Tuesday, May 11, 2010

Choice architecture

Dave Trott posted an example of behavioural economics the other day. I quote direct (lazy of me I know):

Rory Sutherland gave me a brilliant example of choice architecture. At a school in the USA, the girls in their early teens had just discovered lipstick. They would go into the female toilets to apply it. Then, giggling, they’d leave the imprint of their lips on the large mirror. This made a lot of extra work for the cleaning staff. The head teacher asked the girls to stop. Of course they ignored her.

So she took the girl’s to the female toilets for a demonstration. She said, “It takes a lot of work to clean the lipstick off the mirror.” She said to the janitor, “Please show the girls how much work it takes.” The janitor put the mop in the toilet, squeezed off the excess water and washed the mirror. Then put the mop in the toilet again, and repeated the process. From that day on there was no more lipstick on the mirror.

Authors Thaler and Sunstein give many other examples of choice architecture. For example, when taking out money from ATM machines, lots of us mindlessly walk away, leaving our bank cards in the machines. So instead of putting stickers on the ATM screen reminding us not to, they simply change the process so we must now take our cards before the money comes out.

Smart stuff.

P.S. Mr Sutherland is speaking tomorrow morning in Dublin on behavioural economics. I won't be there, but looking forward to hearing how it goes.

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