About 45% of our everyday actions are behaviors that are not actively reflected upon. To alter sustainable behavior is where nudges can come into play. Dealing with this topic is motivated by a personal interest of the author of this blog in sustainable solutions.
Nudges were first introduced into economic psychology by Thaler and Sunstein (2008) in their book „Nudge“ stating that “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.”
There are different ways to nudge sustainable consumer behavior. Simplification and framing regard information presented in a way that fits information processing capabilities and decision making processes of the individual. Simplification has proven to be useful in this field by feedback on electricity bills providing social comparison information in Helsinki, which reduced electricity consumption by 1-1.5%. A second option are changes to the physical environment of customers. An example is reducing the food waste in all-inclusive hotels by reducing the plate diameter from 24 to 21cm, which led to 20% less food being left over. A third field of nudges are changes to default policies. These changes determine results if people take no action. An example is the reduction of paper consumption by 15% through a double sided print option as default for printers. The fourth field consists in use of social norms. These are strong collective forces that influence behavior of individuals. A possible example is the significantly higher reuse of towels among hotel guests by displaying a text saying „The Majority of guests reuse their towels.“ As one can see these nudges can prove to be efficient to some extent. Although further large-scale research is needed to define efficient nudges for different fields of sustainable behavior. Also intercultural differences have to be further examined in order to determine which nudges can work in which countries.
But there are different problems with nudging. The implicit tendency of nudging to manipulate people or hold back information has been criticized. These questions fall in a broader debate about the governmental right to influence people’s behavior. Concerning these questions it has to be said that in most societies it is accepted that the government pursues policies that benefit the society in the long run. This concern can be counteracted by making nudges transparent, although this arises the question if nudges then become less effective. Furthermore the evidence about effectiveness of nudges in sustainable consumer behavior is only emerging. As stated it can at least be said that nudges in some fields are effective at least to some degree. It might not be the tool to make the big change in sustainable behavior but at least it might help a little bit on the way. It can complement other tools and methods such as regulated pricing which in my opinion should be focused on more and which I shortly will explain.
The most important factor in grocery shopping is still the price for 46% of people. Stronger governmental regulations of prices for products especially for unsustainable products could therefore play a huge factor in influencing sustainable consumer behavior. Conventional product prices do not nearly reflect the real external cost included in these products. Who is paying for the cleaning of our drinking water from nitrate which in conventional groceries is used to a large extent as a fertilizer? The Food and Agriculture Organization of the United Nations has stated that roughly every tonne of CO2 produced will cause damage to the environment worth 100€ of costs to reverse the damaging effects. This would lead to costs of 6 to 12 Billion € in Germany alone. Currently everybody is paying these external costs mostly through taxes or health insurance rates even if he does not consume these products. Therefore it appears logical that these costs should be included in the prices of unsustainable products and therefore influence customers to avoid these products from the beginning on. External costs sometimes are hard to identify and further research about the long term effects of unsustainable behavior and how to price these effects is needed.
It is obvious that companies will not pay for these external effects by themselves through raising the costs for their products and donating money. This is why governmental regulations for prices and costs are needed. One possibility would be to regulate the costs for unsustainable production methods by for example rising taxes for fertilizers which would lead to higher product prices for end customers. But long term effects of governmental regulations can be very complex to determine. This is why in the field of company regulations to alter sustainable production there is more research needed. If you became interested in this topic feel free to read my essay for more detailed examples of nudges and further informations concerning sustainability, regulated pricing and also my information sources.
By Janis Vogel
Behavioral Development Economics 