Digital nudging in our personal and professional lives
As I take a breather while writing this blog, my hand involuntarily unlocks my phone and clicks on the Instagram app and before I know it, I have watched 10 stories without consciously intending to even open Instagram. And this situation is not unique, it happens multiple times a day. It had become just another daily habit. It is not a behavior I was particularly thrilled about; I’d rather unconsciously open any news app or the TED talks app. I had already started following news handles on Instagram, but it wasn’t easy to get rid of the irrelevant noise around it.
The first step to changing this behavior was to be aware that this wasn’t the best (Econs read as: most rational) choice or use of my time. Once I had acknowledged and accepted that, the second step involved discovering a way to push me towards the most optimal choice. Within the Instagram app, I found a setting which allowed me to put a daily reminder that would pop up on my phone screen everyday once I had spent 30 mins on Instagram. That small change had a big impact on the unproductive time I spent on this app. Another word for this is ‘digital nudge’.
This was a small example but, in most circumstances, it is an agency besides yourself that nudges you towards more optimal choices. Richard Thaler, an eminent personality in the field of Behavioral Economics, coined the term ‘nudge’, through his 2008 book ‘Nudge’. Establishing why choice architecture is an inevitable fact of life, Thaler describes ‘nudge’ as a means to steer people towards making better choices for themselves, by themselves, using choice architecture.
It has now become a well renowned concept in public policy, with applications in paying taxes timely, in becoming organ donors and so forth. The private sector too has seen a widespread adoption of behavioral targeting in digital marketing, but the rest of the private sector has lagged somewhat in leveraging nudging.
In the workplace, given the dynamic and fast-paced environment in which firms operate today, change management is crucial. Change management requires a sustained change in employees’ behaviors, and hence many change efforts fail. In the business environment today, hierarchical structures are less prevalent, and employees are given more autonomy and ownership to align incentives. Consequently, strict enforcement to drive change can be counterproductive. Employees must feel that it is in their own interest to change. If you want to change employees’ behavior, give them a nudge. If you want that change to spread quickly, go digital. This makes digital nudges a valuable tool for change management in organizations of any size.
So far, digital nudging is understood as “the use of user-interface design elements to guide people’s behavior in digital choice environments”. With devices such as laptop and mobile phone becoming mainstream, digital nudges could include a text message, email, push notifications, and other simple, low-cost interventions to encourage people towards desired actions.
For example, BCG created a digital nudge as part of an internal directive to be more considerate of employees’ life outside of work, an initiative known as PTO. This digital nudge essentially caused a pop-up window to appear whenever employees attempted to send an email after office hours. It didn’t take away their freedom to communicate after office hours but provided them with a moment to reconsider their choice.
In our personal environments, digital nudging has been tried and tested the most in financial well-being and healthcare. In a research on ~9000 American workers, researchers used temporal reframing to frame a savings program as $5 a day vs. $150 a month. The experiment was conducted through the app of a company called Acorns, that specializes in micro-investing and robo-investing. $5 a day, a much smaller amount in isolation, but essentially the same outflow on a monthly basis, ended up quadrupling the enrollment from 7% to 30%!
Digital nudging has used framing for applications in healthcare too, in deciding what type of feedback is encouraging. Many ‘wellness’ applications set simplistic targets (steps taken, calories consumed), that focus on small incremental gains and then incentivize behavioral change by the fear of losing this gain. Apps to help people stop smoking also provide more positive and personalized feedback, such as the number of cigarettes not smoked, and money saved.
Val Health, a health-related Behavioral Economics consulting firm, successfully crafted patient facing collateral and call center scripts to nudge patients to telemedicine for appropriate visits.
There are countless other examples in both finance and healthcare. Not only does digital nudging drive change at an unprecedented scale, it also allows the choice architect to conduct research much faster by testing out multiple designs, to see the results in days or weeks, and to thus institute the best option. Another key element of digital nudging is that digital environments are often linked with choice overloads and decreased attention spans, increasing the tendency to make sub-optimal choices. The highlighted examples and reasons make a strong case to allocate more resources towards digital nudging, a powerful tool to design our personal and professional choice environments.
