(Podcast) Nudgeapalooza behavioral economics insights | Deloitte Insights

Can good behavior be habit-forming? Highlights from Nudgeapalooza

March 14, 2018

​How do we expand our thinking of behavioral science—and habit formation—beyond the nudge? The first podcast from Deloitte’s 2017 Nudgeapalooza conference, which focuses on how behavioral insights can improve outcomes in health, commerce, and public policy.

 
There are controversies. There are questions marks. There are issues. People talk about ethics. People talk about the sustainability. People talk about the applicability in different contexts. But that’s what makes this even richer and more wonderful to examine.

In 2016, Deloitte created the first Nudgeapalooza conference. Its goal was to provide a small, eclectic group of consultants, academics, and practitioners a platform to exchange ideas on how behavioral insights can improve outcomes in health, commerce, and public policy. Building off the momentum of this debut, Nudgeapalooza 2.0 went bigger. From 50 attendees in a single conference room, Nudgeapalooza moved to Georgetown University’s McDonough School of Business Colloquium hall in fall 2017, where 200 attendees witnessed just how much these ideas have grown.

Here are some highlights from keynote speeches of Deloitte’s US chief data scientist, Jim Guszcza, who spoke about the need for human-centered design in data science and digital technology, and University of Southern California psychology and business professor Dr. Wendy Wood, who showed us how to expand our thinking of behavioral science—and habit formation—beyond the nudge.

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TRANSCRIPT

Today, we examine . . . us. More specifically, why we make the choices we do about everything from what to eat, how to save for retirement, and who to love. Or maybe we don’t have nearly as much choice in the matter as we think.

I’m Tanya Ott, and this is the Press Room. And today, we’re kicking off a series of podcasts recorded at Georgetown University, where Deloitte’s Centers for Government Insights and Integrated Research recently held a one-day conference to explore how behavioral science and data science can help governments, universities, and businesses address some of their most challenging problems.

REBECCA HAMILTON: Good morning, everyone. Welcome to Georgetown University and McDonough School of Business. I’m Rebecca Hamilton, professor of marketing here at the business school.

TANYA OTT: They brought together thought leaders, researchers, and academics—like the dean of Georgetown’s business school, Dr. Paul Almeida.

PAUL ALMEIDA: Rebecca said, go read the book Nudge.

TANYA OTT: The book by recent Nobel Prize winner Richard Thaler of the University of Chicago.

PAUL ALMEDIA: And I did, and I was struck by so many different things. I've been a bit of a behavioral scientist for many years, and I study innovation and the power of informal communities. But this really struck me, and one of the things that struck me is, we are all choice architects. Whether we know it or not, we are in fact influencing other people's behavior, other organizations’ behavior, and our own organization's behavior, by the choices we present to them and how.

TANYA OTT: Nudges are everywhere . . . even if we don’t see them. They push us to eat certain things, to plan for our future. They can be pretty simple or way more complicated.

JIM GUSZCZA: So I want to give a high-level talk that maybe ties the conceptual room together, like the rug in The Big Lebowski.

TANYA OTT: That’s Jim Guszcza, Deloitte’s chief data scientist.

JIM GUSZCZA: I'm someone who's interested in using data to help make better decisions. This has changed both the way government agencies and businesses are interacting with customers and citizens.

I always say that we should have three legs of the stool upon which rests employee engagement, customer engagement, citizen engagement, and so on. It's not just data and digital; it's the behavioral design. Thinking throughout human psychology, human factors are what we really need to go from indications to better outcomes. So what is choice architecture? What is all the fuss about? It's not just the information you give people or the choices you give them; it's the way you frame, the way you communicate that information. The way you arrange the choices can have a disproportionate effect on people's behavior.

Ethically, this idea of human-centered design leads you naturally into thinking about the ethics of it. You're not trying to manipulate people. You're trying to take into account user needs, user goals. That's what user-centered design is all about. And, ethically, ethics is all about not using people as means, but as ends. So take into account what people want—the goals people would have if they had unlimited rationality and unlimited self-control. We'll try to help them achieve those goals by making the environment more navigable.

TANYA OTT: Put the fruit before the carbs in the buffet line. Make workers opt out of retirement contributions rather than opting in. But it’s not just about individuals. Jim Guszcza argues it’s bigger than that.

JIM GUSZCZA: There are some classic examples that I think many of you have read about. The kind of water cooler story that put the UK team on the map was using peer influences, social proof to prompt people to pay their taxes on time. Thaler writes about this in Misbehaving. If you send out the traditional tax letter, that might cajole some people to pay their taxes on time. If you add a line to the top of the letter saying, “Did you know that 9 out of 10 of your neighbors in Westminster pay their taxes on time?” you'll collect millions of pounds more revenue.

TANYA OTT: But! But, but, but, but . . . different nudges might be more or less effective for different people.

WENDY WOOD: I think something that Jim alluded to in his talk is that it's time to think about the second generation of nudges, where it's going. And how to tie certain nudges to certain problems. So I think that's going to be nudge 2.0: Understand what the problems are that we're trying to solve, and then figuring out what are the best nudges, interventions to try to address those problems.

TANYA OTT: Wendy Wood, professor of psychology and business at the University of Southern California.

WENDY WOOD: How many of you remember the Strive for Five campaign? This kind of dates some of us, but I certainly do. It started with the National Cancer Institute and the agricultural industry in California trying to convince us to eat five servings of fruits and vegetables a day. It seemed very successful at changing people's beliefs; as you can see, it was also very expensive.

It was a huge national campaign, and when it started in 1992, only about 8 percent of us knew (that's hard to believe, isn't it, given the current media?) that we should be eating five fruits and vegetables a day. But in as short a time as three years, this program convinced 35 percent of us, over a third of us, that we should be doing this.

So this is incredibly powerful, right? Clear success—except when you start looking at behavior. At the beginning of the program, 11 percent of us were complying with this recommendation. At the end of the program, 10 years later, it was still 11 percent. So it had no effect on behavior.1

TANYA OTT: The CDC [Centers for Disease Control and Prevention] ended the program in 2008 and started a new one the next year called Fruits and Veggies—More Matters. The idea being that we shouldn’t just be shooting for five fruits or veggies a day. We all need as much as possible. After that new program started, fruit and vegetable consumption actually went down.2

WENDY WOOD: More and more people continue to be convinced, but we're just not changing our behavior. And there are lots of good reasons for that.

TANYA OTT: One reason? When you’re being nudged to make a regular contribution to your retirement account or to become an organ donor, that’s a one-off decision. You can set it and forget it. But changing lifestyle behaviors?

WENDY WOOD: Many of the challenges that we have in health, in finance, in relationships, in employee productivity, student performance really have to do with long-term change. And we're just not so successful at generating those kinds of long-term changes in diet, in exercise, in the kinds of close relationships that we want to have with people, our performance at work. We're not so good at changing those behaviors that are repeating over time.

TANYA OTT: Wendy says once habits form, they automatically guide action.

WENDY WOOD: They're a kind of a shortcut for us to just keep doing the same thing, over and over again, without having to think much about it, and get the same reward. So they're functional, they're great.

TANYA OTT: When they’re good for you . . .

WENDY WOOD: So if you have a habit to go running first thing in the morning, all you need to do is see that alarm clock, you hit it, and your first thought is put on your running shoes. You're not making decisions about alternatives, and this is demonstrated in a great study with bike riders. The bike riders who had a habit to ride their bike to work, they didn't even try to figure out, is it raining? I find this hard to believe, but really, they weren't interested in, is it raining? They just wanted to get on their bike and go, because that's what they did. So it really reduces your deliberation about the behavior, and you just go ahead and act on the response in mind.

TANYA OTT: But consider this other experiment . . .

WENDY WOOD: We decamped the local movie cinema on campus, and we had people watch movie trailers, and we gave them bags of popcorn, supposedly as a reward for watching and rating these movie trailers.

Unbeknownst to them, half of the popcorn bags were full of stale popcorn, and half were full of fresh. And the stale popcorn was really stale. We had popped it a week earlier, and then put it in a plastic bag in the lab, and then served it to people.

This is nudging for good. The good was the insight that we get from this. [laughs] And we didn't poison anyone.

So, as part of the study, we asked people how much they liked the popcorn that they got. Those who got the stale popcorn, as you can see, gave a rating of close to two on this scale. Those who got the fresh popcorn, unfortunately, didn't like it a whole lot better. We didn't even get to the scale midpoint with these people, but, clearly, the people who got the stale popcorn hated it.

Okay, how much did they eat? We collected the popcorn bags afterward and weighed them to figure out how much people in these two conditions, because these are two different experimental conditions, actually ate?

For people who did not have [stale popcorn], they acted in the way you'd expect. So people who did not regularly eat popcorn in the movie cinema, if they liked popcorn, it was fresh, they ate more. If they did not like the popcorn, when it was stale, they ate less. That makes sense. That's what you would expect, that is what all of us would have predicted.

What is interesting, though, is what happens for people who did have habits to eat popcorn in the movie cinema. Because these are people, who just sit there and eat. They told us they hated the popcorn, but they ate it anyway.

This is what happens when behavior is cued automatically. This is what it means to not be making decisions, right? You're not wondering, is this something I want to do? Instead, you're just doing it based on cueing.

TANYA OTT: Why do people do this? Wendy Wood says it’s because our brains are actually made up of multiple interrelated systems. Habits are pretty much a basic system.

WENDY WOOD: So you can change people’s thoughts, change people’s desires, and not necessarily have much impact on their habits. Habits change only slowly through doing. We get rewarded for a response, and over time with repetition, habits change.

TANYA OTT: Environment can play a big role in encouraging change.

WENDY WOOD: How often do you go to the gym? I think it depends. You couldn't predict, unless you knew how motivated they were, what their self-control was. We focus on internal driving forces in trying to figure out whether someone's going to do something. And that's true. When you begin a behavior, it's all about how much do you want to do it, how much self-control do you have?

But once you actually get into it, it becomes much more dependent on external friction. A study of cell phone users tracked 7.5 million cell phones for a month and tracked the distance their users traveled to the gym, to paid gymnasiums. When it's easy to get to the gym, we go more. There was an exception, of course: very high-end gyms. People were willing to travel more than 3.7 miles, maybe 4, 4.2, to get to the really high-end gyms. Or maybe high-end gym users were willing to travel.

You see the potential issues with correlational data. But the whole point here is that there can be friction in our environments that we don't see, but that our behavior responds to—and that help us form, or not, habits that are beneficial for us.

TANYA OTT: Think about the friction in your environment. “Would you like fries with that?”—marketers understand the idea of reducing friction. Video streaming services do, too . . .

WENDY WOOD: Autoplay keeps people binge-watching because it starts the next show right when the prior one ends. And you don't have to make a decision. You're into it before you realize it: “My god, now it’s 1 o’clock!” Yeah, we’ve all been there.

TANYA OTT: So, whether it’s good or bad for a person—or a company—environmental friction is a thing. But what about self-control? Maybe people who are healthier or wealthier or happier just have better self-control?

WENDY WOOD: The last couple of years, we’ve learned that that’s not correct. Actually, when you observe these people who have high self-control, when you watch all of us, what you find is that they know about environmental friction. Intuitively, they know to select environments that allow them to meet their goals.

They're not hanging out in bars if they're trying to drink less, right? They're not going to the burger bar if they're trying to eat less. These are people who study in the library. They have learned to avoid subjects with their spouse that will create challenging discussions, these are people who have figured out how to keep themselves in situations that are low friction to meet their goals.

WENDY WOOD: If we don't pay attention to the environments that we are in, we end up putting people [in the position to act] in ridiculous ways, that are not consistent with their goals. And I’ll leave you with that thought.

TANYA OTT: That was University of Southern California professor of psychology and business Wendy Wood, speaking at Deloitte’s Nudgeapalooza last November at Georgetown University. We’ll have more conversations from the event in upcoming episodes of the podcast. I’m Tanya Ott for the Press Room. Thanks for listening!

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