Changing Public Behavior Levers of Change

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1 Changing Public Behavior Levers of Change Implications when behavioral tendencies serve as "levers" Adapted from: Shafir, E., ed. (2013). The Behavioral Foundations of Public Policy. Princeton University Press. See especially, Lowenstein, G., L. John, & K. G. Volpp. (2013). Using decision errors to help people help themselves. Chapter 21 (pages ). Miller, D. T. & D. A. Prentice. (2013). Psychological Levers of Behavior Change. Chapter 17 (pages ). Weber, E. U. (2013). Doing the right thing willingly: Using the insights of behavioral decision research for better environmental decisions. Chapter 22 (pages ). Cognitive myopia Framing Hyperbolic time discounting People tend to apply a shortsighted view of time and fail to integrate outcomes of a series of decisions. Includes several sub concepts such as loss aversion, hyperbolic time discounting and preference construction (Weber p. 384). Framing is the practice of shifting perspective closer to the person s point of reference, in order to change a person s subjective evaluation. People search for references points by which to judge value. For the individual, evaluating outcomes relative to his or her knowledge and experience is easier, and apparently more accurate, than objective evaluation (Weber p. 387). People discount costs and benefits that occur in the future, but discount less when both costs and benefits are in the future. The future cost or benefit is perceived as highly uncertain if it is abstract; e.g. not associated with familiar experience. But concrete consequences in the present are linked with affective People fail to make energy efficient choices even when high up-front purchase costs are compensated by future savings. The glass is half full vs half empty is an example of framing. Frame up-front "costs" as a future gain (such as avoiding an impact), rather than as a shortterm loss (such as expense). Use framing, for example, when selling crop insurance to a farmer. Environmental mitigation efforts are often perceived as requiring the sacrifice of concrete, immediate benefits for the sake of abstract, distant goals. Make goals of environmental mitigation efforts as concrete and immediate as possible. Multiple goals requiring short time-lines each may be more effective in 1

2 Loss aversion Mental accounting Narrow bracketing/ myopic loss aversion Over optimism Peanuts effect Preference construction/ query theory Present-based (emotional) associations (Weber p. 384). People put greater weight on loss than on gains (Lowenstein p. 363). The individual does not link loss to the same reference point as his or her reference point for outcomes (Weber p. 384). A "reference point" might be how "useful" the behavior seems to be. People s tendency to mentally organize various incomes and expenses in separate accounts, each with different rules (Weber p. 388). People focus on the immediate consequence of the most available choice and ignore aggregated costs over time (Lowenstein p. 364). The tendency to underestimate task completion times or to overestimate what will happen in a future event (Lowenstein p. 365). People put little weight on (don t value importance of) very small outcomes (Lowenstein p. 364). The first evidence that a person learns about is more valued than later generated evidence (Weber p. 385). When making decisions, the individual gives more emphasis to achieving public support. Change behavior by changing the reference point. One study found, for example, that when purchasing an airplane ticket, some people were more likely to agree to pay an offset fee to compensate for carbon dioxide emissions (future gain) than a carbon tax (seen as an immediate loss) (Weber p. 384). This example could also be described as "framing". Help people organize environmental information into a personal accounting system, such as use of a carbon footprint calculator. Such as when potentially risky financial investment decisions are made one at a time without reference to each other, and outcomes for any one are framed as too small to worry about. Only 5 20% of rebate coupons are redeemed. I don t need to change because there is an infinitesimally small chance of getting cancer from suchandsuch a behavior. Evidence generated in favor of a decision tends to interfere with subsequent generation of evidence arguing against that action. Make behavior choices coincide with timing of already occurring 2

3 preferences Probability weighting/ nonlinear probability weighting/ probability neglect Projection bias Psychological subsidy immediate costs or benefits, in comparison to long term costs or benefits; but takes an even handed approach to making decisions if both costs and benefits are delayed (Lowenstein p. 363). Well specified probabilities = risk. Ill-defined probabilities = uncertainty. But ambiguity aversion is not universal, such as when the decision-maker believes him or herself to be an expert in a relevant domain (sports gambling, stock market, etc.) (Weber p. 385). People put a disproportionate weight on outcomes that have a small probability of occurring and are insensitive to difference in probability at the low end of the scale ( vs chance of winning) (Lowenstein p. 364). Personal experience with a low probability event leads to more risk-taking than when the same option is presented in a statistical summary (Weber p. 386). People tend to project current preferences onto the future (Lowenstein p. 365). Psychological subsidies are those that boost self-respect, public respect, identity, or self-esteem. "Licensing psychology" is a type of psychological subsidy that reduces people s inhibitions against standing in the way. The "preferred behavior", from the behavior, such as applied in point-of-purchase education. The likelihood of a person buying or not buying flood insurance is one example where this tendency affects behavior. The flood may be seen as having a low probability of happening. The presence of this behavioral quality is seen as encouraging the education of the public about innovations as they arise, to help reduce a sense of uncertainty at a future time when awareness of the innovation may influence a behavior choice. People who are not hungry at the moment wrongly predict the likelihood that they will make healthy food choices at a future time when they are hungry. "Friends don t let friends drive drunk." Inhibitions about telling a friend what to do are replaced with feelings of importance or value regarding protecting a friend. When cake mixes were first 3

4 Psychological tax Regret theory Risk & ambiguity aversion professional's point of view, is already in place but individuals don't apply it because performing the preferred behavior is perceived as a psychological tax. Changing the individual's perspective toward perceiving the preferred behavior as a psychological subsidy increases the likelihood that the individual will adopt the preferred behavior (Miller p ). Psychological taxes include loss of self-respect, public respect, identity, or self-esteem (Miller p. 307). The emotion of regret is stronger than the emotion of rejoicing. An error to increase regret can be seen as having more severe consequences than an error that reduces rejoicing (Weber p. 387). People avoid risk, but how people think about risk is varied. People s affective reaction often does not agree with objective measures. If risks are well-known and exposure is controllable, introduced in the 1950s, homemakers liked the taste and look and said they would serve cakes made from the mixes, but the product failed in the marketplace. When manufacturers changed the product to require homemakers to add eggs, oil, and milk, and to mix the ingredients themselves, the product flew off the shelves. Presumably the new version of the mixes "licensed" homemakers to use the mix because it better supported their identity as homemakers. By agreeing to a cash subsidy for a NIMBY activity, members in a community may feel that they are signaling that the NIMBY is undesirable, that they can be bought or bribed, or that they would put others at risk. A more acceptable solution reduces the psychological tax, such as providing a limited subsidy that offers a new park, for example. Weber gives an example applying to climate change mitigation. She suggests that prominent use of climate-change adaptation technology by trusted opinion leaders publicizes anticipated regret about worse outcomes, which could help later adopters of these technologies to modify their practices in a more timely fashion (p. 388). Sure outcomes in environmentally relevant decsions tend to be on the negative or cost side, while gains are delayed in time and somewhat uncertain. 4

5 there is no strong emotional reaction. Related concepts: Ellsberg paradox decisonmakers distinguish between wellspecified probabilities (risk) and ill-defined probabilities (uncertainty) even if the best estimates of the latter have the same value as the former (ambiguity aversion). Behavior change can be supported by increasing certainty and decreasing time required to experience gains. See many other examples in this table. Self-serving fairness Status quo or default bias Certainty effect certain outcomes get more decison weight than they deserve based on their perceived likelihood of occurrence. Finite point of worry people have a limited budget to spend on worry, and will often worry only about one or two things at any one time. Single action bias the propensity to take only a single action in response to a fear signal (Weber p. 382). People confuse what is in their own interest with what is fair. People believe that one s own view is an impartial representative of reality and they hold a related belief that their perspective will be shared by others (Lowenstein p. 364). People prefer to keep doing what they have been doing or what comes to them automatically (Lowenstein p. 363). Failure to achieve a settlement in a dispute when it is in the interest of all parties to achieve a settlement, may be due to differing understandings of what is fair. A person s failure to put aside retirement funds themself, when the employer stops providing an automatic contribution. Connect, or show how desired behavior is similar, to a "default" behavior. 5