How to make more informed decisions
Eric J. Johnson is Professor of Commerce at Norman Eig and Director of the Center for Decision Sciences at Columbia Business School. He has served as president of the Society for Judgment and Decision Making and of the Society for Neuroeconomics.
Below, Johnson shares five key ideas from his new book, Elements of Choice: Why How We Decide Matters.
1. You are an architect of choice.
Consider a restaurant menu: The delicious food on the menu, their prices and descriptions will influence what you choose, of course, but other things will, too. In fact, the menu designer is your hidden partner in this choice. They decided on the order of the dishes, organized them into categories (meat and fish or vegan vs vegetarian) and decided how to describe the dishes. After all, you might be making different choices if the calories were listed or if a heart healthy sticker was present. And then there are the flowery sentences describing the dishes! In short, the designer has influenced you in a way that you are not aware of. It is these decisions made by the designer that we call architecture of choice.
Of course, you also make choices. You offered your partner a list of restaurants where you could dine. You’ve decided which restaurants to mention first and last, into which categories to organize them (for example, chic or casual) and how to describe them. Did you, for example, mention how long it would take to get to each one, or the quality of their service? Even if you didn’t realize it, your design decisions influenced your choice of mate.
Whether you design a website to sell insurance, give your employees a choice of assignments, or give your child the choice of going to bed, you are a designer and you will influence their choices.
2. Choose the correct default values.
All choices have a default value, something that happens if you don’t actively make a choice. In most of the United States, if you do not register to vote, you are not eligible. In other countries like Germany, you have the right to vote by default. About 20 US states have tried to make most citizens eligible to vote by default, when they get a driver’s license, for example. It increases the number of registered voters, and more importantly, it increases the number of people voting. Defaults are pervasive and influential – research shows they increase the number of people willing to donate their organs to others.
Choosing a default value is also important even if you To do make a choice. Some think the default option is a designer approval, and many people choose the default investment plan at work because they think it’s a recommendation. The defaults are also important because we imagine that we have already chosen them, which makes them more attractive. So when you choose a web browser on your smartphone, your choice is influenced by the default, and companies pay billions of dollars for that default.
3. Be aware of the order.
In Texas, primary election candidates are ranked at random on the ballot. Where you are on the ballot can make a difference in who wins; in an election, Paul Green ran against Rick Green. One study showed that whichever green was listed first had a 20% advantage. And even in normal elections, the first name gets 1 to 2% more votes. So if we wanted the elections to be fairer, we could change the order of the names on the ballot for each constituency or county, but most elections don’t. Also think about ordering hotels on a website; the hotel listed first is 50% more likely to be chosen simply because of its position on the list.
But it’s not as easy as always being the first; in other contexts, such as figure skating competitions or the Eurovision Song Contest, it is actually better to be last. Or think about when you go to one of those fancy restaurants where you don’t get a paper menu. It’s a struggle to remember everything read to you, so again, it’s best to be last on the list. The key to understanding which is best is understanding how ordering affects your attention to options.
4. Making decisions easier is not enough.
Choice architects may be tempted to make a choice easier. After all, that’s why we hire good graphic designers, to make things accessible, but sometimes it’s less useful than you might think. Presenting fewer options simplifies a user’s experience, but it also potentially means leaving out the option that works best for a particular person. So, deciding how many options to present must balance the extra effort we demand of breeders with the benefits they might get from seeing an additional option.
Presenting too many options can also be problematic. In New York City, kids and their parents decide where to apply to go to high school. How many options do you think would be the best? In New York, they receive a book the size of an old phone book, with 769 different options. So how can we help them? Research shows they do best when given a list of 30 schools, tailored to where they live.
5. What you don’t know can hurts you and those who make choices.
A lot of things influence our choices, but neither designers nor those who make choices tend to realize how important these influences really are. For example, researchers asked people if a default, like a pre-checked box, made a difference to what they recently chose. The vast majority of them say no, although research indicates that it probably is.
When given the option to set a default, many people don’t, even if it costs them money. Default coupons, such as those that make people save more for retirement, help everyone, but they work best for the less well off. However, having a bad fault, like not saving anything, hurts the most vulnerable the most.
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