Online Vol. 02.2008 

Is Human Nature Nudgeable?

Changing the Choices People Make, Subtly

By Frank Brown

Researchers at the University of Chicago, led by a pioneer in the field of behavioral economics, are doing groundbreaking work to better understand why people make the decisions they do.

“There are numerous real world applications of our ideas. The domain where this research has already had a significant impact is on savings and investing,” said Professor Richard H. Thaler, the director of the project titled Understanding Human Nature to Harness Human Potential. “I think a new area that is particularly promising is the environment. By creating better feedback mechanisms that show people how their behavior is effecting the environment, it is possible to get people to dramatically change their behavior, without forcing anyone to do anything.”

Thaler, who has served for more than a decade as director of the Center for Decision Research, part of the university’s Graduate School of Business, is one of the founders of the field of behavioral economics that straddles the traditional disciplines of economics and psychology.

The center’s research long has revolved around how people form judgments, and make decisions. This specific project draws on interdisciplinary research to determine how to improve well-being in societies, and to help people lead more fulfilling lives.

The project involves faculty members – from fields ranging from behavioral economics and behavioral finance, to cognitive psychology and decision making. This multidisciplinary team will address a series of key questions over the three-year term of the project that runs until 2010:

• How does setting goals affect performance, and degree of satisfaction? How can we improve our self-control, today, in order to better attain our goals for the future?


• How do spiritual values influence our relationships, and sense of purpose? Do these values develop similarly across cultures?


• How can the elderly use their life experiences to improve the quality of their lives?


• Can happiness and well-being be measured, scientifically?

Some of the project’s work, which began in March 2007, builds on recent research, including studies at the Center for Decision Research that have shown that an action can have different effects on people’s behavior and psychology. It all depends on how the action is perceived, according to Ayelet Fishbach, an associate professor of behavioral science at the university.

Fishbach and colleagues are conducting studies at a university gym. In one study 60 people were told to focus on exercise as an end in itself before they began their workouts. In another, 70 people were told to focus on exercise as a means toward attaining goals.

“I found it surprising, although consistent with our theory, that a workout at the gym feels good - replenishing, enjoyable - when people focus on the exercise itself, but it feels bad - depleting, less enjoyable - when people focus on the external reasons for exercising,” said Fishbach.

The behavioral scientists Tanya Menon and Oliver J. Sheldon are exploring strategies to build trust among rivals. Research long has shown that friendly gestures sometimes backfire – that trust sometimes breeds distrust – among rivals with no history of cooperation. A friendly gesture in such a situation can be construed as a jinx, something akin to the evil eye.

But through fair play in competitive situations over time, through friendly words backed up by friendly behavior, rivals can amass enough good will to overcome their suspicions and avoid a backlash, the new research shows. “The way I hope this research improves human functioning is by developing ways that we can handle conflict more productively,” Menon said.

The Understanding Human Nature to Harness Human Potential project is partially modeled after recent work by Thaler, who designed a program to help employees save money when they lack the willpower to do so. Thaler recently conducted research on the reasons why people make poor decisions about personal health and finances. He has co-authored a book, slated for release in March, which suggests that governments and individuals can create environments in which people – whose biases often are at the root of their bad choices – are more likely to make good choices for themselves, their families, and society at-large.

The book, titled Nudge, Improving Decisions About Health, Wealth, and Happiness, is written with Cass R. Sunstein, of the university’s Law School.

“It was the process of writing the book that produced what has become the key organizing feature of our research program - what we call ‘choice architecture’,” Thaler said. “The idea is that anyone who creates the choice environment in which people make decisions ends up having subtle but powerful influences on the choices people make.”

Frank Brown is a writer living in New Haven, CT.

For more information on this project at the Center for Decision Research, please go to:
www.chicagogsb.edu/magazine/29/2/cover.aspx

Marby Sparkman, Editor
milestoneseditor@templeton.org

Pamela Thompson, Vice President of Communications
pthompson@templeton.org

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