Nudges Aren’t Magical (Just in Case Someone Thought They Were)

The idea of nudging, designing choices to help people make better choices, has become popular for good reason. The alternative seems to be random, bad, or counterproductive choice design. Governments want taxpayers to respond to letters telling them to send in their taxes on time. The options seems to be 1) trying to develop an effective letter (a nudge) or 2) sending out whatever nonsense letter first comes to mind. Of course, one can dispute the aims of a nudge – perhaps you are anti-tax and don’t want people to pay their taxes at all – but if a letter is sent you should send a good one. 

Nudging’s popularity has led to push back. Utpal Dholakia (2016) tells us that nudges aren’t perfect. I’m not sure who thought they were but sure, lets accept that. Dholakia then goes on to document problems with “nudge psychology” (his term): “Nudges can be condescending”. They can be but I don’t believe that thinking people “need help” is automatically bad. The world is really complex, I often need help to make good choices.

Apparently nudges may not achieve the end goal. Of course this is true. You might successfully nudge someone to invest for retirement and they still might blow all their savings at Vegas. So what? Some may have been helped by the nudge. Motivational approaches are then said to be harder but more effective. Even if this unsupported statement is true this is not evidence that nudging is bad, or can backfire as the piece’s title suggests. At best this says you should use other tools as well. Who exactly disagrees with this?

Nudges are hard to get “just right”. Sure, that is why you test and refine them. At this point I wondered why nudges being hard is mentioned but the challenges with getting Dholakia’s favoured motivation plans right are ignored.

Nudges effectiveness are “blunted” if people know about them. But even if in some cases, some very well-informed people are immune this doesn’t mean nudges don’t have a positive effect on the behavior of those who somehow forgot to read Richard Thaler’s book.

If Dholakia’s thesis is that nudges aren’t magical and should be supplemented with other techniques he is surely correct. The evidence of consistent “backfiring” is weak, however. My advice is to ignore the headline. There are bad advertisements that turn off customers, and there are bad nudges that are ineffective, or even counterproductive. If you find you have an ineffective nudge try a different one, but don’t give up on trying to help people make good decisions.

Read: Utpal M. Dholaka, (2016) Why Nudging Your Customers Can Backfire, Harvard Business Review Online, https://hbr.org/2016/04/why-nudging-your-customers-can-backfire