Leslie John, Assistant Professor of Business Administration, Negotiations, Organisations, and Markets, HBS
Did you know that bad behaviours – smoking, drinking etc – are responsible for at least 40% of premature deaths in the US?
Our common approach to changing behaviour is to give people information.
But this sometimes has unexpected consequences.
For example, a day-care tried to incentivise parents to pick up their children on time. When they set up a fine, parents became later – because you changed it from a social issue (“you’re a jerk for being late”), to become an economic transaction which made parents feel less bad.
Other example was fast food and showing calories to discourage people from eating too much calorie – where people try to maximise on calories per dollar!
How to improve on calories? Calories are difficult to understand – its quite vague.
To make it more understandable, they added to chip packs – “160 calories – cycle for 30 min to burn off this product”. When they did this, they found that it reduced the purchasing of chips, drinks by around 8% (Bleich et al).
A second example – rather than just writing “Drinking beverages with added sugar contributes to obesity, diabetes, tooth decay”, they added horrible pictures of the three! When we design these incentive intervention systems, you need to consider the trade-off between irritating people and changing behaviour – when will the public accept or not accept these?
In the sugar beverage study, only the graphic warning label worked, and it reduced purchases by 14%.
Changing structures of the environment can shift people to engage in different choices – posited by Richard Naylor who just won a Nobel prize.
When you change the size of a drink cup – make it smaller – it makes people take a smaller portion. The NY Mayor regulated this with policy to cut off the largest cup sizes. Leslie’s research tested the impact of this. When free refills were available via table service – people consumed more. By adding a trivial degree of friction – the machine requiring customers to walk to the machine – decreased consumption.
Volpp, et al 2008.
They designed incentive systems to encourage people to lose weight – and found things more impactful than simply giving cash.
People opted in to lose weight, and were given 1) a deadline and 2) a weight loss goal.
All people were entered into a lottery – and if 1) their number was called and 2) they were under their goal, they won $100.
The devilish twist is that if you don’t quite make your goal, you might still win the lottery draw, but not qualify for the $100. And this “regret aversion” is a powerful driver for change.
Furthermore, there were subgoals + progress reporting and tracking.
You can make standard ways to change behaviour even more effective through knowledge from the psychology literature – and using choice architecture at a system or policy level, with the benefit that it doesn’t even require use of self-control. Lastly, these powers can also be used for bad!