Nudge, sludge and silver bullets

I recommend this Freakonomics podcast with Richard Thaler on Nudge and sludge.

I had a few thoughts while listening.

We don’t know it before we know it

In one part, they were talking about one of the most successful outcomes of nudging, changing the choice to participate in a 401k from opt-in when you become eligible to opting out. That simple flip increased participation from something like 10% to 90%.

Host Dubner thinks its a problem that the choice to participate in a 401k shouldn’t have been designed the way it was in the first place, that it was just dumb.

I was surprised by that, because Dubner strikes me as smart enough to understand that things evolve and emerge as they are discovered. For the 401k choice to be designed better in the first place would have taken knowledge that didn’t exist yet.

I mean, it would be awesome if we all could just think of successful things from the start, but it’s really more of a trial-and-error, tinkering process.

Silver bullets

I feel like the concept of nudging became the shiny object, silver bullet, clever sounding tool du jour. It spawned “nudge” units in government and businesses, that usually fail to meet expectations.

I’d say that like most shiny objects and ‘silver bullets’ it’s because the expectations are too high. The 401k choice is the case that sells nudging, but it’s absolute best case.

Other nudge tactics aren’t nearly has successful. They might move the success rate a few points, but not from 10% to 90%, more like 25% to 29%.

I think then managers become frustrated. They thought they had a clever trick up their sleeve to expand their market penetration to 100% and it only moves it a few points and not enough to pay for the cost of employing the nudge tactics.

I think governments made the same mistake. They used nudges in pandemic messaging and politicians seemed to become frustrated because they didn’t achieve 100%, even though they never have.

Sludge

I like the idea of calling barriers that keep you from doing things, sludge, which was also discussed. That’s easier than ‘barriers.’

I’m going to use that.

Don’t overly rely on clever tactics

While I think choice architecture should be considered, it’s good to keep expectations in check. If you a running a mature company that is already well-penetrated, you may get some marginal results from playing with choice architecture, but if you want real growth, you need to innovate to find things that people value.

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