Inside The Nudge Unit – How Small Changes Make A Big Difference:

Have you read Inside the Nudge Unit – How Small Changes Make a Big Difference?

A majority of people understand the basic principles of an experiment as they probably had to conduct one or two when they were at school. Unfortunately once people leave school most of us abandon this approach and instead follow our herd instinct. People are encouraged to learn the way it has always been done because that seems to work most of the time. Confirmation bias often makes us ignore information that contradicts this. However, this doesn’t tell us why something works or if there is a better way.

‘Inside The Nudge Unit’

It is a fascinating book which explains how the use of experiments has helped government policy makers base decisions on scientific evidence. Rather than doing things the way it has always been done. Using insights from the behavioural sciences, the UK government’s Behavioural Insights Team (BIT) is at the forefront of this scientific approach to decision making.

Written by Dr David Halpern, head of the UK government’s Behavioural Insights Team (BIT). The book draws on the many achievements of the unit which was set up in 2010 by the then Prime Minister, David Cameron.

The Nudge Unit was given the task of transforming the approach of at least two major departments. Improve the understanding of human behaviour across UK government and deliver a return on investment of ten times the cost of the unit. The BIT was initially given just two years to prove its worth. It is now part of the cabinet office.

What is EAST?

Despite a lot of scepticism and resistance from civil servants in Whitehall. The BIT has demonstrated that small changes can have a large impact on human behaviour. Apart from conducting many experiments the team developed a framework for behavioural change called EAST (EASY, ATTRACTIVE, SOCIAL, TIMELY). This framework is used by many behavioural change practitioners. It helps design interventions to encourage the formation of new behaviours.

Easy:

Use defaults to minimise the friction of making a decision. In 2012 the law for joining a company pension scheme was changed from individuals having to actively choose to join a scheme to automatic enrolment. Within six months of this change over 90 per cent of eligible employees chose not to opt out. By 2015 this meant that an additional five million workers were members of company pension schemes. The proportion of people in such schemes risen from just over 60 per cent to over 80 per cent.

Experiments have also shown that tax breaks and subsidies only encourage a small minority of savvy savers to join pension schemes. Changing the default is much more effective than financial education.

Simplifying and reducing the volume of text in communications can also help improve their impact. The BIT found that tax letters using plain English, with a clear, simple call-to-action at the start, could make the letter between 200 and 300 per cent more effective than the control. Click-through rates on emails to businesses could be increased by 40 to 60 per cent by cutting the amount of text in the email.

Attract:

Attraction comprises two elements. There is the ‘attentional spotlight’ which refers to the fact that the brain can only consciously focus on information from a narrow field of vision. Our brain then automatically processes and constructs a more complete picture from fragments of information. Most of our wider visual field is ‘monitoring only’. This is why it is good practice to create a call-to-action which uses a high contrast colour. It easily stands out from the rest of the page.

Once something gets our attention our brain then almost instantly categorise it on two dimensions: positive or negative emotional response and competence. These reactions appear to be part of an evolutionary process. It allows us to quickly identify threats and opportunities. Brands use these reactions to communicate attributes and associations that create a more positive and/or competent image.

Communication

Making a communication relevant to the audience can have a dramatic impact on how much attention you get. Research by Adam Alter has shown the psychological power of our names over our behaviour and outcomes. People even display a preference for the letters that make up their names. A study of people donating money to Atlantic Ocean hurricanes found that people were significantly more likely to donate if the name of the hurricane shared their initials.

Work by the BIT for the UK tax authority (HMRC) targeted doctors and medics who often earn extra income by working in the private sector alongside their NHS employment. A generic letter (i.e. no mention of them being doctors or medics) reminding them to declare extra income had little impact (only 4% responding). However, a letter to doctors and medics having additional earnings. resulted in a fivefold rise in the response rate (21%). They also sent a follow-up letter that made reference to doctors and medics. But also pointed out that the HMRC would treat the previous lack of response as an ‘oversight’. However, ignoring this letter would be seen as an active choice. This letter resulted in a nine fold rise in the response rate (35%).

Image Source: Inside The Nudge Unit

Social:

Many of our choices are the result of social influence (Mark Earls, Herd, 2007) and social norms. People are highly social beings and will often jump on the bandwagon to avoid missing out. People also conform when they want to associate with a particular group or person, or because they are in a new or uncertain situation.

In one experiment for an investment bank, the BIT tested the efficacy of a number of different approaches to encourage employees the equivalent to a day’s salary to a charity nominated by the bank. A generic email with some information about the scheme resulted in 5 per cent of bankers donating a day’s salary. Getting a minor celebrity to come into the office increased this to 7 per cent. Giving a tiny tub of sweets together with a leaflet pushed this up to 11 per cent. An email from the CEO was even more effective (12 per cent), but combining this with a tub of sweets raised this even further (17 per cent).

Image Source: Inside The Nudge Unit

Timely:

Timing is always critical with trying to change behaviour, but what has become clear from the work of the BIT is that interventions are much more effective. Especially if they are implemented before habits or repetitive behaviour become habitual. Working with the UK tax authority the BIT found that interventions designed to get people to pay their taxes on time were around two to three times more effective among those who had normally paid their tax on time. Compared to those who had previously been late paying their taxes.

Further, in the US Dan Ariely and Max Bazerman found that people were less likely to cheat if they were asked to sign a declaration of honesty before. Rather than after an opportunity to lie. In an experiment with car insurance applicants were asked to estimate their annual mileage. As the higher the estimated mileage the higher the cost of the insurance there was an incentive to cheat. However, when the signature was moved to the top of the application form. On average drivers increased the number of miles estimated by around 2,428 miles or 10 per cent more miles.

The BIT

In work with the UK police force the BIT found that adding a few sentences to an email before an online test improved the past rate for black and ethnic minorities by over 40 per cent. The sentences improved motivation and changed expectations by asking applicants to consider why they wanted to join the police force and why this might be important for their community.

Due to our desire for instant gratification, which is linked to hyperbolic discounting, people’s preferences are time inconsistent. Numerous studies have shown that future preferences are very different from what our present-self desires. In a study of Danish workers around three quarters chose fruit over chocolate. However, a majority selected chocolate when the choice was at the time of delivery.

This means that people are often more willing to donate money they have won or inherited if they are asked before they receive the money than after they got it. When this is combined with social proof (e.g. most of our customers …) this can in some cases more than treble the response rate.

Conclusion:

Inside The Nudge Unit demonstrates the power of taking an experimental approach to finding better ways of changing behaviour. The BIT have shown that properly run experiments help us avoid falling into the trap of continuing with what “we’ve always done”. It challenges confirmation bias which is a constant problem. Our brains are great at creating narrative fallacies based upon tiny fragments of incomplete evidence. The best way of countering this aspect of human nature is the controlled experiment or A/B test.

The Science

The scientific approach is especially relevant to marketing. Without behavioural change marketing is just noise. Furthermore, EAST provides businesses with a simple and practical framework to design interventions without being experts in behavioural sciences. There are other behavioural change frameworks available. But for many non-behavioural change practitioners EAST is ideal. It avoids the complexity of some of the more established behavioural change frameworks. Perhaps EAST is a bit simplistic. But it is up to the user to put the effort into looking for evidence and develop hypothesis for testing. A poor workman shouldn’t blame their tools.

The book covers a lot more than the EAST framework. David delves into the history of Nudging. Behavioural insights as a policy tool and the risks and limitations of nudging. The book is a must read for anyone interested in using the behavioural sciences to design interventions to change behaviour.