly don’t consider all instances as equal, it seems. A prime example of consumer manipulation was the launch of Procter & Gamble’s soft drink, Sunny Delight. That was actually a distinctly downmarket product, with just 5% citrus juice in a concoction of water, sugar, vegetable oil, thickeners and additives. Nonetheless, P&G’s marketers ensured it was sold in the chiller cabinets, next to the bona fide fruit juices. It worked: consumers paid the premium price, in the belief that they were buying something healthy and worthwhile. (It didn’t last: three years later, the subterfuge had been well and truly revealed and Sunny D had fallen from grace…)

 

But when similar tricks are used to manipulate people to recycle more, there is hardly any moral indignation. That makes objective evaluation of what is (and is not) responsible use of behavioural ploys really quite hard, if not impossible.

Perhaps educating people better, so they are more aware of our cognitive biases, and the techniques used by others, well-meaning or not, to influence us might help? Unfortunately there is little or no evidence that this works. Even Daniel Kahneman admits to being just as prone to biases as the next person.

More questions than answers

The concern about unethical use of instruments that affect our choices and our behaviour without us realizing is real and justified. And the desire to set and enforce new ethical standards for behavioural practitioners is understandable.

Is that possible? Could we come up with solid definitions of what is, and what is not acceptable? Could we establish a body whose judgement would guard us from evil nudges? Who would guard these guards themselves?

snakeoil

Vintage manipulation

The panel discussion at the LBEN left the audience with more questions than answers. Yet, enforceable standards and rules rely on clear-cut, unambiguous definitions, and a pile of difficult questions is not a good starting point. With a bad regulatory framework, we risk throwing out the good nudges with the evil bathwater.

Perhaps new regulations are not really needed, anyway.

Attempts to manipulate and mislead people are not new. Yet society has managed to curtail the most egregious excesses. Yes, we have laws to tackle outright fraud, but for the fuzzy stuff we rely on a system of much more informal checks and balances – consumer organizations, the media, the social media. If we could deal with the snake oil of the late 19th century, and with the pretend orange juice of the late 20th, we should be able to deal with the ‘evil’ nudges that the 21st century will throw at us.

For the time being at least, it seems the best we can (and should) do is to remain vigilant and critical of what we see, and shout out when we observe something dubious – whatever side we are on, practitioners or simple nudgees.

All we need now is a clever nudge to help us do so.

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About koenfucius

Wisdom or koenfusion? Maybe the difference is not that big.
This entry was posted in Behavioural economics, Cognitive biases and fallacies, Ethics and tagged , . Bookmark the permalink.

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