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Nudges are Cheap in the Same Way Medicines are Cheap

November 21, 2017

In the majority of presentations on applied behavioral science, it is strongly emphasized the fact that Nudges are low-cost (cheap) interventions/ changes that have a disproportionally large impact on the desired outcome.

 

I believe that this is, mostly, an exaggerated claim. Nudges are cheap in the same way medicines are cheap. Manufacturing one pill doesn’t cost much, and the pill, usually, is highly effective in achieving the desired outcome.

 

In the case of Nudges, behavioral interventions such as changing the default option, adding social comparisons, and rewording of a message are or, at least, seem cheap. But, there are at least three big categories of not-so-obvious barriers to adopting behavioral interventions.

 

 

Research costs

 

First, there is the issue of research costs. In the case of medicines, the problem is what chemicals to put in a pill. Manufacturing a pill is cheap, but the research needed to know which chemicals solve a certain problem is expensive, very expensive. It goes similar with behavioral interventions. Rewording a message or introducing social proof are, usually, cheap, but the question of which intervention will be effective can only be answered by applying thorough research. And that doesn’t come cheap.

 

Feasibility of applying behavioral interventions

 

Second, there is the issue of feasibility of applying behavioral interventions. Changing the default option, adding an element of social proof on a package or rewording a message in a letter seem like they are easy to implement. However, more often than we like to admit, these are very difficult to implement in real life. Consider the following examples.

  • The by-default enrollment of employees in 401(k) plans was very controversial and the matter was settled by a decision of the US Supreme Court of Justice. That can’t be easy.

  • Changing a message on a packaging of consumer goods implies a complex process of having new designs, making changes on the assembly line and dealing with the hurdles of the necessary logistics to make the changes.

  • Rewording a message in letters from public authorities requires to go through several levels of bureaucracy. After all, what and how a public authority communicates is, rightful so, heavily regulated.

 

The willingness of decision-makers

 

Third, there is the issue of decision-makers’ willingness to accept the deployment of behavioral interventions (Nudges). I’m not talking about the unhealthy reluctance that some people exhibit instinctually. Rather, I’m talking about the healthy caution-driven reasoning.

 

Does it make economic (business) sense?

is a perfectly legitimate question.

 

Promoters of behavioral interventions emphasize the low-cost – high-impact nature of Nudges, but, as I outlined earlier, there are legitimate questions about this nature. In practice, Nudges aren’t as cheap, both in terms of research costs and hassles of implementation, as they first seem to be.