• literary meaning of nudge is to “touch or push gently”

• Thaler and Sunstein define nudge as “any aspect of the choice architecture that alters people's behavior in a predictable way without forbidding any options or significantly changing their economic incentives.”

• The use of ‘nudge’ in policy design means that the policy enforcer (government) has to induce a change in the behavior of the policy subject (individual) in a way that is not coercive.

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• Many countries (US and England) have been used behavioral economics when making their policies (but not Korea)

• Behavioral economics -> merging psychology & economics: scholars have found out that traditional economics do not explain certain aspects of unpredictable human behavior. Psychology helped revise their assumption of a ‘rational human’ which is used to develop economic models

 

• Policies using ‘nudge’ are based on an inductive approach. Understanding of human psychology can help induce individuals to act in a way that the policy enforcer wants them to.

• Popular examples

• At Amsterdam’s Schiphol Airport, a drawing of a fly on the urinal reduced the amount of urine splashing out by 80%.

• In 2009, the Volkswagen Group decorated the stairs in the shape of a piano keyboard at the Odenplan subway station in Stockholm and made the piano sound when people stepped on it. As a result, 66% more people used stairs instead of escalators.

• 92% of Brazilian citizens do not wear seat belts when riding a taxi. To solve this problem, the Fiat car offered free wifi for passengers who wear seat belts in the taxi. As a result, all 4,500 passengers wore seat belts in the back seat. 

• We (Paradigm Academy) aim to use these kinds of inductive methods to lead individuals to act in a way that could benefit the society. 

 

• We need to create innovations that are “designed to be chosen”, we ourselves need to be choice architects

• Weave psychological joints of human decision making into innovation

 

• social nudges : In order to shift one’s behavior, choice architects might simply inform people about what other people are doing. 

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Examples:

1. “Social norms” approach in order to reduce drinking and other undesirable activities. Problem of alcohol abuse is increasing among college students. Students believe that alcohol abuse is far more pervasive than it actually is. They are influenced by their beliefs about what other college students do. This indicates that alcohol abuse will increase if students have an exaggerated sense of how much other students are drinking. Montana adopted an educational campaign that stressed the fact that majorities of citizens of Montana do not drink. For example, one advertisement states “81% of Montana college students have four or fewer alcohol drinks each week.”/ “70% of Montana teens are tobacco free.” This led to improvements in the accuracy of social perceptions & statistically significant decreases in smoking.

2. Social nudges used to decrease energy use. Experiment involved 300 households in San Marcos, California. 1) All households were informed about how much energy they had used in previous weeks & average consumption of energy by households in their neighborhood. As a result, above-average energy users significantly decreased their energy use while below-average energy users significantly increased their energy use. (negative boomerang effect) 2) half of the households were given small, nonverbal signals that their energy consumption was socially approved or socially disapproved. Those households that consumed more than the norm received an unhappy “emoticon,” whereas those that consumed less than the norm received a happy emoticon. Big energy users showed an even larger decrease when they received the unhappy emoticon. Moreover, when below-average energy users received the happy emoticon, the boomerang effect completely disappeared. When they were merely told that their energy use was below average, they felt that they had some “room” to increase consumption, but when the informational message was combined with an emotional nudge, they didn’t adjust their use upward.