Is Nudge Theory ethical? And are you already doing it without noticing?


How many choices do you think you’ve made for yourself so far today? Probably a lot less than you think.

From the moment you woke up this morning, you gave into the subtle persuasions of the world around you. Why did you eat cereal for breakfast? Because at some point it was advertised to you. Why did you choose to leave your jacket at home? Because the newsreader on the radio said it was going to be a warm day (it’s not). Why did you turn off the main road to take a backstreet? Because at one point in time, someone told you that was a faster route.

We like to think we’re in the driver’s seat of our decision-making, but the truth is we’re constantly influenced by external forces. So, how does that affect the way we work?

The power of suggestion

Nudge Theory is the psychological behavioural concept of influencing people’s thinking in subtle ways in order to steer them towards what’s deemed to be the ‘appropriate decision’. It’s a practice commonly seen in politics and policymaking, often with positive applications.

Commonly cited examples include the UK’s decision to enforce ‘automatic enrolment’ into pension plans (with the option for employees to formally opt-out) as well as opt-out organ donation policies, which have been adopted by countries like England, Iceland and Wales.

“The theory was that many people actually wanted to put more money aside for retirement but they were put off from doing so by the need to make what they feared would be complicated decisions,” writes Ben Chu Economics Editor for the Independent.

You could argue that nudging people towards a financially healthy retirement isn’t a bad thing, and the UK government’s Behavioural Insights Team (which is co-owned by social innovation foundation Nesta) predicts that by 2020, 700 lives could be saved due to the government’s nudging practices around organ donation. But if you’re not being upfront about influencing someone’s decision, even if it’s for ‘the greater good’, is that really ethical?

The theory was coined by economist Richard Thaler, who won a Nobel Prize for the concept in 2017. In order to protect against nefarious uses of the theory, he set up three key guidelines to accompany the technique’s use:

  1. Be transparent
  2. Make decisions easy to opt-out of
  3. Nudge with people’s best interests in mind

He often encourages people to “nudge for good”, acknowledging that in the wrong hands his concept has the ability to be harmful.

A common example of this that he refers to in a New York Times article is travel insurance policies, which often go against all three guidelines. Details are often only revealed in the fine print, it can be complicated to opt-out and the potential to make some extra cash often trumps travellers’ protection.

In his book ‘Thinking, Fast and Slow’, social psychologist Daniel Kahneman talks about the two systems of the human brain. In an interview with People Management (the UK’s equivalent of HRM), he says, “System 1 provides the automatic reflex responses that remind us to duck if something is heading for us; while the more rational but slower System 2 controls conscious thought processes. Nudging recognises that System 1 thinking often overrides the more rational process when making decisions.”

In this same article, author Emily Burt refers to a humourous example, to demonstrate just how simple it can be to implement this theory.

“Possibly the most famous example of nudging is a small house fly painted on the urinals in Amsterdam’s Schiphol airport. This tiny but highly effective intervention, conceived by an airport staffer, reduced unpleasant spillage by 80 per cent on the basis that when presented with a target, men instinctively aim for it.”

Nudging is part of ‘choice architecture’. You’re not meant to trick someone into making a choice, you’re meant to present them with two different options (even if one has been circled with a big, red pen). But when nudges are used as an advertising technique or where someone stands to gain financially or socially to someone else’s detriment, that’s when it can become dangerous.

Benefits to the workplace

While all organisations will have fixed and definitive rules around workplace behaviour and expectations, nudge theory is often used for the more subtle work situations. They’re not hard and fast rules, but things run more smoothly when they’re implemented. Burt points to flexible working options as one.

An organisation wanted to break free of the traditional 9-5 work day but was finding it hard to encourage workers to adopt a new model. A small tweak to their calendar system made all the difference. If an employee tried to schedule a meeting outside of the hours of 10am-3pm, a message would pop-up reading: ‘did you know this is non-core working hours?’ It’s thought this practice saw a 7.1 per cent uptake in flexible work options.

You’re not meant to trick someone into making a choice, you’re meant to present them with two different options (even if one has been circled with a big, red pen).”

Using the same example of flexible work, nudging can be applied in a negative sense. For example, a company may preach flexible work arrangements but employees who try to take advantage of the policy might find their managers are subtly nudging them not to.

The messaging can be quite subtle. Anything from the officious, “You’ll need to have a good reason and pre-approval from your manager” to someone simply asking, “Oh, you’re leaving work early, again?”

Another strong way to encourage workplace behaviour is to use the success of colleague’s peers as a motivation driver. A simple way some offices will do this is by implementing a ‘Wall of Fame’ which displays the achievements of various staff members.

Other visual devices can influence staff too. There are obvious workplace health and safety examples, like the image of a person slipping over on a sign which encourage people to proceed with caution, but for the eco-conscious organisation, displaying a company’s energy consumption on a chart might direct employees to use less energy.

An attack on autonomy?

Academics wrote an article for the Harvard Business Review (HBR) about nudging in the healthcare space, but say their approach can be applied across a variety of industries.

Healthcare organisations have been using the nudging technique to improve doctors’ decisions in particular areas, such as decreasing inappropriate prescriptions and increasing specific vaccine rates. Even if the overall results are positive (i.e improved medical outcomes) the authors say that doctors often perceive the nudge as an attack on their autonomy.

“In our experience implementing change across different institutions, many managers have shared reservations about nudges as things being done to physicians rather than done with them.”

“This is a particularly relevant problem for professional employees because three important traits they possess — a strong sense of purpose, a desire for autonomy, and a commitment to mastery — can be barriers to accepting managerial nudges.”

This kind of pushback isn’t surprising. Often when people notice they’re being nudged in a certain direction, their instinct is to rebel against the suggestion. To overcome this, experts suggest using positive messaging to deliver a positive result.

For example, a 2017 study into tax compliance showed it was more effective to say something like: “90 per cent of taxpayers have already complied with their tax obligations” rather than threatening non-compliant taxpayers with sanctions.

How to nudge ethically

There’s a fine line between nudging and manipulating, but the HBR authors say there are appropriate ways to using nudging theory ethically and offer three tips.

  1. Be transparent about the purpose of the nudge.
    Referring back to the organ donation example, it was found that when default options were explicitly outlined, the effectiveness of the nudge wasn’t impacted, people were happy to remain on the donor list. “Transparency helps dispel suspicion around these goals, creating fertile soil for dialogue about specific nudges and their purpose.”
  2. Co-create the nudge
    “Another misconception is that nudges must be passively received to change behaviour. In reality, the impact of nudges does not depend on their being ‘done to’ people.” Taking a collaborative approach to nudging is an effective way to ensure employee autonomy is maintained.
  3. Consider the constructive framework
    While some may implement nudges as a means to prevent certain things from happening, the HBR authors say managers should also consider how they could use this in a professional development sense, i.e encouraging leaders to engage with feedback programs or to set professional goals. “Nudges that champion professional ideals may motivate more positively.”

Nudging Theory can have great benefits, when placed in the right hands. Keep in mind the creator’s advice when testing this approach and “nudge for good”.

What are your thoughts on Nudging Theory? Share them in the comment section below.


There are plenty of different ways to get the most out of your workers, Nudge Theory is one of them. Check out Ignition Wealth’s ‘Leadership and management essentials’ course to learn new and relevant skills.

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Doubting Thomas

I was hoping this “theory” was going to be about employing a character…err, employee, purely to make everyone else look smarter. I’m so disappointed that the ‘Hey Dad’ reference that came to mind has proven to be wide of the mark. Come on, I can’t be the only person who thought of Nudge, can I?

More on HRM

Is Nudge Theory ethical? And are you already doing it without noticing?


How many choices do you think you’ve made for yourself so far today? Probably a lot less than you think.

From the moment you woke up this morning, you gave into the subtle persuasions of the world around you. Why did you eat cereal for breakfast? Because at some point it was advertised to you. Why did you choose to leave your jacket at home? Because the newsreader on the radio said it was going to be a warm day (it’s not). Why did you turn off the main road to take a backstreet? Because at one point in time, someone told you that was a faster route.

We like to think we’re in the driver’s seat of our decision-making, but the truth is we’re constantly influenced by external forces. So, how does that affect the way we work?

The power of suggestion

Nudge Theory is the psychological behavioural concept of influencing people’s thinking in subtle ways in order to steer them towards what’s deemed to be the ‘appropriate decision’. It’s a practice commonly seen in politics and policymaking, often with positive applications.

Commonly cited examples include the UK’s decision to enforce ‘automatic enrolment’ into pension plans (with the option for employees to formally opt-out) as well as opt-out organ donation policies, which have been adopted by countries like England, Iceland and Wales.

“The theory was that many people actually wanted to put more money aside for retirement but they were put off from doing so by the need to make what they feared would be complicated decisions,” writes Ben Chu Economics Editor for the Independent.

You could argue that nudging people towards a financially healthy retirement isn’t a bad thing, and the UK government’s Behavioural Insights Team (which is co-owned by social innovation foundation Nesta) predicts that by 2020, 700 lives could be saved due to the government’s nudging practices around organ donation. But if you’re not being upfront about influencing someone’s decision, even if it’s for ‘the greater good’, is that really ethical?

The theory was coined by economist Richard Thaler, who won a Nobel Prize for the concept in 2017. In order to protect against nefarious uses of the theory, he set up three key guidelines to accompany the technique’s use:

  1. Be transparent
  2. Make decisions easy to opt-out of
  3. Nudge with people’s best interests in mind

He often encourages people to “nudge for good”, acknowledging that in the wrong hands his concept has the ability to be harmful.

A common example of this that he refers to in a New York Times article is travel insurance policies, which often go against all three guidelines. Details are often only revealed in the fine print, it can be complicated to opt-out and the potential to make some extra cash often trumps travellers’ protection.

In his book ‘Thinking, Fast and Slow’, social psychologist Daniel Kahneman talks about the two systems of the human brain. In an interview with People Management (the UK’s equivalent of HRM), he says, “System 1 provides the automatic reflex responses that remind us to duck if something is heading for us; while the more rational but slower System 2 controls conscious thought processes. Nudging recognises that System 1 thinking often overrides the more rational process when making decisions.”

In this same article, author Emily Burt refers to a humourous example, to demonstrate just how simple it can be to implement this theory.

“Possibly the most famous example of nudging is a small house fly painted on the urinals in Amsterdam’s Schiphol airport. This tiny but highly effective intervention, conceived by an airport staffer, reduced unpleasant spillage by 80 per cent on the basis that when presented with a target, men instinctively aim for it.”

Nudging is part of ‘choice architecture’. You’re not meant to trick someone into making a choice, you’re meant to present them with two different options (even if one has been circled with a big, red pen). But when nudges are used as an advertising technique or where someone stands to gain financially or socially to someone else’s detriment, that’s when it can become dangerous.

Benefits to the workplace

While all organisations will have fixed and definitive rules around workplace behaviour and expectations, nudge theory is often used for the more subtle work situations. They’re not hard and fast rules, but things run more smoothly when they’re implemented. Burt points to flexible working options as one.

An organisation wanted to break free of the traditional 9-5 work day but was finding it hard to encourage workers to adopt a new model. A small tweak to their calendar system made all the difference. If an employee tried to schedule a meeting outside of the hours of 10am-3pm, a message would pop-up reading: ‘did you know this is non-core working hours?’ It’s thought this practice saw a 7.1 per cent uptake in flexible work options.

You’re not meant to trick someone into making a choice, you’re meant to present them with two different options (even if one has been circled with a big, red pen).”

Using the same example of flexible work, nudging can be applied in a negative sense. For example, a company may preach flexible work arrangements but employees who try to take advantage of the policy might find their managers are subtly nudging them not to.

The messaging can be quite subtle. Anything from the officious, “You’ll need to have a good reason and pre-approval from your manager” to someone simply asking, “Oh, you’re leaving work early, again?”

Another strong way to encourage workplace behaviour is to use the success of colleague’s peers as a motivation driver. A simple way some offices will do this is by implementing a ‘Wall of Fame’ which displays the achievements of various staff members.

Other visual devices can influence staff too. There are obvious workplace health and safety examples, like the image of a person slipping over on a sign which encourage people to proceed with caution, but for the eco-conscious organisation, displaying a company’s energy consumption on a chart might direct employees to use less energy.

An attack on autonomy?

Academics wrote an article for the Harvard Business Review (HBR) about nudging in the healthcare space, but say their approach can be applied across a variety of industries.

Healthcare organisations have been using the nudging technique to improve doctors’ decisions in particular areas, such as decreasing inappropriate prescriptions and increasing specific vaccine rates. Even if the overall results are positive (i.e improved medical outcomes) the authors say that doctors often perceive the nudge as an attack on their autonomy.

“In our experience implementing change across different institutions, many managers have shared reservations about nudges as things being done to physicians rather than done with them.”

“This is a particularly relevant problem for professional employees because three important traits they possess — a strong sense of purpose, a desire for autonomy, and a commitment to mastery — can be barriers to accepting managerial nudges.”

This kind of pushback isn’t surprising. Often when people notice they’re being nudged in a certain direction, their instinct is to rebel against the suggestion. To overcome this, experts suggest using positive messaging to deliver a positive result.

For example, a 2017 study into tax compliance showed it was more effective to say something like: “90 per cent of taxpayers have already complied with their tax obligations” rather than threatening non-compliant taxpayers with sanctions.

How to nudge ethically

There’s a fine line between nudging and manipulating, but the HBR authors say there are appropriate ways to using nudging theory ethically and offer three tips.

  1. Be transparent about the purpose of the nudge.
    Referring back to the organ donation example, it was found that when default options were explicitly outlined, the effectiveness of the nudge wasn’t impacted, people were happy to remain on the donor list. “Transparency helps dispel suspicion around these goals, creating fertile soil for dialogue about specific nudges and their purpose.”
  2. Co-create the nudge
    “Another misconception is that nudges must be passively received to change behaviour. In reality, the impact of nudges does not depend on their being ‘done to’ people.” Taking a collaborative approach to nudging is an effective way to ensure employee autonomy is maintained.
  3. Consider the constructive framework
    While some may implement nudges as a means to prevent certain things from happening, the HBR authors say managers should also consider how they could use this in a professional development sense, i.e encouraging leaders to engage with feedback programs or to set professional goals. “Nudges that champion professional ideals may motivate more positively.”

Nudging Theory can have great benefits, when placed in the right hands. Keep in mind the creator’s advice when testing this approach and “nudge for good”.

What are your thoughts on Nudging Theory? Share them in the comment section below.


There are plenty of different ways to get the most out of your workers, Nudge Theory is one of them. Check out Ignition Wealth’s ‘Leadership and management essentials’ course to learn new and relevant skills.

1
Leave a reply

avatar
100000
  Subscribe to receive comments  
Notify me of
Doubting Thomas
Guest
Doubting Thomas

I was hoping this “theory” was going to be about employing a character…err, employee, purely to make everyone else look smarter. I’m so disappointed that the ‘Hey Dad’ reference that came to mind has proven to be wide of the mark. Come on, I can’t be the only person who thought of Nudge, can I?

More on HRM