← The Brainy Business | Understanding the Psychology of Why People Buy | Behavioral Economics
The Brainy Business | Understanding the Psychology of Why People Buy | Behavioral Economics
478. The Power of Choice Architecture in Behavior Change
00:49:49
In this episode of The Brainy Business podcast, Melina Palmer engages in a thought-provoking conversation with Eric Johnson, a leading expert in choice architecture and behavioral decision-making. They explore the critical elements of choice and how...
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- [00:01]
Melina Palmer
Have you ever wished you had more influence at work? That people would naturally be more likely to buy in on whatever idea you're selling them, whether they report to you or not? Well, you're in luck. I teach a virtual 10 week class on internal Communication and Change Management through Texas A and M University and it's enrolling now. Get details and enroll@hbl Tamu edu and click on Certificate program. You get to learn directly from me, including live virtual office hours over zoom with a cohort of interested brainy folks like you from around the world. Again, learn more and enroll in the internal communication and change management course at HBL TAMU. EDU. That's HBL like Human Behavior Lab, dot TAMU like Texas A&M University. EDU and click on Certificate program. Your future self will thank you and when you're ready, enjoy the show. Welcome to episode 478 of the Brainy Business Understanding the Psychology of why People Buy Today's episode is a conversation with Dr. Eric Johnson about the elements of choice. Ready? Let's get started.
- [01:26]
Dr. Eric Johnson
You are listening to the Brainy Business Podcast where we dig into the psychology of why people buy and help you incorporate behavioral economics into your business, making it more brain friendly. Now, here's your host, Melina Palmer.
- [01:42]
Melina Palmer
Hello. Hello everyone. My name is Melina Palmer and I want to welcome you to the Brainy Business Podcast. How we present choices, options, and decisions is foundational in behavioral economics. It is central to so many aspects of the work we do and the root of lots of interesting, thoughtful questions like how many choices are best, how important are defaults in decision making, and how can businesses use choice to their advantage? We are, of course, diving into all that in today's episode, which is a refresh of my conversation with Dr. Eric Johnson, which originally aired in October of 2021, discussing his book the Elements of Choice. Eric is a faculty member at the Columbia Business School and director of the center for Decision Sciences. His research examines the interface between behavioral decision research, economics, and the decisions made by consumers, managers and their implications for public policy, markets, and marketing, among other topics. He has explored how the way options are presented to decision makers affect their choices in areas such as organ donation, the choice of environmentally friendly products and investments. His research has been published in Science, Psychological Review, Psychological Science, Nature Neuroscience, Harvard Business Review, the Journal of Economic Theory, and many other consumer, economic, marketing, and psychology journals, as well as popular outlets including the New York Times, the Wall Street Journal, Money, Discover, businessweek, the Financial Times, CBS Evening News, and npr. According to the Institute for Scientific Information. He is one of the most highly cited scholars in business and economics. He's won many awards and been an associate editor of the Journal of Consumer Psychology and is a member of several editorial boards, as well as the senior editor for Decision Sciences at Behavioral Science and Policy and an editor at Frontiers in Decision Neuroscience. Needless to say, you're in for a treat today. Don't forget, links for my top related past episodes and books are waiting for you in the show notes for this episode, which are found within the app you're listening to and@the brainybusiness.com 478 all right, let's talk about the Elements of Choice. Dr. Eric Johnson, welcome to the Brainy Business Podcast.
- [04:11]
Dr. Eric Johnson
Thanks so much. Glad to be with you and glad to be with your listeners.
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Melina Palmer
Absolutely. Well, I'm so, so excited. We're definitely going to dig in super deep on choices and how to make them. But first, if you can tell a little bit about your background and you know, how you got into the field, I of course talked a little bit about how Lighty Klotz had recommended that I speak with you, and I'm so excited that he did. I talked about that in the intro. But yeah, tell us a little bit about you.
- [04:39]
Dr. Eric Johnson
So I was incredibly lucky to go off to a PhD and study at Carnegie Mellon, where there was this guy named Herbert Simon who a couple years later won the first Nobel Prize in behavioral economics. And then from there I sort of did even better and I did postdoc with Amos Tversky at Stanford. So by then I was basically anything that come after that's my own fault. But I was well trained and I was lucky enough to spend time in Chicago and eventually ended up teaching back at Carnegie Mellon, making the transition into the business school. Taught at Wharton for a number of years and then moved to Columbia about 20 years ago. And my research has always been about how people make choices and how the way you present information to them affects their choices. And a few years ago, the folks who wrote Nudge, my friends Richard Thaler and Cass Sunstein, invented a word for what I did, which is called choice architecture. And so all of a sudden what I was doing, I knew this already, but what I was doing had a real world implication and also been very interested in policy and in practice. So, you know, the rest is maybe not history, but it's my story.
- [05:48]
Melina Palmer
Absolutely. Well, and I mean, such an impressive and definitely for anyone that works in, in the field that's hearing all the amazing people you've had A chance to work with and be trained with. It's really phenomenal. So we're very thankful to have you with us today to share some of that knowledge. So what do you think first got you interested in choices? Just in general, you know how to do kind of whether it's like stumbled into it or you knew that was what you wanted to study, how did that even kind of come about?
- [06:22]
Dr. Eric Johnson
So I was fascinated with looking around me at the choices people were making. So I, when I was finishing high school, I went to a school where some people went to the community college. Other people applied to lots of very good schools. And I wondered why there was that difference and they were not the slacker as going to community college or the smart kids. It was really, it was just very interesting that they sort of made their choices very differently. Eventually I ended up years later when I was at Carnegie Mellon studying AI and cognitive psychology, saying these are great tools to understand what's going on. And so it just seemed a natural application. Also very interested in how these things get applied and how to help people make better decisions. So just from then on it was just a fascination of mine.
- [07:12]
Melina Palmer
Awesome. So if you were going to talk about maybe we're definitely going to talk about the book, like I said, and some of the tips that are in there in the elements of choice for people to be paying attention to. But do you have a favorite, maybe research. I know you've done so many, so favorite research, study or project. Something that can really help to show people the importance of good choice architecture and why choice is so important.
- [07:40]
Dr. Eric Johnson
So rather than talk about my research first, I'll talk about that later, I promise. I have a friend, a former student who I think did research. It's a great example. And this woman was in medical informatics. She designs the, the health record system or actually implements a health record system at one of the major hospitals here in New York. And they were pushing very hard to. What would be an important behavior change was to get doctors to describe generics as opposed to brand name drugs. Now it turns out generic is usually about a fifth of the price of a brand name drug. And often they're chemically, most of the time chemically identical. So let's use a drug called Allegra, which some of us who use antihistamines know. The generic is called fexofenadine hydrochloride. And if Allegro cost a dollar a pill, Fexofenadine hydrochloride is 20 cents. And hospitals been trying for years, partly to save money to actually make that shift. But they have paid doctors, they've educated doctors, even had alert boxes on the electronic health record systems pop up. And we. What they've done is basically trained doctors to press the dismiss button very quickly, but they didn't change the prescriptions at all. So what Jessica did was actually take a look at why this happened. And it turns out doctors could either sit down and type Allegra, which they knew very well, or sit there and go, what's the name of that drug again? After all, fexofenadine hydrochloride is so memorable.
- [09:10]
Melina Palmer
Right? Rolls off the tongue.
- [09:11]
Dr. Eric Johnson
Exactly. I have written on the screen in big letters so I can remember how to pronounce it. And what happens every time is they just couldn't recall. So they did what they did easily. Now, it turns out all she did was when someone stopped typing a L, L, E for Allegra, they finished populating the field with the name of the generic. Now, what was interesting is doctors could add a press of a button, you know, prescribe the non generic, but nobody did. The prescriptions for the generic went up from about 40% for all drugs to over 80%. Doubled the number. So what was going on here? Well, it was pretty clear. What it was is two things. One is the doctors wanted to minimize their effort, particularly at the beginning of the decision. After all, doctors are very busy. And the second thing is memory played an important role. Right. They just couldn't remember the generic name. They remembered. Remember. They remember. They actually were probably sold this. They got notepads with the name on it, pens with the name on it. It was detailed. You know, salespeople came into it. So they knew when it. The only option was Allegra. That's what the name was. So by actually doing that diagnosis, they were able to do a very, very relatively inexpensive change. Doctors actually liked it. It saved them effort. And they prescribed generics just twice with twice the frequency. So there's a case where the choice is made partly by the doctor, but it turns out the system is helping them make the choice, because as soon as you type, you get the completed name. So I think that's one of my favorite examples of how choice architect can change behavior. One last point about that, which is generics are not only good for hospitals because you think I'm just telling you about hospitals saving money. It turns out generics actually are better for patients because they can afford the drugs, and studies show they're more compliant. They keep taking the drug, they might run out of money if they were Doing the brand name, but with generic, they actually take the drug more regularly. So it's actually the patients who are also better off with this kind of system.
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Melina Palmer
Yeah, I really appreciate and I talk a lot on the show about how the changes that can be implemented from behavioral science, behavioral economics, they don't have to cost a lot of money, but they can have a really big impact. So when you take the time to step back, look at the real problem we're trying to solve, what are we looking to overcome? The behavioral intervention is maybe something teeny tiny, like you said, the auto field saying. Did you mean this? Not just Allegra, but the really long word that I don't have written up on my screen to help me know how to pronounce. So then you say, oh, yeah. So we may think, well, the doctors obviously prescribe Allegra. It must be because they like it more. They. They put in some sort of thought and we can, you know, logic our way through all of this. But at the end of the day, it truly is because it saves a few moments of thought, and I mean, Milla, moments really of having to do that. But when you put in the time to plan the architecture properly up front, the actual intervention itself can be something very small.
- [12:17]
Dr. Eric Johnson
So the person who is doing this is your hidden partner. When you're making a decision, you're not aware of it because you just are looking at the options. But your hidden partner, who in the. I call the designer, goes choice marketing gets to be long on the mouth after time. The designer actually is helping you make the choice. And many designers don't even know they're doing that. They're just filling out and they're just designing a form. They're giving you a spreadsheet, but they're actually influencing your behavior. So part of the idea here is that designers actually have a lot more influence often than they really realize.
- [12:50]
Melina Palmer
Absolutely. And I think one of the examples from the book that I really like that kind of dials this point home is the Copenhagen airport and looking at taking different doors, which is such an obvious thing. And of course, in explaining it and talking about it here, we don't have the aid of the visual that is in the book. So for everyone, there are some really great imagery pieces within the book that will be helpful for you when you pick up your copy. But can you talk a little bit about how some tape essentially made such a big difference?
- [13:24]
Dr. Eric Johnson
Sure. And it's not just the tape, it's the color of the tape.
- [13:26]
Melina Palmer
Ah, yeah.
- [13:27]
Dr. Eric Johnson
It turns out that when you walk out of cope, everyone who's ever gone out through international customs, you know, has nothing to declare, something to declare, a line. And of course, you go usually to the nothing to declare unless you're running contraband or something like that. But now actually, if you're running contraband, you probably go to the nothing to declare line. But most people go there, honestly. And in this particular airport, after you got through that doorway, you could go to the left or the right, but almost everybody, since they went through the first door, kept going, and there was crowding in lines, and this was a problem. So some folks who are doing the analysis at Copenhagen said, you know, the problem is people don't realize that they go through all these doors on the left. So they first said, what we're going to do is put a taped line on the floor and they use sort of a dull green tape. And that actually had an influence. So people realized, oh, from here on in, I can go to the left. But they doubled the number of people who did that when they used a bright fluorescent green tape. So just the tape actually changed the behavior. Now, I don't think people are actually particularly aware of it. It's just they were given permission. Again, one of these very subtle cues that actually changed what people did. And it's a lovely example. It illustrates something which I think the Allegra. Notice I didn't say fexofenad and hydrochloride. The Allegra example does, which is that little bits of effort at the beginning of the decision, little clues, you don't revisit those. They have an influence throughout the course of the decision. I use the term plausible paths because, like in the Copenhagen example, it's a walking path. Often it's us navigating through information or navigating through a store. So if you're on a website, obviously you're not going to look at everything on the website. You're going to have a path, a subset of the information you look at. And so a large part of how choice architecture works is by favoring one path versus the other. In the case of the Copenhagen, it's a physical path, but also can be a set of breadcrumbs, if you will, as you go through the digital world.
- [15:27]
Melina Palmer
Yeah, I am going to be linking to the episode I did on color theory in the show Notes, and it definitely talks a lot about how it's not just that, you know, the color red is always going to do X, Y or Z, or that green was necessarily the most important, that it was bright green versus bright blue. But it's the contrast in a lot of cases of showing. So you know, bright red on Target's website isn't going to have the same impact as it would on Facebook's because it's a lot of blue and you know, things along those lines. So there that will be linked for people in the show notes to check out as well. So we talked a little bit about those paths and the other thing that I think I really would love to talk a little bit about because as I mentioned to you in kind of our pre chat, the episode on the Paradox of choice ended up coming out just a couple weeks before this episode is going to come out. And so there is this balance in the question of how many choices are the right number of choices. And I know of course it's an it depends but what sort of insight can you provide on how many options to provide?
- [16:36]
Dr. Eric Johnson
So lots of people end up saying, and I hear this all the time when I work with companies or not for profits is we have to keep the number of choices down. We all know about that and it's actually a trade off. There's a balancing act here because if I know exactly what you want, if I knew exactly what you wanted, I would give you just one option. But the person making the choice knows a lot about themselves so they actually probably know more about what they want or at least a lot and they can look at that. So I used an example which I like a lot which is New York City public schools. Now school choice is interesting for many reasons but I became aware that in New York they give high school kids going to high school, 769 different schools to choose from. Now I want to say there is a trade off that you know, there's a right balance between the two. I'm sure 769 is just much too many.
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Melina Palmer
Yeah.
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Dr. Eric Johnson
So what is going on there is they don't know. They wanted to say know nothing about the kid. They do it in a physical book. Literally the book used to look at the sign for your older listeners of a telephone directory. Those things used to exist. So and it often ended up staying in kids lockers. And as a result people actually are overwhelmed. They use really simplified ways of getting through it. So there was a wonderfully bright valedictory name of his 8th grade class who looked at this list and said I'm going to use the rule, I'm going to apply only to schools that have the highest graduation rates. Now that seems perfectly sensible. Has one small problem which is those schools also are incredibly tough to get into. It turns out at least a few of them are harder to get into than Harvard. That's how competitive they are. So it turns out he did that and he didn't match with any of the schools. And here's a perfectly bright kid who used a perfectly good rule, but because the information was so overwhelming, the number of options was so overwhelming, he ended up using a heuristic, a shortcut that ended up leading him very much astray. So obviously 769 is too many once, since if we picked it at random, it could be for him, he wants to go to college prep. It could be the School for Performing Arts, you know, it would not be right. So there's a trade off between how much you're asking people in terms of deciding and how much variety you need to give them so they can find the option that's best for them. So, you know, you'll see people talking about the curse of choice, for example, as if more choice is always worse and there's a trade off. You the more you know about somebody, the smaller you can make the choice set. But if you don't know much and if you can't customize it, you have to extend that. Now there are ways of making it better, like for example, arranging things in hierarchies. What they did in New York City, some researchers said, we're going to do two things. We're going to only include schools that are within a half hour distance of your home. That seems sensible. And the second thing we're going to do is only use the schools that graduate. And this is a sad statement about New York, about New York schools that graduate at least 70% of the high school students, that means a bunch of them don't. And that's the sad part. But by eliminating those, they get the set down to 30 good schools. And people are much more likely to match in that setup. They actually find schools that want them and schools that they want.
- [20:00]
Melina Palmer
Right. So understanding something about the person that's there can help you to narrow down from the ridiculous amount of things you can put out to something that's going to help them to find. And you know, the really important thing with any sort of the choice architecture, nudges, you know, you talked about nudge early on, is of course, someone could then go and do additional research if they wanted. So if the 30 schools that are presented don't seem to fit, and they say, you know, I really want one of these, and it's outside, you know, it's 31 minutes away from them. You know, they are able to go and do that on their own, but it makes it easier up front to apply and get something done.
- [20:42]
Dr. Eric Johnson
It's a soft barrier. It's easily. I mean, let's face it, on a website, it's usually one click. Here are 10 flights. You want click here to see more. It's very low cost. Now, most people, again, the point about small amounts of effort at the beginning, don't go beyond that 10. But they. Their freedom is not restricted.
- [21:01]
Melina Palmer
Right. So when you talk about and think about choice, and you mentioned, you know, consulting for businesses, and we have a lot of people in business that listen to the show, the brainy business, obviously. So what do you think is the most important thing that people should know about choice?
- [21:20]
Dr. Eric Johnson
Why don't you ask me a small question with small implications? I think the big thing is this notion that choice is not determined by myself and my preferences alone. That literally my hidden partner, the designer, is having an influence. That desire, in the case of New York City public schools, probably was just thinking, I want to make sure people have all the options, not realizing that they were going to lead some people to less choice. The other thing that's related to that is to realize that we are all designers in everyday life. This is maybe less true of business, although it is true. You give choices to your employer, your boss, and to your employees. And so we're all choice architects all the time. At home, when I sit down and say to my wife, which of these restaurants do you want to go to? I'm a choice architect. If you have children, you're saying, okay, here are four outfits you can wear to school or 10 outfits you can wear to school, you're being a choice architect. So the important point is we're all designers all the time for these decisions that you think of as being important, like websites with schools or colleges or retirement plans, but also for everyday life, like when I'm actually talking to my niece about what she wants to do when she grows up, you know, I'm being a designer as well. So it's that ubiquity of that role that I think, which would be really important for people to walk away remembering.
- [22:44]
Melina Palmer
And so for the people that are designing choices within a business, those designers that know you mentioned a website. Right. So for someone who is very much responsible with the product set and how to be presenting it, what are some things that you think are important for them to think about from that aspect when they are, they should be acutely aware that they are designing some choices. What should they keep in mind?
- [23:13]
Dr. Eric Johnson
So you're sort of giving me a little bit of Sophie's choice, which one of my favorite things to think about is most important. So I'll take that challenge and say I think some things are well known so we can talk a little bit later. But let me say the thing everyone will say when you think about designing choices is defaults. Options that are pre selected for you. And that has a lot to do with some research I've done in the past. We can talk about that in a bit. But there's a broad set of tools. Everything you do on that website, let's say, is going to have influence. One of my favorites and one that's actually surprisingly powerful but complicated is order what is first, what is second, what is third. That will have an influence. And the way it will have an influence depends a lot on the medium. One obvious way is that nobody wants their product to be below the fold in newspaper terms or you'd have to scroll down to see it. That is death for many products. We've done a paper where we looked at health insurance plans and if you're below, if you have to be on that click to see more button, your share goes down markedly. So order is just one, but I think there are many others that would be important things as a designer to think about. You know, think about it. When you're talking to a family member, you give them four options. Say, oh, there's more, but let's stop there. That's, that's the interpersonal equivalent. Or if you're in a restaurant and there's a menu, an oral menu where somebody reads you everything, clearly, order has a huge effect there because you forget many of the things in the middle, right?
- [24:52]
Melina Palmer
Yes, definitely. So you did mention defaults. And so let's talk about those. Defaults are good things.
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Dr. Eric Johnson
There are good things. I love defaults. Here's another real life example. Whenever I'm arranging an appointment with somebody, I give them a default time, saying, I'm very flexible, but how is the time, of course, a time that particularly fits my schedule because if they don't have a strong preference, you know, it might as well be one. That's good for me. But also it saves for them lots of back and forth. You know, that you, you all have been on the six email, or maybe Thursday is better for me, et cetera, et cetera. So defaults are powerful. Two things about defaults. One of the most famous pieces of research I, I've ever done was done with a friend of mine named Dan Goldstein who's now at Microsoft Research. What we did was look at defaults in organ donation. It turns out we were very interested to find out that in different European countries, the number of people who had agreed to be a donor ranged from single digits to almost 99%. And we started wondering about that. And it turns out one of the things when we investigate and some countries you're a donor by default. In other countries you have to opt in to be a donor. So people typically call this opt in versus opt out. What's interesting is that creates a huge difference. We started with both a online study. We actually looked at field data and actually did analysis of actual donation rates. It turns out there are big differences between countries, even countries that are similar. So Germany and Austria or Denmark and Sweden, you know, culturally relatively similar countries, in one you can have single digit organ donation, in the other it's over 90%. And why? Well, again, in terms of agreement to be donors, one is the default. In other case you have to opt in to choose that. So that's a powerful example. I just want to add one more thing which is I don't want your listeners to walk away thinking you always need those big effects. So since your listeners are aware of behavioral science and need to also also be aware of how to be more sophisticated users. So yeah, lots of people sort of say, wow, I just changed something. What's nice about defaults, by the way, it's literally one line of HTML code. I literally had a phrase button pre checked is X and I've done it. So it's as cheap as cheap becomes. So they say I can increase my market share by double by that. Well, we picked a context where it worked very, very well. There are other contexts like retirement savings, where it works very well. But what I want your listeners to think about in terms of making this decision their own as designers, is not all situations are the same. So you really, as a listener, don't listen to one study. You might love the study I just talked about, but turns out when you look across all the studies in what's called a meta analysis, that's a literary analysis of all analyses, you find the effect is still pretty big. It's actually Great, it's like 25 or 30% on average, but it depends on the circumstances. So I think one of the things that I try and really emphasize is as you should be a more sophisticated consumer of behavioral science and not use any one study and think about how the situations in that study reflect the situation you're dealing with.
- [28:37]
Melina Palmer
Right. That I say a lot. You know, the context is so important and not everything is fully generalizable. Most things are not. Right. That it's not just a blanket, that it'll always work in exactly the same way.
- [28:49]
Dr. Eric Johnson
It will always work the same size in the same way. Exactly.
- [28:52]
Melina Palmer
Right. Yes, absolutely. I want to give you an opportunity to talk about some of your research that was part of what we talked about. Right. You said you talked about someone else's instead of yours early on. And I'm now remembering. Do you have. I won't ask for favorite because I'm sure there's lots. And it can be something you're working on now. It can be a throwback of something. Doesn't have to be in the book. Any great research that you would love to talk about?
- [29:19]
Dr. Eric Johnson
One of the things that I think is important to understand about that, for designers to understand is this notion of that our preferences. I'll give you an example, is that our preferences aren't written in stone. This is sort of if you think about plausible paths as being one of the ways that choice architecture works. Another way is that basically we're often trying to predict what we'll like when we make a decision. Economists think we have these things called utility functions. And I just quickly look at that. Reality is we have many preferences, and some people call this constructive preferences, which is great, except it sounds like you're making them up out of whole cloth. You don't have anything there. When it comes to sitting down for dinner, I will have six or seven preferences that are fighting for each other. I want food that's healthy. I want food that's delicious. I want food that's light. I also want something filling. And so depending upon what comes to mind, I might make different choices. So we've shown this a number of ways. One of my favorite studies is one where we basically ask people about climate change and would they pay a carbon fee to fight climate change? And we either asked them whether they labeled either a carbon offset or a carbon tax and said both were identical in the details. And we found that there were much more acceptance of a carbon offset. Why? Because people first thought about the benefits and by the tax, they thought about the money they would lose. Now, that effect, as you might guess, was much bigger for Republicans and Democrats. Democrats said tax offset. Both. Okay. But Republicans, we made a very big difference in their preferences by saying, calling it an offset than a tax. And that's partly. And we show this. We have people type aloud as they make these decisions, literally type. What are you thinking about? And we see they think about very different things.
- [31:13]
Melina Palmer
Yeah. And so just the. I think that's some priming that's associated with the word tax. Right. That it makes you think about something completely different than, like you said, offset, that you're looking at those benefits. So thinking through that word choice of what you're trying to get someone to do can really make a difference in the way you nudge their choice with that sort of titling.
- [31:37]
Dr. Eric Johnson
Another food example, which I love, is a study done by some folks in Iowa where beef is important. And they looked at whether you labeled ground beef either 75% lean or 25% fat. Now there's only lean or fat and ground beef. That's it. But that difference made a very big difference in people's ratings of taste, even tasting the thing. And obviously the argument is that people think about different characteristics depending upon the label.
- [32:03]
Melina Palmer
Yes, I talk about the. That in the framing, you know, ground beef, which one do you want? And I say it more in the, like, when you see them labeled 90% fat free, 10% fat, which one feels better to you? And everybody says, you know, 90% fat free sounds much better. But even though it's the same, and.
- [32:21]
Dr. Eric Johnson
If you ask people, they actually will say different things because it's actually the retrieving different things from memory.
- [32:27]
Melina Palmer
Interesting. So when you think about. So obviously you spend a lot of time culling all this information together and putting it into different segments for the book. And I'm sure as you, you know, through your, your work and teaching and everything, you've had these categories kind of in mind for some time. It's probably not all just in for this most recent book, but when you look into the kind of the future of choice, you know, what would you want people to be looking into? Like, what do you see for the field of choice architects? I guess as that kind of grows into the next decade, we'll say, I.
- [33:06]
Dr. Eric Johnson
Think we've seen it already, which is the realization that one study is not enough to actually build a science. We need to do cross study. We've also seen some unfortunate cases of fraud, some very well known, where people results just don't replicate either because they're very precious, they're very sensitive for that particular context, or in some cases, people appear to have made up data. So that's something. Fortunately, if you look at across studies, it stands out like a sore thumb. So one recent example actually, which was just retracted from the pnas Proceedings the National Academy of Sciences was the same. Researchers tried to replicate their own research and they couldn't. And it turns out you know the rest of the story. So I think we need to build tools for actually seeing what's real and what are the things that change it. So when I talked about defaults, it turns out we can understand when default effects are going to be large versus small in some ways. So for example, if it's default is coming from somebody you trust, what we call endorsement, it's much more likely to be a bigger effect than if it's somebody you don't trust. So it's understanding those things that change the way the tools work is I think the thing I would. I think we are seeing. We're seeing it already. So I don't call it. Some people call it the replication crisis. I call it the replication revolution, which is a frame, which is a framing manipulation, I realize. But also it puts an emphasis on the benefits of having things that if I have a student, they say, gee, I'm thinking of doing a thesis on this area. I can say, good, because we know that replicates and it's not a pain for them, it's a benefit for them. It's a benefit for someone. My students, my MBA students, I say it's like investing in a technology. You want a technology that has big effects and is low variance. It's going to work every time. And when I put it that way, they say, oh, that's really important. It's not quite as nerdy as you make it sound.
- [35:12]
Melina Palmer
There's nothing wrong with nerdy.
- [35:14]
Dr. Eric Johnson
I'm not complaining.
- [35:17]
Melina Palmer
We like that around here. Is there anything in the book that. There's plenty from the book that I haven't touched on yet, I guess, but what's a favorite section or something you think is so like really just important to. To dial in on that you want people to really think about?
- [35:35]
Dr. Eric Johnson
So let me actually just give you an example of how choice structure can address some. And this is just something quite current, which is vaccination for Covid. Lots of people tried to standard economic things. Let's give people lottery tickets or incentives and turns out at least lottery seem not to have been particularly effective. Now this is not going to be the kind of science I'd like it to be, which is people have done a fancy randomized control trial. But there's something that we know works for flu vaccines and that is if you give people a default appointment, say you can come in 10 o'clock on Tuesday, you know, Press this button if you want to reschedule or cancel. You actually have people in a study, a former postdoc of mine, on their own, only 2% of the people come for appointments. If you get an invitation, email invitation, it goes to 5%, but when you're given an appointment it went up to 16%. So you literally get an eight times increase in the number of people getting flu vaccines. Now they've tried this, it turns out, not with the kind of fancy study I'd like, but they've tried this in a couple of places. So like in one Swedish region, Uppsala, they were trying to get those 16 to 70 year olds who are so hard to get vaccinated because they think they're impervious vaccinated and up. So they got 70% of them just by giving them default appointments. In other areas in Sweden that didn't do that, it was more like 10 to 15%. They've also done that in Belgium and in Wales and it's actually quite effective. And why is it? It's because it basically does what we call query theory. It makes me think about what are the reasons a vaccine is good first and because that's there in memory, I'm actually going to be much more likely to go. And actually it turns out it's harder to think about the reasons I wouldn't want to do this. So I think an important thing is that these things can have huge implications for social welfare, for how people's life outcomes. And I think that that's a very nice example and the ones that would not come easily to mine out of standard economics and public policy.
- [37:39]
Melina Palmer
Yeah, I would think that at least part of what might be at play, and some of that too, is that kind of the risk by omission versus commission. Right. So if you've been given a default appointment and you opt out of it and say, no, I'm not going to go, you took an action that then if you get sick with the flu or Covid or whatnot, you know, you potentially did something versus if you never made the appointment, you know it's you were going to. You can kind of hypothesize all the good things that were out in the future. But you know that emission versus commission.
- [38:13]
Dr. Eric Johnson
No, I think that that's exactly right. And it's also playing inside your head because the default suggests that you have the vaccine. Turns out the most effective message is there's a vaccine waiting for you. So it's much like in naval economics we talked about the Endowment effect, where a Mug like this has more value when it's yours than when you could buy it. Well, if the shot is yours, it's going to be. You're going to think first. I think actually that's one of the reasons defaults work. They endow you with the option. So if you even Amazon, if they endow you with express shipping, you will think about what the advantages are first and you think less about the disadvantages. So you're right. It's omission commission. It's also how easily things come to mind. And this idea, which is called query theory because you divide things into queries, I think actually helps us understand why defaults work and why the endowment effect happens.
- [39:14]
Melina Palmer
Oh, yeah, absolutely. So as we wrap up the conversation here and you've given lots of amazing examples and research, and we'll definitely talk more about, you know, for everyone that's ready to go get their copy of the book, which when the episode comes out, the book will have been out for three days. So we're excited about that. If you were going to use one example that you think is maybe one you haven't. So something we haven't talked about yet, is there anything that's really a quintessential sort of all these aspects of choice that are super important that just can really put choice with a little bow on it?
- [39:52]
Dr. Eric Johnson
So now you've gotten to the Sophie's Choice question one more time.
- [39:55]
Melina Palmer
Sorry.
- [39:57]
Dr. Eric Johnson
It's okay. It's okay. I should have had something. Let me sort of suggest something that is, I think, important and it's our decisions about privacy and cookies. This is not going to save people's lives, but it's a decision we all make, it turns out, I think multiple times a day. You all see press here to accept cookies. And it's a nice illustration because it's of a lot of value. Google pays Apple something like One guess is $40 billion to be the default search engine on your iPhone. Now, we all know we could change that. Nobody does. So it has huge economic consequences. And what's interesting is that it's actually easy to change, but no one does. And it's again, this issue. There's a little bit of effort that's involved. You see this, by the way? I just found this out. It was quite interesting. One of the sites that one of the consulting companies that does cookie management for sites actually introduces a slight delay of about 1 1/2 seconds. If you say, I want to change my cookie settings, they actually have a second and a half delay. And that is Making a huge difference in people's cookie settings. So again, it's getting to the point that choice architecture and designers have amazing influence. Now, as a user, I did not know there was a second and a half delay. I just knew that I pressed the button so I could book my airline flight or buy something at Amazon. But the designer had a great responsibility there and, you know, they chose it to use it in one way. I'm hoping people will design in ways that they would want to be designed too. I mean, you know, you wouldn't be happy if I was telling you I was without your awareness, changing your choice of cookies, would you?
- [41:49]
Melina Palmer
Right, yeah. And so with that delay is the goal of that to get somebody to kind of bail and say, nevermind, I don't care enough, I'll just accept them.
- [41:56]
Dr. Eric Johnson
I'll keep, I'll keep my default, my old setting, I won't change them. So the way of offering people a choice without really giving them a choice, that it will be a case where choice will change their choice. In computer science, by the way, they call these dark patterns, which I think is interesting as a phrase.
- [42:13]
Melina Palmer
Right? Yeah, we don't, we don't like dark patterns.
- [42:17]
Dr. Eric Johnson
Right, right. It's, it's a good label.
- [42:19]
Melina Palmer
I can't remember what book I read this in or where it came from, but I know there is the. Someone had a study or that they were talking about trying to influence people to take the stairs and where the company has the health plan and the incentives and all the things to try to get people to take the stairs. And what they did is they made it so that it took longer for the elevator to get there. And then everybody started taking the stairs and they didn't tell anybody that, you know, it was a slow elevator. And then after that they kept taking them because now taking the stairs is the new default and it was an easy thing to do. So similar to the green tape that this little tiny. That's where a delay can help people to do something that they were already wanting to do. Helping them to make a choice they want to make versus encouraging them to make a choice that you want them to make, which might not be the best thing.
- [43:13]
Dr. Eric Johnson
No, absolutely. I mean, I think there are deep ethical issues here. They're not any different than in ethics in other places. We have lots of tools and you use them for good or bad. So I don't think choice architecture. The only thing that's interesting is you are often unaware of choice architecture. You ask people, we know this with default, I default, you to something and say, did the default make a difference? Most people will say no.
- [43:39]
Melina Palmer
Right.
- [43:40]
Dr. Eric Johnson
They'll say, other people, they'd be affected by defaults, but not me. And if you think about it, you're thinking about how you're making a decision. You're not thinking about why that default was set or what life would be like if the other option was chosen. But it's just like, you know, you can lie to people too. You know, you can influence their behavior and you have to decide what you want to do with that tool.
- [44:00]
Melina Palmer
Right? Yeah. Well, and then, you know, they say they wouldn't be swayed by the default, but then, you know, how long does it take before you're phone goes black? What's your ringtone? Or how long does any of this stuff happen? Yeah, defaults are everywhere.
- [44:15]
Dr. Eric Johnson
Right? Exactly. And I mean, they're good, right? Because if we had to make a decision every time, we'd go crazy. They save us effort. And that's good. It's just, you know, it's a joint decision between the designer and the chooser, the person making the choice.
- [44:32]
Melina Palmer
Right. Well, I do appreciate that you say in your book, very similar to something I talk about here is, you know, we, let's assume, look on the positive side. We assume good intent from everyone. And yes, some people can take information and use it for evil, but in general, let's assume we've got good people making, using choices, the elements of choice for, for good. So as we wrap up here for everyone that now is so excited to go get the book, it'll of course be linked in the show notes. But what's the best way to learn more about it and about you or get in contact or anything along those lines?
- [45:06]
Dr. Eric Johnson
There is, you might guess, a website called elementsofchoice.com and that's up and available and has some great things including some nice things said about the book by some, some, some wonderful people and you. It's one click away to order, so that would be a great thing. And you always can reach me at Eric JohnsonOlumbia, Eduardo and on Twitter, Prof. Eric Johnson.
- [45:31]
Melina Palmer
Perfect. And we'll put that one in the show notes. I never type people's email addresses and put them onto websites.
- [45:39]
Dr. Eric Johnson
That's fine.
- [45:40]
Melina Palmer
Save you the spam.
- [45:42]
Dr. Eric Johnson
Yes, thank you.
- [45:43]
Melina Palmer
Thank you.
- [45:44]
Dr. Eric Johnson
I'll stop doing that. Thank you.
- [45:46]
Melina Palmer
All the listeners can that heard it now can go. They can go type it. You said it. Good for them. But I won't do that to your inbox. Don't you worry.
- [45:55]
Dr. Eric Johnson
Excellent choice, architecture, decision thank you.
- [45:58]
Melina Palmer
Yes. You are very, very welcome. So we'll definitely link to that all in there. And I know that you mentioned that you were doing the day that this episode comes out, you're doing a lecture, training talk, what have you with the Behavior Change for Good initiative as well. Right.
- [46:16]
Dr. Eric Johnson
The folks at Penn at the Behavior Change for Good have been kind enough to a book series and I'm excited to do that same day this comes out. So if you want more, and I'll say I'll be hosted by the fabulous column Camera, who's one of the best, in fact, pretty much one of the people who invented neuroeconomics along with some other people. So it should be a fun, a fun conversation.
- [46:39]
Melina Palmer
Awesome. Well, we will definitely, you know, Katie Milkman is a friend of the show. We will make sure to link at least to the series there and hopefully there will be replays and things for people to go check out. So thank you again so much for talking about the elements of choice, and it's just been a real joy to chat with you today.
- [46:57]
Dr. Eric Johnson
Thanks. It's been a lot of fun. I appreciate the time.
- [47:01]
Melina Palmer
So what got your brain buzzing as you learned about the elements of choice today? For me, I love breaking down choice and getting super nuanced in thinking about decision making. It is fascinating how little adjustments can make so much difference in what people choose. And I really appreciate what Eric said about how it isn't necessarily that when or how you present a choice changes someone's preference, but instead to acknowledge that we're always in a state of multitudes. We have many preferences, some of which are competing. And depending on what is brought to mind just before a decision by priming, framing and other factors, what you choose might change. Taking that food example he mentioned in our conversation, I may want to eat healthy and live a long life. I also want to enjoy the moments I'm in. Am I in a rush? Am I seeing someone for the first time in a while, for the last time in a long while? Did I just get back from the gym or my doctor, or am I gonna go to the gym or do I have a doctor's appointment tomorrow with blood work? Did I stay out late last night or have I been good all week? What is made salient by the way an option is presented can be focusing on some of these competing factors and not on others to help shape my experience and outlook before making a decision. When we work with clients and look at the choices that they're presenting and we talk about trying to keep people out of a state of overwhelm. We love to joke about not letting your options come across like the Cheesecake Factory menu in alphabetical order, right? Anybody who's been to the Cheesecake Factory knows they have these very, very long menus and they are much easier to navigate than they could be because of how they sort that by, you know, appetizers, pizza, entrees, drinks, whatever else. If that was alphabetical, no shot. And then we think about these school choices that Eric was talking about with the students in New York having to choose between six or seven hundred different schools that they can go to when there are too many choices, there's too much there, we get stuck. And so you can just make it easier to do business with you by limiting the options and or changing how you present them. It can change everything. This is a fascinating aspect of behavioral science, one of my favorite, something I absolutely love to dig into. And I love that Eric wrote this wonderful book about how to help everyone to understand not just that choice architecture exists and that you are in fact a choice architect architect. But going further than that on how to consider all the elements involved in presenting a choice, like how many options you should offer, how to present them, how to account for those natural cognitive shortcuts, and much more. And I hope you've been inspired by the conversation here today and you can read all about it and more by checking out the Elements of Choice, which of course is linked for you in the show notes to make it easy, along with links to my top related past episodes and books and ways to connect. It's all waiting for you in the app you're listening to and@the brainybusiness.com 478 and just like that, episode 478 on the elements of Choice is done. Join me Friday for a brand new episode with Dr. Ava Vandenbrook and Tim Denhare, authors of the Housefly Effect. It's going to be a lot of fun. You don't want to miss it. Until then, thanks again for listening and learning with me and remember to be thoughtful.
- [50:40]
Dr. Eric Johnson
Thank you for listening to the Brainy Business Podcast. Molina offers virtual strategy sessions, workshops and other services to help businesses be more brain friendly. For more free resources, visit thebrainybusiness.com.