Nudge in Chief: Choice Architecture and Public Policy (Guest Post)

President Obama’s recent executive order encourages federal agencies to utilize behavioral science insights in the development of their policies and program.

Read what my friend, Diana, has to say about it and follow her posts on LinkedIn Pulse!


On September 15, 2015, President Obama signed an Executive Order titled,“Using Behavioral Science Insights to Better Serve the American People.”  Behavioral science – an amalgamation of behavioral economics, psychology, and cognitive science – aims to uncover the intricacies of the human decision making process, and its utility in improving the public sphere has finally been acknowledged at the highest level.

The research findings regarding human behavior have already been applied to a number of areas, most notably marketing and advertising. However, as Richard H. Thaler and Cass R. Sunstein assert in their book “Nudge: Improving Decisions about Health, Wealth, and Happiness,” behavioral science can and should be applied to a number of spheres not just to influence, but to improve  the choices that individuals make.

Choices aren’t made in a vacuum. You may think that you are in control of your choices, but a large portion of your response is determined by the environment around you – the choice architecture. Thaler and Sunstein argue that there is a technique to how choices can be presented in order to help people select options that will improve their lives. This technique called “nudging” involves subtly changing the structure of the environment without limiting choice. For example, Google redesigned their cafeteria to make healthy choice more visible, with the result of employees’ fat consumption from candy dropping an impressive 11 percent. In addition, according to Thaler and Sunstein, “for reasons of laziness, fear, and distraction, many people will take whatever option requires the least effort” – meaning the default option. For example, in countries where the organ donation form is set as “opt-out” (check this box if you don’t want to participate), people do not check the box and are automatically enrolled to donate their organs. If the organ donation form is set as “opt-in,” people do not check the box and are automatically not enrolled to donate. In both cases, large proportions of people simply adopt the default option.

This executive order signed by President Obama specifically addresses the concept of choice architecture and highlights the power of the default option, as it pertains to public policy. Executive departments and agencies are mandated to consider how the presentation of choices can promote public welfare, giving particular consideration to the selection of the default option. The goal is to create federal programs that reflect how people engage with and respond to choices. For example, the executive order cites automatic enrollment and automatic escalation in retirement savings plans, default options that have made it easier to save for the future and accumulate billions of dollars in additional retirement savings.

Working in management consulting has solidified my deep appreciation for and trust in evidence-based thinking. Solid data provides me with the foundation upon which I can build sound recommendations for clients. Unfortunately, in my eyes, the political sphere is one where voters make decisions based on emotions and politicians make decisions based on the desire to be re-elected to power. But shouldn’t our leaders adhere to data-driven practices? According to President Obama, the answer is yes. This executive order marks a tremendous step forward towards bringing evidence-based practices into the public sphere.

(Dis)Honest: Do you Lie?

Of course you do. Everyone lies. Everyone openly admits to lying. Yet, we still think of ourselves as perfectly good, lovely people. Hm. This topic has intrigued Dan Ariely, a behavioral economists and psychologist to study it in depth and to subsequently write a book, direct a documentary, and create an online project about it.

The book, called Dishonesty: The (Honest) Truth about Dishonesty attempts to explain how people cheat. One of the main findings is that few people in society cheat a lot (think: WSJ front page), but a lot of people cheat a little (think: you, me, him, her, etc). The economic cost of everyone cheating a little bit actually adds up to be so much greater than the cost of those few individuals who make it to jail cheating a lot at once.

In his studies, Dan Ariely and his team at Duke’s Center for Advanced Insights tried many different ways to get people to cheat. For example, they asked people to solve a set of math questions and told them that they would be paid for how many questions they got correct. After time is up, subjects were instructed to count how many questions they got right, walk to the front of the room, SHRED their answer sheet, and then verbally report how many they got correct. The researchers did not and will not know what their real score was – did they cheat?

What they found was that 90% of people cheated. 90%!!! Almost everyone was okay with cheating on that math test. I’m sure if you and I were in that experiment, we would have cheated too. They tested this effect across gender, cultures, age, and found universally the same result.

There are many other interesting things that Dan Ariely has done and I’ll outline a few here:

  • The documentary with the same title as his book. I personally really liked it. It’s a little long (~1 hour 45 mins), but it was filled with story after story of interesting people who started a small lie, and then it over time snowballed into these HUGE lies that went out of control. They ended up going to jail and/or losing everything. If anything, it served to scare me about the consequences of lying.IMG_4353
  • He spoke at several Ted Talks (this link is for the dishonesty one) that you might want to check out. I’ve had the fortune of listening to Dan speak several times now, including last week at Harvard Kennedy School of Public Policy and he’s a great speaker. He has a knack for holding his audiences’ attention through his stories and jokes, and engaging his audience while revealing stunning facts (e.g. the one about 90% people lying). Highly recommend it!
  • Irrational Card Game is on Kickstarter now. His lab is full of creative people and this is one of the products they came up with. It’ll be a fun way to learn about behavioral economics in general and looks super fun! pb ordered me a set and I cannot wait to play it! 🙂
  • Phone apps to help you. This is news to me as I was researching about this blog post. They made several phone apps with fun surveys like “what is the best pick up line you know”; there’s another one that looks like it targets procrastinators. Excited to check these out!

I’ll be in Chicago next weekend for Halloween 🙂 and move-out 😦

Have a great week ahead,

xx Steph

TSNY Trapeeeeeze

How did I move from Chicago to somewhere even colder? Apparently there were signs of first snow in Boston a few hours ago, ekk! After the freezing morning run along Charles River, I’ve strategically planned to stay at a coffee shop all day. It’s nice and toasty in here, so I had to double-check….first snow on Oct 18?

Only three weeks ago, I was still in Chicago waiting to try my first Trapeze class in nice, warmish weather. Trapeze, for those unfamiliar, is where you hold onto a horizontal bar (think monkey bar) and swing in the air, just like Cirque du Soleil. Terrified by the idea? I was too! Convinced that I wouldn’t be able to hold onto the bar and embarrassingly fall off in a split second, I walked up to write my name on the chalkboard and hear the instructions for first timers.

The basic instruction is to hold on tight to the bar and then follow the rest of the instructions being called out to you when you’re on the bar. READY? um….not really….?

Ignoring my shaking legs, up I climbed on the thin ladder, which was wobbling in the Lake Michigan breeze. Here’s a video of what I could do by the end of class:

I think I’m ready to audition for Cirque! Okay, maybe not, but it wasn’t as terrifying as I thought it would be. I know you skeptics out there will not believe me when I say that. The truth is all the movements relied on momentum, especially when I had to put my leg up onto the bar, it was much easier than it looked because it used the force you get when you jump off the board. In fact, the hardest part was probably getting your legs off the board, which took me an entire minute, along with ample convincing from the instructor, the first time around (the video became too long to upload…) Otherwise, it’s not bad!

I would definitely encourage you to try if you’re even slightly intrigued. Full disclosure – my muscles did hurt for about 2 weeks after because it used muscles that I never knew I had (possibly similar to the ones used in yoga?) Great experience and great crew!

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For those of you who might want to give it a try, they have rigs in Chicago, NYC, Boston, DC, LA. Check it out at TSNY.

Stay Warm! xx

Gains and Losses

The last two weeks have been a whirlwind. I moved to Boston to start a new role as a research assistant and am also taking classes along the way. One of the classes that I’m taking is Behavioral Economics. One of the readings (and there are so many!) is an interesting paper by Richard Thaler called Mental Accounting and Consumer Choice.

In particular, he builds on Daniel Kahneman and Amos Tversky’s model of loss aversion, which says that people strongly prefer avoiding losses to acquiring gains. We feel a loss approximately twice as badly as we feel a gain, so the magnitude from losing $2 is as strong as gaining $1.

Thaler took this model and said, okay, so is it better to combine the losses/gains together in one go or separate them? You can go through the different thought experiments: would you want to pay a fine a little at a time, or a lump-sum? Would you want to get a small piece of chocolate at a time, or a whole bar?

He found that people are happier (“get more utility”) by separating the gains, and aggregating the losses. You see plenty of examples in businesses where they’ll “separate the gain” by selling you items one-by-one and telling you all the benefits of each item so that you feel the happiness little by little. Or “aggregate the losses” when you pay for an insurance package that is all-inclusive instead of having to feel pain for an additional item you pick.

In the spirit of this blog, here are some examples of how you can apply it to your ever day life –

  1. Increase in gain should be separated – if you’re giving someone a gift, it’s better to buy many small gifts, than to have one big gift, given the same amount of budget.
  2. Increase in loss should be combined – if you’re telling your boss you didn’t complete a few tasks, you should deliver it all at once because separating it is just prolonging the torture.
  3. Gain and then losses – if you’re going to deliver bad news after establishing good news, do it at once. This is when you set the expectation high, and then cannot deliver. In this situation, it is better to tell them the disappointment in one sitting.

Hope you’ll be able to find ways to use this in your day-to-day! I’m thinking that purchasing one item at 10 stores will make me happier than purchasing 10 items in one store! 😉

Happy weekend xx
Steph

Reducing Youth Violence

I was listening to a Freakonomics’ podcast “I don’t know what you’ve done with my husband but he’s a changed man” episode and learned something related to the topic of this blog that I want to share with you.

The episode was on Cognitive Behavioral Therapy (CBT), which is a type of psychotherapy in which Psychologists and patients work to overcome difficulties through discussions and problem solving. Most of the time, it means changing one’s thinking, actions, or emotional responses to their surroundings.

Chicago was mentioned several times in the podcast. Ever since living in Chicago, I have had a tendency of getting very excited about the topic being discussed when Chicago is mentioned. I feel that the general population is referring to Chicago more and more now, or is that my illusion? Either way, I decided to look more into BAM (Becoming A Man), a youth program in Chicago that was mentioned in the podcast.

The program is super interesting. It’s part of University of Chicago’s Crime Lab, where they implement research-based policies to reduce crime and violence. This program, BAM, was a one-year program aimed to reduce youth gun violence that is so prevalent in Chicago. In addition, they wanted to reduce skiving and school dropouts.

The Crime Lab went into schools and taught Grade 7-10 males on a variety of social cognitive skills, including self-control, conflict resolution, and social information processing. These are crucial knowledge for everyday functions that is curiously not taught as part of the school curriculum.

Results from the implementation were remarkable. Before the program, the average youth missed 6 weeks of school and had a grade point average of D+. After the program, students missed fewer classes and performed better. More importantly, they were 10–23% more likely to graduate and violent crime arrests reduced by a whooping 44%!

The long-term effects of this program are still being evaluated. The after effects of an experiment are something that is important to think about when implementing programs in the real world. Firstly, the results of the program itself could have positive or negative impact on the participants (though you hope that it’s positive of course!) However, researchers should also think about what happens to the participants after the experiment is “over”. The long-term impact might range from positive, where the situation continues to become better, neutral, where there’s no impact, or worst-case negative, where it has adverse effects. In this case, the worst case scenario could be that the Grade 7-10 males immediately resorted to gun violence after the program because they didn’t have cognitive behavioral therapy sessions anymore.

Hope this was new and educational! It was for me. Have a productive week!

Steph

 

Source: University of Chicago Crime Lab Research and Policy Brief – “BAM – Sports Edition”

Social Norm

One of the most frequently quoted Psychologists in my marketing classes was Robert Cialdini. He has a PhD in Psychology and spends most of his research in the field of Marketing, commonly interpreted as the application of psychology. Many of his work has every day applications, so I’ll eventually cover all of them on the blog, but today I’ll talk about Social Norms.

If you’ve stayed at a hotel, have you seen a card in the bathroom that asked you to reuse your towels? More likely than not, the card referenced something about saving water or saving the environment. Cialdini sneakily changed the words on some of the hotel guests’ cards. These are the four variations –

(1) HELP SAVE THE ENVIRONMENT

(2) PARTNER WITH US TO HELP SAVE THE ENVIRONMENT

(3) JOIN YOUR FELLOW GUESTS IN HELPING TO SAVE THE ENVIRONMENT

(4) JOIN GUESTS THAT HAVE STAYED IN THIS SAME ROOM TO SAVE THE ENVIRONMENT

Which one do you think had the biggest compliance in reusing towels?

Both (3) and (4) use the Social Norm appeal, meaning that they mention others who are just like you (who stayed at the hotel). Knowing that others similar to you have reused the towel motivates you to do the same. (4), however, takes it a step further and makes the connection with other guests who have stayed in the exact same room. Does this work? After all, you don’t know the guests who have stayed before you, and probably don’t care.

It absolutely does work! Cialdini and his collaborators found that (3) increased towel reuse by 26% compared to (1). This is a huge increase given that they only changed one line on the card. What’s more remarkable is that in (4), they found a 33% increase in towel reuse participation compared to (1).

Using the power of social psychology in creative ways can have powerful impact. In this case, it helped effectively reduce water and electricity usage. In our daily lives, try to establish social norm to increase compliance to your idea – it could be getting your friend to go to a party with you, or increasing attendance to your next Meet-Up event.

Have a great week!
Steph

Teaching Positive Psych in Italy (Guest Post)

By my friend Simone, owner of blog Simone Vibes. This post is a great application of psychology. I created this blog so that everyone can incorporate psych into their daily lives, so if you have any examples of applying psychology into practice, please feel free to share it with me and write something for my readers!

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I love Positive Psychology, and I have loved it ever since I took its introductory course at Penn in the fall of 2013. Professor Angela Lee Duckworth radiates positivity, and her excellence in the field is palpable. The simplest exercises in making life worth living can bring enormous changes to our daily lives.

During my Fulbright year in Italy, I was invited to teach some guest lectures at local high schools, on a topic of my choice. It was not hard for me to decide on a mini-course introducing the field of Positive Psych, and the success rate, even among unruly Italian teenagers, some struggling to fully grasp the English language, was overwhelming.

In Salerno, Italy, much of the population is struggling with unemployment and dangers from the Mafia. Located just 45 minutes south of Naples, this small coastal city is a hub of mob activity. Many of the kids have hard familiar conditions that they hide with overly confident comments and cool fashion. However, underneath it all, their teachers confided in me that life is not easy. I decided to bring two exercises – ‘Three Good Things’ and the ‘Gratitude Letter’ – to their lives, to see if it had any effect.

At first, many of the students, between the ages of 15-18, were skeptical. Some said it seemed cheesy, others grunted at the task to appear cool. But I had faith. After a brief, but relatively thorough introduction on the origins of and ideas behind Positive Psychology, I let them choose one of the exercises, to be completed at their leisure.

At the end of class, I asked if anyone wanted to read their letter or list out loud. At first timid, some kids eventually raised their hands. Mind you, English is not their native language, so writing these personal things in English class, and thus, obviously in a language they may still feel a bit awkward in, added to the challenge. However, they did a fantastic job, both linguistically and in terms of content.

Those who read out loud had much softer, excited tones in their voices than at the beginning of class. The other classmates listened very attentively. Some nodded. Others looked pensive.

When I asked the young students how the exercise made them feel, the answers ranged from “so happy” to “funny” to “with lots of love”. In their own sweet way, they demonstrated that simple exercises from Positive Psychology can be applied to anyone. With a little faith, they can have an unexpectedly uplifting effect, even on the stubborn and skeptical!

Later that day, I received several Facebook friend requests from the students. Wondering about this, having only spent a couple of hours in each class, I reached out to their permanent teacher to inquire about these requests. She smiled and told me, “They really loved your class. It put them in a good mood. They did not even scramble to leave for lunch!”

This positive effect undoubtedly made it onto my list of three good things that day. Not only that, it was one of the unquestionable highlights of my Fulbright year.

I believe in the power of Positive Psychology across cultures and age groups, across languages and traditions. I am grateful for what I learned and hope to keep sharing it whenever possible.

 

A Summer Weekend (Guest Post)

By my friend, Jenny Xia, who also wrote about Eataly exactly a year ago

Having lived in DC for the past year, I couldn’t help but feel slightly overwhelmed by how much bigger Chicago seemed in comparison. As Steph and I explored the city, I began to convince myself that Chicago has to be larger than NYC. In a moment of nerdiness, I Googled this and it turns out that NYC’s over 30% bigger in square mileage.

It also turns out that I experienced a psychology phenomenon called the “contrast effect.” The term describes how undergoing two contrasting experiences can skew a person’s perception of the latter event. During my stay with Steph, Chicago seemed enormous, though I probably wouldn’t feel the same way if I had been visiting her from NYC. In a way, the cognitive bias worked in my favor as it made my visit to Chicago feel even more exciting and the city grander.

The rest of the weekend Steph and I spent together was as exciting as the day Steph recapped in her last post, here’s some of our activities that weekend:

  1. Touring Pilsen

Continue reading A Summer Weekend (Guest Post)

A SUMMER FRIDAY

Last weekend, my friend Jenny came to visit me in Chicago and I wrote about the Coloring Book she got me. This past week flew by and it is the beginning of the week again! How did that happen?

Scrolling through my photos, I was faced with the issue of having too many choices (see Choice Overload). We did so much last weekend that I don’t know which activity to write about! In hindsight, it seems almost stressful that we packed so many activities one after another, but in the moment it was just a series of spontaneous decisions that all turned out to be amazing memories.

I’ll recap a few activities here even though it doesn’t do the weekend justice. Here are some ideas on what you can do in Chicago, whether you’re visiting town or a local –

  1. Goose Island Brewery Tour

Goose Island is a local beer company conveniently located in Goose Island, where it got its name from. It is the proud owner of the famous craft beer 312 Urban Wheat Ale where we see so often around Chicago (312 is the area code). I have to confess that I’m not a huge beer fan, though I’ve become more tolerant in recent months. Beer also goes well with spicy SzeChuan food, one of my favorite cuisines. But overall, I don’t know much about beer besides occasionally drinking it. So, Jenny and I decided to check out the craft beer brewery when she visited.

For $12, you can get a tour of the brewery located on 1800 W Fulton Street, West Loop. You put on safety goggles and rubber boots, and off you go! Get a beer on one hand and leave the other hand free for the many samples they give you along the tour. It’s a great way to learn about the beer-making process and the history of the company.

Chicago Brewery Tour

 

2) Fulton Market Kitchen

After the brewery tour and too many beer samples later, Jenny and I Yelped for restaurants nearby. It wasn’t until then that I realized we were close to the West Loop, a foodie area in Chicago. We made a reservation at Fulton Market Kitchen and started our 25-minute walk to it. Along the way were factories that have been refurbished into offices, usually with a restaurant on the ground level. I love these set-ups for their combination of the old and the new. It reminds us of the past as we continue to move forward into the future.

FultonMarketKitchen

Fulton Market Kitchen is a restaurant located in one of these refurbished factories. The interior design is filled with art on the walls. In the center next to the cocktail bar, a featured artist is painting his/her piece, creating new art right in front of your eyes.

The food is served in tapas portion and presented decoratively on white marble plates. The dishes were a little too flavorful for me, but I still thoroughly enjoyed everything. Extra points for the real candle on the table. I definitely want to be back again!

 

3) Night at the Art Institute

Ending our Friday night with a more cultural twist, we went for a night out at The Art Institute of Chicago, rated the best museum in the world by TripAdvisor. There are a few other “night at the museum” events around the city, such as Adler After Dark at the planetarium (read my post here) and Jazzin at the Shedd at the aquarium. The Art Institute doesn’t hold night events usually but this was a private event. We walked around Charles Ray: Sculpture 1997-2014 exhibition, which is the special exhibition this month at the museum. There was also a cash bar and some really spicy popcorn which I avoided, knowing that I wouldn’t be able to stop after eating one (see my post on Stale Popcorn Experiment).

NightattheArtInstitute

These were just our Friday afternoon/night activities! We explored even more places and did more activities on Saturday and Sunday, all of which were new experiences for me. Jenny will cover off on more next week.

Have a great week, Steph

COLORING BOOK

My good friend Jenny was visited me in Chicago this weekend. It was a memorable weekend exploring different chi-neighborhoods, attending local cultural events, and showing her my chi-city life (i.e. brunch/workout/drink). In fact, we did so many fun things this past three days, I can’t decide which one to highlight, but stay tuned for my post next week for some of the things we did 🙂

SecretGardenShe also surprised me with a gift – thank you love!! It’s a coloring book called Secret Garden: An Inky Treasure Hunt and Coloring Book, which has elaborate garden designs to color in. She also bought me a set of 24 color pencils, something that I haven’t touched for way too many years. Along with the present, she also expressed that coloring has therapeutic effects, which intrigued me to read more about this. 
ColorPencilSetof24
It turns out that coloring book for adults have become so popular that it makes the Top 10 Bestseller Book on Amazon. It is becoming a phenomenon not just within the US but also worldwide, where people are using these beautifully outlined pages as a way to de-stress or lower their anxiety levels.

Research has supported that this works! In an experiment, people were asked to complete an anxiety-inducing task, and then after engage in 20-minutes of coloring session. They were either coloring 1) on a blank piece of paper; 2) on a plaid design (below) that is basically crisscrossing of straight lines ;3) on a mandala, an elaborate and repetitive pattern often seen in Indian religions and associated with meditation. PlaidDesignThey found that after 20 minutes, those who colored the plaid design or the mandala had significantly lower anxiety levels, whereas those who merely colored on blank paper did not relieve any stress. Additionally, they found that there is no difference in how much stress was reduced between coloring the mandala, which is much more difficult to design, and the simple crossing lines that could be drawn on Word. However, I suspect that the reason all the coloring books out there right now are closer to the mandala designs is because marketers and designers would opt for the fancier and prettier option to attract consumer attention. Shoppers might be less intrigued to buy a coloring book made of just straight lines, which I could probably draw with a ruler and a piece of paper myself. PagesinsideSecretGardenCannot wait to start coloring these beautiful pages in the Secret Garden! While I have a set of 24 color pencils, the participants in the experiment only had 6. I wonder if having 4x more choices will make me more stressed out – a choice-overload problem?

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Miss you already! With Love, Steph