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Friday, September 7, 2012

Strategic CSR - Nudge

The article in the url below highlights the value of behavioral economics for public policy. This is an important and fascinating component of the CSR debate:

‘FREAKONOMICS’ was the book that made the public believe the dismal science has something interesting to say about how people act in the real world. But “Nudge” was the one that got policy wonks excited.

Nudge economics incorporates the biases and prejudices that inform our decisions into policies that encourage ‘optimal’ social outcomes, while still retaining the ‘illusion’ of choice (see: Voluntary vs. Mandatory and Luxury):

Behavioural economists have found that all sorts of psychological or neurological biases cause people to make choices that seem contrary to their best interests. The idea of nudging is based on research that shows it is possible to steer people towards better decisions by presenting choices in different ways.

When deployed intelligently, the results can be powerful:

In one trial, a letter sent to non-payers of vehicle taxes was changed to use plainer English, along the line of “pay your tax or lose your car”. In some cases the letter was further personalised by including a photo of the car in question. The rewritten letter alone doubled the number of people paying the tax; the rewrite with the photo tripled it. … A study into the teaching of technical drawing in French schools found that if the subject was called “geometry” boys did better, but if it was called “drawing” girls did equally well or better. Teachers are now being trained to use the appropriate term.

Have a good weekend

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Nudge, nudge, think, think
Free exchange
The Economist
March 24, 2012