PREFERENCES AS BOUNDARY CONDITION of NUDGE EFFECTIVENESS E Potential of Nudges Under Empirical Investigation Tina A.G

PREFERENCES AS BOUNDARY CONDITION OF NUDGE OF EFFECTIVENESS : CONDITION BOUNDARY AS PREFERENCES PREFERENCES AS BOUNDARY CONDITION OF NUDGE EFFECTIVENESS e potential of nudges under empirical investigation e potential of nudges under empirical investigation empirical under nudges of potential e Tina A.G. Venema Dissertatiereeks Kurt Lewin Instituut 2019-06 Tina A.G. Venema PREFERENCES AS BOUNDARY CONDITION OF NUDGE EFFECTIVENESS The potential of nudges under empirical investigation Tina A.G. Venema ISBN: 978-90-393-7232-6 Layout & printing: Off Page, Amsterdam Cover illustration: Ashur - 99designs Copyright © 2019 by Annie Geziena Venema. All rights reserved. No part of this thesis may be reproduced, stored in a retrieval system or transmitted in any form or by any means without the prior written permission of the author. PREFERENCES AS BOUNDARY CONDITION OF NUDGE EFFECTIVENESS The potential of nudges under empirical investigation De effecitiviteit van nudges in relatie tot persoonlijke voorkeuren De potentie van nudges empirisch onderzocht (met een samenvatting in het Nederlands) Proefschrift ter verkrijging van de graad van doctor aan de Universiteit Utrecht op gezag van de rector magnificus, prof.dr. H.R.B.M. Kummeling, ingevolge het besluit van het college voor promoties in het openbaar te verdedigen op vrijdag 17 januari 2020 des ochtends te 10.30 uur door Annie Geziena Venema geboren op 21 april 1991 te Bellingwolde Promotor: Prof. dr. D.T.D. De Ridder Copromotor: Dr. F.M. Kroese Dit proefschrift werd (mede) mogelijk gemaakt met financiële steun van NWO in de vorm van een TOP- subsidie voor het onderzoeksproject Welfare Improvement through Nudging Knowledge (407-13-030). TABLE OF CONTENTS Chapter 1 General introduction 7 Chapter 2 I’m still standing 23 A longitudinal study on the effect of a default nudge Chapter 3 The (bitter) sweet taste of nudge effectiveness 37 The role of habits in a portion size nudge Chapter 4 The one that I want 51 Strong preferences render the center-stage nudge redundant Chapter 5 When in doubt, follow the crowd? 71 Responsiveness to social proof nudges in the absence of clear preferences Chapter 6 Summary and general discussion 91 References 106 Dutch summary (Nederlandse samenvatting) 117 Acknowledgements 124 Curriculum Vitae 127 KLI dissertation series 128 chaptER 1 GENERAL INTRODUCTION GENERAL INTRODUCTION “… The world was beginning to face problems of an entirely new order of magnitude – the exhaustion of resources, the pollution of the environment, overpopulation, and 1 the possibility of a nuclear holocaust, to mention only four. Physical and biological technologies could, of course, help. We could find new sources of energy and make better use of those we had. The world could feed itself by growing more nutritious grains and eating grain rather than meat. More reliable methods of contraception could keep the population within bounds. Impregnable defences could make a nuclear war impossible. But that would happen only if human behaviour changed, and how it could be changed was still an unanswered question…” - B.F. Skinner, from the Preface to Walden Two (1976) This dissertation considers the extent to which ‘nudges’ are effective in changing behaviour. In the twentieth century, scholars and novelists such as Skinner and Huxley fantasized about societies in which knowledge about human behaviour, derived from the social sciences, would be applied to guide people’s decisions in creating a utopian world. Decades later, some now wonder whether this fantasy could become reality with the introduction of nudges to (governmental) policy agendas. Nudges are changes to the environment in which people are presented with choice options (i.e., choice architecture) designed to steer them towards a particular ‘sensible’ choice, without restricting alternative options or changing financial incentives (Thaler & Sunstein, 2008). For example, guests in hotel rooms might find a sign stating “84.3% of the previous guests reused their towels, thereby contributing to the reduction of the hotel’s ecological footprint” (e.g., Goldstein, Cialdini & Griskevicius, 2008; Scheibehenne, Jamil, & Wagenmakers, 2016), or employees might be automatically enrolled in a retirement savings plan set up by their employer when signing their contract (Thaler & Bernartzi, 2004). Nudge interventions come in all shapes and sizes, but one thing they all have in common is that they capitalize on psychological processes that guide our interactions with our environment. The potential of nudges has invoked both enthusiasm and apprehension. The current dissertation presents research that critically tests the extent of this potential; are nudges indeed effective in changing behaviour and what are the boundary conditions? In this introductory chapter we will first provide a short overview of how the concept of nudges came into being and how it was received. We will then proceed to outline and explain the aims of this dissertation and introduce each of the empirical chapters. HOW IT ALL BEGAN In 2008, behavioural economist Richard Thaler and lawyer Cass Sunstein published their book Nudge: Improving decisions about Health, Wealth, and Happiness. In this book they successfully introduced the idea that behavioural insights can be of great value to 9 CHAPTER 1 (governmental) policymaking. To understand how their idea led to the installation of numerous behavioural insights teams/units throughout the world, inspired countless research endeavours and fuelled important philosophical debates, it is first necessary to get an idea of the zeitgeist in which this book was received. For years, economics was one of the few social science disciplines that exerted an influence on governmental policies (Christenen & Lægreid, 2002). The classical economist view of human behaviour stipulates that people are ‘maximizers’ when it comes to making decisions. Economic models predict that people weigh the pros and cons of a choice option to make the best possible decision given the information at hand. In other words, people were assumed to make rational decisions, and when they seemed to be making irrational decisions this was attributed to their lacking important information regarding this decision (e.g., Friedman, 1976). From 1980 onwards, governmental policies gravitated towards a doctrine that viewed citizens primarily as self-interested consumers with unbounded rationality and unreserved self-discipline (Christen & Lægreid, 2002). The two most common ways to influence the behaviour of the public were either prohibition and regulation by law, thereby removing the decision from the public, or education to provide the public with more information so as to improve their decisions. This is not to say that the view of humans as rational decision- makers has gone unchallenged; already in 1974, Tversky and Kahneman published their renowned article on heuristics and biases in human decision-making (Tversky & Kahneman, 1974). This was ensued a couple of years later by Sen’s prominent article “Rational Fools, a critique of the behavioral foundations of economic theory” (Sen, 1977). Many others followed (e.g., Gigerenzer & Goldstein, 1996; Stanovich & West, 2000; Evans, 2003), and gradually it became widely accepted that people seem to predictably make decisions against their better judgement, purposefully ignore information and, most of all, to make decisions mindlessly. While hugely influential in the field of economics (Rehman, 2016), a clear understanding of how to implement this knowledge in public policy was still missing. With their book Nudge, Thaler and Sunstein translated this ‘new’ behavioural insight into a readily applicable tool for behaviour change. They suggested to make use of the influence that choice architecture has on people’s decisions. Choice architecture refers to the wide range of settings in which choice options are presented, whether in forms, online, or in supermarkets and public spaces, etc. There are abundant examples of this type of influence, as marketeers have long discovered this presentation tactic. For example, the placing of premium brands at eye-level in supermarkets to increase profits, and the automatic renewal of magazine subscriptions ensuring a steady customer base are just two common manifestations. Making small changes to the environment in which people are exposed to choice options can radically alter the outcome of these choices. Thaler and Sunstein presented compelling examples, including the Save More Tomorrow program that offers employees the opportunity to save any future salary raises in a savings account, and the case of rearranging a school canteen so that children 10 GENERAL INTRODUCTION load their plates with vegetables first, leaving less room for unhealthy starches. As well as yielding encouraging results, these interventions are relatively easy and cheap to 1 implement. To explain how choice architecture influences decisions, Thaler and Sunstein referred to a dual systems theory that later received much attention outside of academia with Kahneman’s book Thinking, Fast and Slow (Kahneman, 2011). This theory posits that there are two systems that govern all human behavioural decision-making: one that is quick, automatic, intuitive, unconscious and efficient (system 1); the other slow, deliberate, reasoned, conscious and effortful (system 2). While system 2 is thorough, the exertion such processing entails means that people cannot use it for every decision; in most cases the sheer amount of information that

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