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Behavioural Economics

Why we need a label for 'Climate Change'

This article of ours first appeared in Huffington Post on 17th July, 2017.

Nineteen of the G20 countries have affirmed their commitment to the Paris climate agreement, which sets guidelines for each participating country to mitigate global warming. Sponsored by the United Nations, it aims to slow the rise in global temperatures. The US is the lone outlier on climate change while India remains committed on the issue of climate change “as per its own values and requirements.”

On the face of it, climate change seems like a problem that may be happening but is still some time away in the future. So perhaps it can be handled sometime in the future. After all there are so many urgent problems facing our country—poverty, malnutrition, black money, terrorism, lack of infrastructure, etc. Plus, there is this diffused sense of responsibility because it’s affecting almost every country in the world. So the question arises, why should India take the lead to tackle climate change? After all it’s the developed countries that are responsible for much of the industrialisation that’s causing global warming and climate change. But what really matters is which countries are facing and will continue to face the maximum harm from climate change. And India is right on top of that list according to research by the Notre Dame Global Adaptation Initiative. The group measures vulnerability by considering the potential impact of climate change on six areas: food, water, health, ecosystem service, human habitat and infrastructure.

Climate change is a wicked problem. As this New Scientist article points out:

“It provides us with no defining qualities that would give it a clear identity: no deadlines, no geographic location, no single cause or solution and, critically, no obvious enemy. Our brains scan it for the usual cues that we use to process and evaluate information about the world, but find none. And so we impose our own.

It is wide open for interpretation causing constant uncertainty. Climate scientists say people don’t get the science about the environment. Environmentalists say political will is being corrupted by vested commercial interests. Commercial interests deny climate change. Individual minds are left confused.

But not only do vested economic interests inhibit reforms, our individual brains are not geared to deal with the problem. Climate change is global, complex, somewhat abstract problem, and occurs in a time frame of decades, all of which make it difficult for people to respond appropriately. Costs are short term, benefits are long term and perceived as uncertain, though in fact benefits are massively greater than the costs of action now. Take survival, for instance. But people suffer from loss aversion—the tendency to fear losses more than we love gains. So it’s challenging for us to give up our aspirations to consume and enjoy the pleasures of consumption now, in order to reap the benefits of reversing climate change.

According to the National Oceanic and Atmospheric Association, US Department of Commerce, January 2017’s average global temperature was the third highest for January in the 1880-2017 record, behind 2016 (highest) and 2007 (second highest). The extent of polar sea ice on 4 December, 2016 was about 3.84 million square kilometers (1.48 million square miles) below the 1981-2010 average, according to U.S. National Snow and Ice Data Center satellite measurements. That’s roughly the size of India melted away because of rising global temperatures. The increase in temperature, heatwaves, storms, floods and disruption of weather patterns is being felt by everyone, but it’s still somehow not enough to get everyone to take the necessary desired action. Why?

To begin with, climate change is a soft term, moderate and fuzzy. It could do with re-labeling as “climate disaster”. Climate disaster creates a stronger sense of threat and generates a greater sense of urgency. It brings up vivid images to the mind of typical disasters—storms, floods, wildfires, droughts, etc. So people are more likely see it as harming them and their family, and more likely to see it happening now. Several behavioural science studies have shown evidence that when words are re-labeled it makes a huge difference in people’s behaviour. Imagine 3G, 4G and wifi being reworded as “radiation”.

However, education on “climate disaster” is not enough. It needs to be made more tangible for everyone to act upon it. We need to create behavioural design nudges in our everyday lives that enable everyone to effectively contribute in reducing climate disaster in a tangible, concrete way. For example, just like the Bureau of Energy Efficiency has created an energy saving star rating system for household appliances like air conditioners, refrigerators and washing machines, we need to have an encompassing “climate disaster” star rating system for each and every product and service we consume. Fewer the stars, more the damage caused to the planet. Higher the stars, the better it is for the planet. For example, amongst food items, chicken would get a higher star rating than beef because cows let out methane as they digest food, a potent greenhouse gas, 25 times as powerful as carbon dioxide. And beef requires 28 times more land to produce than chicken and 11 times more water. Vegetarian plant-based food would get the highest star rating in comparison. The “climate disaster” star rating system will, in turn, nudge manufacturers to ensure their products and services have a high star rating. That means relying on renewable sources of energy, efficient use of resources, efficient emissions and better waste management. Sure it can be complicated to work out such a rating for all products and services, but if done, we could have a shot at surviving ‘climate disaster’.

Consumer and Employee behaviour (Bajaj Finance)

Last week we spoke at Bajaj Finance on applying behavioural science to improve sales conversions, new product adoption, product portfolio, choice architecture, pricing strategies, employee behaviour change, productivity, performance management systems, learning and team collaboration.

One of the questions asked during the Q&A was what’s the difference between data science and behavioural science and what’s the role of both in business. We answered the question with the example of Uber. To make sure you can hire an Uber within couple of minutes of booking one and to make sure the cab arrives at the exact location around the time promised, Uber must be applying incredible amount of data science – matching user’s data with driver’s data and of course so much more we don’t understand as behavioural scientists. When Uber would use surge-pricing too, they would apply data science to incentivise drivers to reduce customer’s waiting time. But it didn’t go down well with anyone. So Uber changed its tactic from surge-pricing (1.8x) to upfront-pricing (Rs. 167). With upfront-pricing customers no longer feel its unfair because they are informed about the exact fare at the time of booking prior to the trip, which is a certain fixed amount and that puts customers at ease, even though in peak times Uber indicates that fares are higher due to higher demand. On the other hand, surge-pricing (1.8x) pinched people a lot more. But now with upfront-pricing, Uber is still able to charge a surcharge, but without pinching people as much, thereby improving customer experience. Uber’s upfront-pricing is an example of Behavioural Design.

Was a privilege to talk at Harsh Mariwala’s Ascent + INK conclave, along with industry stalwarts like Harsh Mariwala, Chairman, Marico and Uday Kotak, Executive Vice Chairman, Kotak Mahindra Bank.

Topics included irrational behaviour of masses, doctors, air travellers, car drivers; inefficacy of campaigns like Swachh Bharat at changing behaviour; why our government and companies in India need to adopt behavioural design; public behaviour change; Bleep, People Power and how Nudge units are being implemented by governments around the world.

Comedian Cyrus Broacha interviews us on funny behaviours and Behavioural Design.

Cyrus’s nonsense makes a lot of sense.

Super witty and sharp Cyrus knows more about Behavioural Design than anyone who has interviewed us.

Behavioural solutions for road safety

This editorial article first appeared in Mint on 21st March, 2017

Making roads better should reduce the number of accidents. Yet that’s exactly the opposite of what’s happening in India. Despite measures being taken by the government on improving roads, there has been a continuous increase in road crash deaths since 2007, with a brief annual reduction in 2012. Between 2010 and 2015, incidence of road accidental deaths increased by an annual average rate of 1.2%. There were over 500,000 road accidents in 2015, up from 489,000 in 2014. More than 500,000 people were injured in road accidents in 2015, up from 493,000 in 2014. A total of 146,000 people died in road accidents in 2015, up from 139,000 in 2014. According to the National Crime Records Bureau, out of 146,000 deaths, only 0.8% of the cases were due to lack of road infrastructure.

Road safety is not just about creating infrastructure. It is about designing behavioural solutions that take human biases and irrational behaviour into consideration. When the roads are smooth, wide and empty, drivers are likely to speed. If the car being driven is big and tough, the driver feels much safer compared to driving say, a small hatchback. That makes drivers over-compensate and take undue risks. Regular speed limit signs are ineffective at getting drivers to slow down, because drivers don’t choose the speed based on speed limit signs. Rather, drivers simply go with the flow depending upon the width and smoothness of the road and traffic conditions.

To get drivers to reduce speeding, there have been several effective behavioural design nudges implemented around the world. At the curve of Chicago’s Lake Shore Drive and Oak Street, a series of horizontal white stripes have been painted on the road, that get progressively narrower as drivers approach the sharpest point of the curve, giving them the illusion of speeding up, and nudging them to tap their brakes.

According to an analysis conducted by the city’s traffic engineers, there were 36% fewer crashes in the six months after the lines were painted compared to the same six-month period the year before. Similar behavioural design nudges are now being applied in China and Israel to curb speeding.

In another trial in the UK conducted by Norfolk County Council, more than 200 trees were planted on the approach roads in north Norfolk which had a history of speeding problems. Results found that drivers reduced their speed by an average of 2 miles per hour. Again, as the car approached the village, the trees, planted closer and closer together, gave the impression that the vehicle was moving faster. This encouraged the motorists to slow down.

In another experiment in the US, the Virginia department of transportation painted zigzag white markings instead of the familiar straight dashed lines, to caution drivers approaching the road-crossing intersection used by pedestrians and bicyclists. They found that zigzag markings slowed average vehicle speeds and increased motorists’ awareness of pedestrians and cyclists. They also noted that the effects of the behavioural design didn’t wear off once motorists became used to it—they still slowed down a year after installation.

Building infrastructure like traffic signals doesn’t mean people will always follow them. But creating behavioural design nudges like displaying the seconds remaining for the traffic signal to turn green, is likely to reduce the number of people who break the signal. Such behavioural design takes into account that people are usually in a rush.

Rationally speaking, people shouldn’t be breaking signals because they wouldn’t be acting in their self-interest by putting themselves in harm’s way. But human behaviour is not rational. Drivers honk even when there is no way that honking could clear a traffic jam. Even when the signal is still red, there are drivers who honk. Therefore, rational ways of changing behaviour like educating people or creating awareness-based campaigns are ineffective. What’s effective at getting people to reduce honking is “bleep”—a red button on the dashboard of a car that beeps and flashes when the driver presses the horn. To switch off the red button, the driver has to press it. This behavioural design nudge breaks the habit of drivers’ honking because now each time drivers want to honk, “bleep” makes them deliberate whether they should honk or not. Bleep has been shown to reduce drivers honking by 61% in a six-month and 3,800km-long experiment in Mumbai.

Behavioural design needs to be applied at pedestrian crossings at traffic-signal junctions. At various traffic junctions, there are two signals in view—one signal placed just after the zebra crossing and the second signal on the other side of the junction once you’ve crossed it. That makes drivers keep inching forward, not stopping at the zebra crossing and thus not allowing pedestrians to cross. So to get cars to stop at the zebra crossing, only one traffic signal needs to be placed just before the zebra-crossing stripes begin, so that drivers have no option but to stop to get a view of the one and only traffic signal.

It’s time authorities stopped relying on ineffective money-draining campaigns, driver education and enforcement of laws. Instead, we should test simple, practical, scientific behavioural design nudges to improve road safety.

Behavioural Design & Road Safety

Our latest series of talks is how Behavioural Design can solve key road safety issues like accidents, speeding, honking, making pedestrian friendly traffic junctions, motorbike lanes and ensuring safety for all stakeholders. These talks are being done for Mercedes Benz. If we do get permissions we’ll try to upload the talks. Nevertheless we will write about the Behavioural Design nudges soon.

Part 5 of Behavioural Design interview with Hrishi K of 94.3 Radio One (last one in the series).

 

Part 4 of our Behavioural Design interview with Hrishi K of 94.3 Radio One.

 

Behavioural Design interview on Radio One 94.3 – Part 3

Behavioural Design interview on Radio One 94.3 – Part 2

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