Behavioral Economics 101: Choice Architecture
Let’s face it, we don’t always make the best decisions.
Whether its overspending or signing up for health insurance, our decisions can be attributed to economic decision making – pay now or pay later. And so the question becomes, what are the factors that affect our decision making and further, if we agree that better choices should not only be made, but encouraged, what can we do as designers, policy makers, and executives, to create better outcomes?
Perhaps creating a set of choices that makes it harder to make the wrong choice is beneficial. Chicago Booth Professor, Richard Thaler describes this as “choice architecture.”
If you are in charge of choice sets, you are an architect.
If you are the food services director at a cafeteria and have the opportunity to influence where the fresh fruits and processed snacks are located, you’ll have some decisions to make. Same goes for health workers designing anti-smoking programs or urban planners who want to achieve, healthier, cleaner cities. You get the idea.
In each of these cases, the choice architect has decisions to make about how they will lay out a set of choices. Does the food services director optimize for profit? Do they leave it up to their line staff to decide based on what looks best in the space? Or do they arrange food choices in a way that optimizes for healthier eating? Even doing nothing at all is a decision though often described as negligence in the worst of cases.
Should smoking be banned or can we successfully encourage people to not smoke at all? Does adding a lane to the 405 freeway in L.A. reduce traffic? Or do shared mobility centers, and heftier parking fee’s create more users of public transportation?
Each of these scenarios involves human decision making, and unfortunately, while the right choice may seem blatantly obvious, many people make less than optimal decisions. While heuristics, or what is commonly referred to as “rules of thumb”, can help us solve problems faster through mental shortcuts, they can also lead to cognitive biases that point us in the wrong direction.
There’s no such thing as neutral design.