Nudge theory posits that by shaping the environment, we can increase the likelihood of individuals choosing one option over another.
Nudging aims to “gently push or touch” someone in a particular direction. This may be with the aim of helping the individual and society; but in marketing, it’s used to nudge consumers into making purchases.
For example, imagine you are booking an online flight ticket. The website asks you whether you’d like travel insurance, and the default option is “Yes”. Now, you are much more likely to opt for insurance, even though you have the freedom to opt out of it.
Definition of Nudge Theory
Richard Thaler and Cass Sunstein popularized the nudge theory in their book, Nudge: Improving Decisions About Health, Wealth, and Happiness. They define the concept as:
“A nudge, as we will use the term, is any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives.” (2008)
They further add that the “intervention must be easy and cheap to avoid” and that “nudges are not mandates”.
They give an everyday example to explain this point: promoting healthy eating. They compare a nudge verses a mandate:
- A Nudge to Eat Healthily: When a departmental store puts fruit stalls at eye level, it is a nudge, aiming to promote healthy eating.
- A Mandate to Eat Healthily: banning junk food is not a nudge; it is a “mandate” that takes away choice. Nudging theory seeks to indirectly encourage people. The individual must maintain their autonomy and ultimately make the decision on their own.
10 Examples of Nudge Theory
- Urinal Target: One of the most commonly cited examples of nudge theory is the urinal target. It is essentially an image/mark placed inside a urinal to encourage users to aim at it; this reduces the spillage of urine onto the floor and therefore reduces cleaning costs. Often, an image of a housefly is used for this purpose since they connote unhygienic conditions and are not as frightening as other insects (Evans-Pritchard, 2013). This has been put to use in many places, such as airports (such as Amsterdam’s Schiphol Airport), schools, and stadiums. Thaler and Sunstein also mention this in their 2008 book, and Thaler calls it his favorite example of a nudge.
- Placement of Products in Stores: How products are placed in a departmental store affects the purchasing behavior of customers. There are many techniques of “nudging”, one of which is increasing the noticeability of the desired option. When the environment is such that an individual’s attention is drawn towards a particular option, then they are more likely to choose that. Kroese et. al. studied snack shops in the Netherlands and found that customers purchased more healthy food (such as fruits) when they were placed close to the cash register (2016). Many other studies have also found similar results in departmental stores, making this a well-accepted nudge.
- The Default Option: Another kind of nudge is the default option, which is the option that a user automatically receives when they do nothing. Campbell-Arvai et. al. argue that people are more likely to choose a particular option if it is the default option. Think about installing new software on your computer: we mostly go with the default (“recommended”) options. Another study was done by Pichert & Katsikopoulos, who found that people were more likely to go with the “renewable energy” choice for electricity when it was set as the default option.
- Social Proof Heuristic: We look at the behavior of other people to guide our behavior, and this is the basis of another technique of nudging. Social-proof heuristic says that, by looking at others, humans can be “nudged” towards the desired options. Cheung et. al. studied this in the context of dieting and discovered that it can be used to promote healthy food choices. The social-proof heuristic can also be used in fundraising campaigns: when donors become visible to the public, others are also more inclined to make contributions.
- Political Applications: The nudge theory has been quickly adopted by governments around the world to influence citizen behavior. In 2008, the US government got Cass Sunstein himself and appointed him administrator of the Office of Information and Regulatory Affairs. Two years later, the UK also established its “Nudge Unit”, which was led by David Halpern. Both David Cameron and Barack Obama employed the nudge theory to advance domestic policy goals in their countries (McSmith, 2010). More recently, Boris Johnson’s government tried to fight the coronavirus pandemic by using the nudge theory to encourage “herd immunity”. (Costello, 2020).
- Nudge Management: Nudge theory has also been adopted in the business world, where it helps with management and improving corporate culture. It is commonly used in Human Resource software. Tim Marsh believes that the nudge theory can help organizations increase their safety and create a robust, “zero harm” culture (2012). A lot of Silicon Valley companies are using various kinds of nudges to increase the productivity and happiness of their employees. “Nudge management” has even become a popular term, which aims to improve the productivity of white-collar workers.
- Healthcare: Nudge theory is one of the many health initiatives aiming to change people’s behavior, such as reducing smoking, increasing physical activity, etc. Nudgeomics is an excellent practical application of this. It is a DNA-based dietary App created by DnaNudge (associated with Imperial College London) that provides personalized food recommendations to individuals. So, when users are shopping, they can scan the food items using their phone and the app will tell them whether the product is suitable for them or not. Essentially, the goal is to create an environment where an individual is “nudged” towards a healthier lifestyle while still maintaining their autonomy.
- Fundraising: Fundraising campaigns can benefit from the nudge theory, which can help them increase contributions and acquire new donors. Firstly, nudges can help make donations easier. As we had discussed earlier, default options are more likely to be chosen, and this can be used to encourage people to opt for recurring donations. Secondly, nudges can donations more “enticing”: donors can be sent personalized messages or be told about the impact of their contributions. These have been shown to increase donations (Small, 2003).
- Algorithmic Nudging: Nudges can be used in digital algorithms to perform various functions. In his article for the Harvard Business Review, Möhlmann coined the term “Algorithmic Nudging” to discuss how companies are increasingly using algorithms to influence behavior not by force, but by “nudging” them into desirable behavior (2021). He also talks about how algorithmic nudging is much more powerful than its non-algorithmic counterpart—the former has enormous data at its disposal (allowing personalization) and can even be adjusted in real time.
- Tourism: Several studies show that the nudge theory can be used to improve tourism in various ways. Tourists can be encouraged to choose more sustainable hotels, consume more ethical food, and reduce their energy consumption (Marques et. al., 2022). So, nudging can help in both lowering costs and reducing the damage done to the environment.
Strengths of Nudge Theory
Nudging is an effective indirect way of influencing behavior, and it can improve the lives of many individuals.
Unlike traditional methods of compliance (such as direct instruction, enforcement, etc.), nudging is a radically different way of achieving change. It seeks to influence behavior through indirect encouragement, which can be much more effective.
For example, if you simply tell your child to clean their room, they may not listen. But, if you play a “room-cleaning” game with them, then they will most likely be persuaded. Nudging can similarly be used in various kinds of situations.
It can help us improve the lives of individuals, say getting people to eat healthy or to become more prudential with their finances. By helping individuals, nudging ultimately contributes to the betterment of the entire society.
Weaknesses of Nudge Theory
Despite its strengths, many scholars have questioned the effectiveness and ethics of nudging.
Maier et. al. argue that, after taking into account the publication bias in nudging research, there is little evidence that nudging has any effect (2022).
Other scholars, such as Boyce, have also said that we need to move away from “short-term, politically motivated initiatives” like nudging.
His point, and that of many other scholars as well, is that nudging does not produce long-term behavior changes (Nina, 2008). The second major criticism of the nudge theory is its ethicality: some people see it as a form of psychological manipulation.
This is most apparent in the fundraising example we discussed earlier. The messaging and intrusive prompting may manipulate the donor’s autonomy. Most of us would like to contribute on our own accord, without being “influenced” in any direct or indirect way.
Nudging seeks to indirectly influence behavior by shaping the environment of individuals.
This environment, also known as the choice architecture, can be shaped in a way that certain options have a greater chance of being chosen. Nudging is a radical way of bringing positive change in society, although there are some concerns about its effectiveness and ethicality.
Andy McSmith. (2010). “First Obama, now Cameron embraces ‘nudge theory'”. Independent.co.uk.
Campbell-Arvai, V., Arvai, J., & Kalof, L. (2014). Motivating sustainable food choices: The role of nudges, value orientation, and information provision. Environment and Behavior, 46(4), 453-475.
Cheung, T. T., Kroese, F. M., Fennis, B. M., & De Ridder, D. T. (2017). The Hunger Games: Using hunger to promote healthy choices in self-control conflicts. Appetite, 116, 401-409.
Evans-Pritchard, B. (2013). Aiming to reduce cleaning costs. Works That Work, (1), 117.
Kroese, F. M., Marchiori, D. R., & De Ridder, D. T. (2016). Nudging healthy food choices: a field experiment at the train station. Journal of Public Health, 38(2), e133-e137.
Marques, O. R. B., & Souza-Neto, V. (2022). Behavioural nudging. In Encyclopedia of tourism management and marketing (pp. 274-276). Edward Elgar Publishing.
Marsh, T. (2012) Cast No Shadow. Rydermarsh.co.uk
Maier, M., Bartoš, F., Stanley, T. D., Shanks, D. R., Harris, A. J., & Wagenmakers, E. J. (2022). No evidence for nudging after adjusting for publication bias. Proceedings of the National Academy of Sciences, 119(31), e2200300119.
Möhlmann, M. (2021). Algorithmic nudges don’t have to be unethical. Harvard Business Review, 22.
Lakhani, Nina (December 7, 2008). “Unhealthy lifestyles here to stay, in spite of costly campaigns”. The Independent.
Small, D. A., & Loewenstein, G. (2003). Helping a victim or helping the victim: Altruism and identifiability. Journal of Risk and uncertainty, 26, 5-16.