In the past ten years behavioral and
decision sciences have gained a lot of ground in both research and practice.
Some very popular books that have “translated” the academic knowledge have
helped a lot in this process. Now, 10 years is not that much for either science
or practice. It is not exactly the very beginning, but for sure there isn’t a
vast history behind using behavioral and decision sciences in practice.
In this post I will address several
issues that have to do with the ethics
of applying behavioral and decision sciences. Since academia has its own
ethics codes and regulations I will not address the research related issues.
However, there is no real ethics code of
applying behavioral and decision sciences in practice. Let’s take a look at
some potential issues.
Can applying the insights from these sciences be avoided? Take for
example choice architecture, can it be
avoided?
The fast answer to this question is “Yes” and the reason for this
is that in our minds it is always possible to not do something. In other words,
if something can “be done” it also can “not be done”. In reality, however, things
are not that straightforward.
Let’s think for example of the so
often encountered “agree to terms and conditions” that we find on websites. The
“check box” can be empty (not checked) as a default or it can be full (checked)
as a default. We know that “the default option effect” is very powerful, thus
being or not being checked makes a huge difference. But can we actually avoid
the use / occurrence of this effect?
As you probably have figured,
avoiding this effect is a lot harder than we initially thought.
Things are quite similar for
other “tools” of choice architecture. For example the mere existence of a choice set influences the person’s choice.
People don’t usually choose something that is not in the choice set. In other
words, whenever a person is presented with a choice set there are elements of
choice architecture present even without any intent.
Another example is the way in
which elements of choice architecture are hard to avoid is the way in which we present options to be evaluated. We can present
them in single evaluation mode (one at a time) or in joint evaluation mode (all
at once). The options could be presented in a mix of both ways such as first
present them one at a time and then allow for comparisons by showing them all
at once. However, even this might influence the choice of a person.
I guess you got the main idea. Even if one would want to not use choice
architecture (or other means of influencing people’s choices or decision) it is
not really possible to fully avoid it.
Not being possible to fully avoid using elements of choice architecture
does not mean that we have to use the entire set of tools form behavioral and
decision sciences. In fact it would be wrong to use everything, but that’s
another story. For example if we can’t avoid having a “checkbox” with a default
of “checked” or “not checked” this does not mean that we have to use more tools
such as peer or authority recommendations.
The question now is “should we use more than just the things we
can’t avoid?”. My answer is “yes”, but we have to “handle with care”. Tools from behavioral and decision sciences
have significant effects on human judgment, decisions and behavior. Sometimes
these effects are not necessarily large, but they exist and more or less they
affect everyone. Using these tools responsibly is not an easy job.
Can we “overdo it”? The answer is “For sure!”. One of the areas in which tools from behavioral and decision
sciences are used is marketing. Companies and their marketers want to sell
more, increase profits and so on. Everything is legitimate. At the same time using too much the insights from these
sciences can back-fire big time.
One way in which using too much of behavioral sciences insights can
back-fire is customers returning products. For example, if a (on-line or
brick and mortar) retailer increases its sales by using too much of behavioral insights
it is not unlikely that some of the customers will return products that were
bought under the influence of the behavioral tools. Sure, not each and every
customer will return what she bought, but it is enough that a critical number
of clients do so. An avalanche of people returning (slightly used) products
will create considerable troubles with logistics and cash-flow. Again it is not
necessary that all customers return products; a couple of hundred is enough to
create problems.
In an earlier post, I have
discussed the issue of Regret in
decision making and subsequent behavior. Regret is a very powerful negative
emotion that comes from the realization that “I could have done better”. Some people might regret buying stuff out
of impulse (or mindless shopping) and
this negative emotion will be linked with the brand of the seller. This
does not apply only to physical stuff, but to services also.
In essence, a marketer who uses behavioral insights to increase sales should keep
in mind that there is a need for a balance between present outcomes (sales
increases) and future outcomes. Again, it is not necessary that a large
number of people to react in a negative way. Considering the fact that many
markets are more or less stagnating and that profit margins are getting smaller
and smaller it is enough to just “overdo it just a bit” to get bad results.
On a more moral philosophy note,
there is an issue of morality in using too much of behavioral sciences
insights. I remember reading an article which advocated “reducing consumer
surplus”. Consumer surplus is considered to be the difference between what a
person would be willing to pay for something and what she actually pays. This
consumer surplus can be seen in a different light such as opportunity to save
more for one’s children’s education. Companies what to “reduce consumer surplus”
and from their point of view it is legitimate to want higher profits. At the
same time there is a bit more to life than just increasing profits. Anyhow,
that’s my opinion.
In a similar note, in a consumerist
world we are surrounded by “Stuff”, most of which we don’t really need. If you
think about the “personal storage space” business sector, the only reason it
exists is that people buy a lot of stuff that they don’t need. Of course, not
over-buying is due to the use of “tools” from behavioral and decision sciences,
but using too much of these tools can lead to useless purchases.
Unfortunately there is no “golden rule” that says “from here on it is
too much”. What is “too much” is up each and every one of us to decide. As
far as I know there is no “code of ethics” in using behavioral insights in
practice. There is some (formal) regulations (at least in the EU) on some
aspects such as subscribing to newsletters (default option is “no”), but there
is a long way from this to a “book of rules”.
Richard Thaler and Cass Sunstein have proposed the
concept of “Libertarian paternalism”.
This apparent oxymoron is considered to be a
“self-regulatory mechanism for using behavioral insights”. In essence,
Libertarian Paternalism combines two major philosophies that are in opposition.
Libertarianism supports the idea of the rational independent agent. In other
words, it claims that leaving people and markets free the optimal outcome for
both the individual and society will emerge. At the other end of the continuum is
Paternalism which supports the idea that it is best if “someone” (authority) tells
people what to do and makes decisions for them.
The combination of these two opposing philosophies goes like this. We
use paternalism to “steer” (or nudge) people into the right direction and at
the same time we do not restrict free choice.
For example one can use “the
default option effect” to increase the number of people who make the “right”
choice, but people are free to change the “default option” into another one at
their choice.
Richard Thaler and Cass Sunstein claim that by allowing for free choice abuses can be
prevented. By abuse they understand using behavioral insights for “bad”
purposes. Indeed, by not restricting free choice people can make their own
judgments and subsequently act accordingly. I for one, however, am not fully
convinced that free choice is enough to prevent abuses. In the end “steering”
people’s decisions and behaviors can be done in either the “bad” or the “good”
direction.
I conclude this post with a warm recommendation: “Handle with care!"
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