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Illustration: Mike Pick, adapted from photograph by Sir Mervs
For those of us familiar with the strange land that is Washington, DC, it’s tempting to snicker a bit at the sudden star turn of the field of behavioral economics in our nation’s capital. Books like Cass Sunstein and Richard Thaler’s Nudge, Dan Ariely’s Predictably Irrational, and George Akerlof and Robert Shiller’s Animal Spirits are being passed around like samizdat. Human beings, the thinking goes, bear little more than a passing resemblance to the “economic man” of classic econ textbooks. We’re messy creatures, not altogether skilled at maximizing value, or efficiency, or all those other things our self-interest is supposed to drive us to attain.
“People make bad choices,” says Swarthmore psychologist Barry Schwartz, author of The Paradox of Choice. “Or they make no choices at all unless you hold a gun to their heads.” Look no further than the mortgage mess. For all the malevolence on the part of mortgage lenders, many of us simply took on loans we couldn’t possibly carry long term. Moreover, we regularly do things like leave money on the table, letting our confusion over retirement plans scare us away from employers matching funds. The dream of Nudge-ers, as the shorthand goes, is that if the Obama Administration can just tweak the way that we make choices, even just slightly, we might make smarter ones.
Sure, we scoff. That stuff might win you Nobel Prizes (Note Princeton’s Daniel Kahneman, 2002). But, we think, Washington and the convoluted political process therein is where grand intellectual visions go to die.
There’s a chance, though, that the web-savvy Obama Administration might have an opening through which to put its behaviorist vision into practice. Behavioral economists use the term “choice architecture” to frame how decision makers can gently scoot people towards better choices. Internet experts talk about “information architecture” or “interaction design.” But they share much in common—particularly, the understanding that today’s information-rich world is confusing, and that attention dedicated to crafting the environment in which people make choices gives us, as Schwartz puts it, “a fighting chance of knowing what we’re doing.”
“When you’re doing interaction design,” explains Christian Crumlish, curator of Yahoo’s Pattern Design Library, “you often start by studying people’s behavior in the wild, because you want to map and facilitate what they already do.” Take Amazon.com’s “Customers Who Bought This Item Also Bought…” feature. Search for Herbert Marcuse and Amazon suggests that perhaps you might also be interested in something by Hannah Arendt. The site’s architecture is mimicking the experience you might get by walking through your neighborhood bookshop’s philosophy aisle.
Though other times, says Crumlish, the intent behind interaction design is to guide new behaviors. If you’re launching a new social network, for example, your goal is to shape an environment that encourages users to share as much as possible. “There are,” says Crumlish, “all sorts of tricks to do that.”
Facebook, for example, sets defaults that encourage their users to reveal as much as possible about their lives—details that other humans find irresistible. (Some moves, like Facebook’s News Feed, at first violated users sense of privacy. But tellingly, it was users’ comfort level that adjusted, not company policy.) What’s striking is how well those web design tricks find their match in behavioral economics’ literature. Sunstein and Thaler, for instance, prescribe defaults to solve the problem of uneconomic humans who simply fail to pick a 401(k) plan: make enrollment in a plan the default option. Most people will stick with the status quo. Others will work up enough energy to change it. All will be better off than if they were enrolled in no plan at all.
If you’re US Treasury Secretary Tim Geithner, and you really want Americans to renegotiate the terms of their mortgage—a major feature of the Obama Administration’s plan to ease pain for homeowners—the web can be an ally. The Treasury Department boiled the complex economic plan down into the bare bones site MakingHomeAffordable.gov. The interface is built like a cattle chute, shunting mortgage holders into the program most appropriate for them. It’s perhaps not the most nuanced of tools, but it’s better than letting Americans flounder under stifling mortgages. There’s a corollary from Obama himself: As a candidate, Obama distributed a drop-dead simple web widget that calculated an individual’s tax burdens under his economic plan. “Too crude!” his critics cried. The campaign said nothing, while millions of Americans got the idea that—contrary to what McCain kept arguing—what they owed the IRS might just be a little lighter under President Obama.
Stanford’s Persuasive Technology Lab makes academic study of these computer tricks and of the technological engineering that shape human behaviors. One example they cite is the popular sale site, Woot.com. Every day a new item is featured on the homepage, like a digital watch that sets itself according to atomic time at a price of $19.99—good for one day only. Mere mortals are powerless to resist the call of a limited-time deal. Studies show, writes Sunstein and Thaler, “losing something makes you twice as miserable as gaining the same thing makes you happy.” And so, we buy. Of course, bricks-and-mortar retail stores take advantage of the one-day sale, but the web is different. Running to Best Buy for the latest deal raises questions in our minds like, “What if the parking lot is so crowded that I can’t get a space?” With Woot.com, it’s one or two-click satisfaction. Even more powerful, though, is the web’s built-in transparency. Commenters on that Global Atomic Watch one-day sale, for example, helpfully point out that the cheapest online price for this timepiece is $39.95. Sold.
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