Do you suffer from the money illusion?

In a study by Kahneman, Knetsch and Thaler, subjects were asked to judge the fairness of pay cuts and pay increases, in a company located in a community with substantial unemployment. One group of subjects was told that there was no inflation in the community and was asked whether a 7 percent wage cut was “fair.” A majority, 62 percent, judged the action to be unfair. Another group was told that there was 12 percent inflation and was asked to judge the perceived fairness of a 5 percent raise. Here, only 22 percent thought the action was unfair. Similar results suggesting this money illusion have been reported by Shafir, Diamond, and Tversky.

People fail to notice how inflation eats up savings, people fail to notice how inflation eats up returns, people fail to notice convenience fees on air tickets, people fail to notice fees on mutual funds, people fail to notice brokerage on stocks bought and sold, the list goes on.

Do you suffer from the money illusion too?

Sources:

Daniel Kahneman, Jack L. Knetsch and Richard Thaler – Fairness as a Constraint on Profit Seeking: Entitlements in the Market – The American Economic Review Vol. 76, No. 4, pp. 728-741 (Sep, 1986)

Eldar Shafir, Peter Diamond Amos Tversky – Money Illusion – The Quarterly Journal of Economics, Volume 112, Issue 2, Pages 341–374 (May 1997)

How to get people to stop littering?

Let’s explore few ways in which one could reduce littering:

1. You could fine people for littering.

2. You could place CCTVs in the area.

3. You could incentivize people for using garbage bins.

4. You could create a social stigma for people who litter.

5. You could make throwing stuff in bins fun.

6. You could use social proof to indicate that a high percentage of people use the bin.

But behavioural scientists did something better in the 2011 Copenhagen study that reduced littering by 46%.

They placed green footprints on the ground, pointing the way to the nearest garbage bin. Simple, low cost, effective Behavioural Design.

India, though is a different story. Usually there are no trash bins in public places, because the trash bins get stolen by people who sell it to make some money, even though they are fixed to the ground with screws. Everything in India has re-sale value.

So Briefcase has created a Behavioural Design solution in the form of non-stealable, waste-segregated, long-lasting, low cost, low maintenance, all weather, endorsable trash bins. But unfortunately, the local government authorities here in Mumbai – the officers from BMC, aren’t interested because of apathy. How can we change their behaviour? Can you help us?

Source: http://www.inudgeyou.com/green-nudge-nudging-litter-into-the-bin/

Do you spend enough time analyzing the problem?

I used to hear the words ‘the client wants it yesterday’ a lot when I used to be in advertising. And for various reasons people in advertising succumbed to the pressure. This in turn led to clients crunching the timelines even shorter as years passed, while the ad industry diligently kept working harder at keeping deadlines, lowering the quality of strategic thinking, thereby positioning ad agencies as short-term ad campaign makers.

Though you may not be from the ad industry you may find yourself in a similar situation. Unfortunately, the temptation in such time-pressured situations is to use habitual responses to get started on the solution immediately. Since problem-construction feels like a waste of time, it’s the phase that gets sacrificed most often. In reality, it is the most important part of the creative process.

In the classic study on creative preparation conducted by behavioural scientists Jacob W. Getzels and Mihaly Csikszentmihalyi, they asked art students to create a still-life painting of an object, which was later evaluated professionally. The study found that students judged to have created the best work were those who spent the longest preparing – thinking about the object itself and how they were going to use it. When Mihaly returned to the same people 7 and 18 years later, he found that it was these measures of problem identification and construction that predicted the artists’ long-term success. Even 18 years later, artists who spent longer constructing the problem were more successful.

Says Jeremy Dean of www.psyblog.co.uk, “The choices made in the early stages have a massive impact later. That’s why spending longer thinking about the problem before you dive in is likely to lead to higher levels of creativity in the final product. Fools rush in where the more creative dare to tread.”

Needless to say, deadlines are part and parcel of constraints in any commercial work. Constraints bring out the best in us, but we need to give ourselves adequate time to analyze the problem well enough. That’s why before identifying the Behavioural Design principles to be applied to the challenge, we spend a substantial amount of time analyzing the product and customer data and map out the customer journey, whether the customer is a consumer, employee, investor or simply put, the user.

Source: Jacob W. Getzels and Mihaly Csikszentmihalyi – The creative vision: A longitudinal study of problem finding in art – Wiley New York 1976

S.M. Rostan – Problem finding, problem solving and cognitive controls: An empirical investigation of critically acclaimed productivity – Creative research journal 7, no. 2 (1994): 97-110

Behavioural Design for Urban Planning

We were happy to be invited to speak at Milano Arch Week 2019 on applying Behavioural Design to urban planning or as they liked to refer to it ‘Urban Regeneration’. We are happy that architects are opening up to our practice of Behavioural Design to build cities that work for people living in it and to use architecture to modify public behaviour.

Our talk included Behavioural Design examples from my Instagram feed. Some of the examples we referred to were the Ballot Bin that gets cigarette smokers to stub their cigarette buds at the Ballot Bin because they are motivated to vote for their choice, whether the choice is about your favourite football player or some other topical question. We were asked about Bleep horn reduction system as a Behavioural Design nudge to reduce drivers’ honking. We spoke about how the Bureau of Energy Efficiency (BEE) in India has made it mandatory for appliances to come with star ratings and how it’s nudging people to choose higher star rated appliances so that people can save money and in doing so also consume lower power and contribute towards climate crisis in a positive manner. Some of the other examples we spoke about were Behavioural Design nudges to reduce overspeeding, getting people to – use trash bins in the outdoor, use sanitizers in hospitals, use stairs instead of escalators, and many more. If you’re curious to know more, click here.

Behavioural Design & Sustainability Workshop

We were very happy to be invited by a foundation known as Acting for Good based out of Hong Kong, for a workshop on applying behavioural science for sustainability, conservation and climate change conducted by persuasion stalwarts Influence at Work (UK). Nature, wildlife and conservation is very close to our heart. Sure we’ll continue to work with commercial clients on consumer, employee and investor behaviour change, but solving behavioural aspects of climate change is something we are likely to dedicate a big portion of our time towards, because we all need to begin reversing the damage we’ve been causing to our planet. There isn’t a bigger challenge facing mankind and we’d like to be on the side of creating sustainable Behavioural Design solutions.

We loved interacting with environmentalists, ecologists, wildlife protectors, conservationists, trainers working in Asia as well as catching up with behavioural scientists from Influence at Work (UK). The workshop was very well put together. And the participants’ understanding of the behavioural science principles was also amazing. We got along so well, it felt our meeting had to happen. We already miss them. We’ve also begun thinking about behavioural challenges related to climate change and conservation. We can’t wait to spread the workshops and to work on some of the tough behavioural challenges in Asia being faced by workers on ground. We’ll communicate on this topic as and when we make progress. The journey has just begun and we’re hungry to make a big difference.

To change the habit, change the environment

Habits get automatically activated by our environment, especially so in stressful situations like when you get home hungry and tired – that time our habits are in full control of us. An effective way to change the habit is to change the environment.

Behavioural scientists Neal and colleagues had participants sit in a cinema watching trailers while others sat in a meeting room watching music videos. None were aware that the study was about eating habits; they were told it was about attitudes and personality.

When sitting in the cinema, strong habits cued by familiar circumstances had their familiar effect – people ate popcorn like robots. In the cinema, it didn’t matter whether the popcorn was stale or fresh or whether the person was starving or had a full stomach. Liking for popcorn had very little effect on how much they ate. Those with weaker popcorn eating habit did eat less of the stale popcorn.

In contrast, participants in the meeting room, all behaved, more thoughtful, whether or not they had a strong habit of eating popcorn at the cinema. They ate less of the stale popcorn, and less overall if they weren’t hungry. Even for those with strong popcorn eating habit, the change of environment was enough to disrupt their automatic behaviour. Overall, in the meeting room, people ate 50% less popcorn than those in the cinema.

Then some people in the cinema were told to eat with their non-dominant hand. If they were right-handed, they were told to eat with the left hand. This jolted them out of their habitual behaviour and brought the conscious mind back into action.

Take a close look at your kitchen. Is the first thing you see healthy or unhealthy? What’s easily accessible – fruits or packaged snacks? How big are the containers in which food is stored? How big are the plates you eat out of?

Source: D.T. Neal, W. Wood, M. Wu, D. Kurlander – The pull of the past – personality and social psychology bulletin 37, no. 11 (2011): 1428-1437

Behavioural Design for Employee engagement at Nasscom

It was fun speaking on applying Behavioural Design to improve employee engagement at Nasscom Technology & Leadership Forum on 21st Feb 2019 at Grand Hyatt, Mumbai. I spoke about few high-impact low-cost Behavioural Design nudges, based on experiments in behavioural science, that demonstrate how employee engagement and experience can be improved at the workplace. Given that employee engagement is at abysmally low levels at a lot of companies, it’s high time to apply behavioural science to transform processes like appraisals, feedback, learning, rewards, recognition, productivity, collaboration amongst other experiences to improve employees’ performance and happiness. The Behavioural Design nudges shared raised a good amount of smiles and curiosity. There were inquiries to deliver talks at different companies and do projects to change employee behaviour. Let’s see which of them happen. After all Behavioural Design is about improving conversions.

The journey from taking the lift to walking the stairs

The journey from taking the lift to walking the stairs

How often have we heard that we must take the stairs especially if we need to go to Floor nos. 1/2/3, yet how many times do we take it? It’s an exercise that can be so easily incorporated into everyday life, but awareness yet again doesn’t translate into action.

So a few behavioral scientists put a sign at the bottom of the stairs telling us that walking up the stairs burns about five times as many calories as taking the lift. Sixteen studies analyzed this intervention and found that on average, stair use increased by 50%. Sure this is from a low baseline, because not many people generally use the stairs in the first place, but it does demonstrate that a small nudge can do more than any big-budget-ad-campaign to change behavior. Few stations in Tokyo, Japan like Tamachi station have implemented it by mentioning the number calories burned with each step. And a friend of ours says he feels better while walking up the stairs because he can see how many calories he’s burning with each step.

Of course there’s a way of making climbing stairs fun like the Volkswagen piano staircase, but putting signs is probably a thousand times cheaper.

Source: R.E. Soler, K.D. Leeks, L.R. Buchanan, R.C. Brownson, G.W. Heath and D.H. Hopkins – Point-of-decision prompts to increase stair use: A systematic review update – American Journal of Preventive Medicine 38, no.2 (2010): S 292 – S 300

Psychology and Physiology are deeply connected – Part III

Continuing the series of ‘Psychology and Physiology are deeply connected’, this is the final one.

This experiment is popularly known amongst psychologists as ‘The Love Bridge’ study, named after the bridge in Capilano Canyon, Vancouver where the experiment took place. The suspension bridge spans 450 feet and hovers 230 feet above the ground, causing it to sway as the wind blows. There was another bridge in the area that was a small but sturdy wooden bridge bordered by guardrails, just ten feet off the ground.

At various times throughout the day, researchers Donald Dutton and Arthur Aron, had a young female assistant approach men between 18-35, as they stepped off the end of each bridge with a scripted story – that she was a psychology student conducting a study on the effects of exposure to scenic attractions on creative expression. The assistant would then ask each man to fill out a short survey. When done, she would offer to tell him about the study when she a little bit more time. Then she would write down her name and number and hand it over to the men. Most men happily accepted it and walked off.

As expected the female assistant started getting calls from the men. While only two of sixteen men who crossed the small sturdy wooden bridge called, half of the eighteen men who crossed the suspension bridge called. Why did she miraculously become more attractive to the men who crossed the suspension bridge than to the men who crossed the small sturdy wooden bridge?

Turns out that for the men who crossed the suspension bridge, anxiety and adrenaline translated into a heightened romantic interest in the assistant. Their physiological reactions affected their perceptions and behaviour.

But could the men who took the suspension bridge be more courageous and daring and therefore more likely to take a chance on calling the assistant? 

To test the possibility, the researchers went back to Capilano to conduct a follow-up study. This time the female assistant was stationed only at the end of the suspension bridge. She approached some of the men right after they crossed and others, ten minutes after they had finished crossing.

More men who met the assistant just after they crossed called, than the ones who were approached ten minutes later. The latter’s anxiety had subsided and their adrenaline levels had gone down.

No wonder going for a roller-coaster ride on a date makes sense.

Source: Attraction under conditions of high anxiety – Donald Dutton and Arthur Aron – Journal of Personality and Social Psychology 30 (1974): 510-17.

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