Opinion

How big data is nudging us further than ever before

Almost a decade has passed since Cass Sunstein and Richard Thaler's Nudge was released, and its revelations are still having an impact today. Freelance creative strategist Antony Giorgione looks at the state of behavioural play.

Back in my schooldays I moonlighted as a restaurant dishpig. Each night the chef would look in the coolroom, then come out and dictate the specials to the floor staff, with a particular focus on ingredients that needed to be moved on.

He was nudging, though that’s not what he called it.

Nudging is an offshoot of the increasingly popular field of psychology known as behavioural economics. Behavioural economics has come to imply some sort of ‘psychological magic’, but in reality it is more akin a revised set of cognitive shortcuts, baselines and differentials.

For example, it posits that we might experience a financial loss more deeply than we experience a commensurate gain, or that we might deduce Cologne has a larger population than Herne simply because we’ve heard of Cologne and not of Herne.

Nudging itself is the application of behavioural economics and related theories into the public realm.

Its principles were laid down by Cass Sunstein and Richard Thaler in their book ‘Nudge’, where the authors outline a set of methodologies with which an individual might be tacitly encouraged towards a better behaviour – such as default rules, simplification, the use of social norms and reminders, among other things.

Since the publication of the book, nudge units have emerged around the world to apply these ideas into areas of governmental policy.

The Victorian Government has recently set up a behavioural unit and Thaler one in the US, but the most significant player in this field is the Behavioural Insights Team created as an adjunct to the UK government. The BIT is now a privately-owned entity with a global representation including within the NSW Government.

I have written before on Mumbrella about the BIT’s work; specifically how they used a couple of sentences in a recruitment process to bring minority applicants on par with the dominant cohort in test pass-rates.

Now BIT has commodified nudging processes to the extent that they can apply similar methodologies cross-culturally, for example using the same system for hastening the payment of rates in Costa Rica or Singapore. They have also built a proprietary recruitment system to minimise unwanted bias, known as ’Applied’ and it is available for use by any entity – public or private.

BIT has become, in effect, a rapidly growing comms agency network.

So like dynamite – invented to help miners – and the world wide web – invented for defence and education infrastructure – the idea of nudging is expanding beyond its original remit.

In parallel with the output of the public interest behavioural units are the consumer-orientated Facebook, Google, Amazon et al. – the largest ever petri dishes of behavioural data in the history of everything.

Where the behavioural units use strictly governed randomised controlled testing, the online giants are accumulating vast swathes of behavioural history to test against itself. They work with a significantly larger sample; a scale so great we really only seem to know a fraction of what is actually being tested or applied. Or learned.

There is a revealing article by Noam Scheiber in the New York Times that lays out the ongoing application of nudging within the private sector.

Uber ran a program aimed at their drivers. They could keep them out on the road longer with small nudges such as automatically loading the next ride whilst in the midst of the current ride, or a male manager using a female persona in despatches to encourage the (overwhelmingly male) drivers to move to a more desired location.

In another example, Uber would send a message to a driver close to the end of their shift challenging them to ‘make it to $330’, that figure being only $10 and one more ride away. They would send this message with two option buttons; ‘go offline’ and ‘keep driving’. The ‘keep driving’ button was highlighted.

Of course, these sorts of practices are not restricted to Uber’s drivers.

There’s the discovery they made about battery life. It turns out the Uber app was capable of reading a host phone’s settings, and they identified a relationship between the urgency around battery life and the willingness to accept higher surging.

Those whose phone was about to go flat were prepared to accept surge prices up to nine times higher. Uber admitted to the study, but claimed it has not been applied back onto their customer base.

Our threshold for tolerating these practices can be demonstrated against this above information.

Now that you know this about Uber, are you going to stop using them?

Probably not.

The value of the service’s utility to us outweighs these perceived shortcomings, as well as others.

We accept Uber for what they are. And more for what they bring to us.

If you’re hoping there might be consumer laws against some of the more predatory nudging practices, I’m not sure when that will come to be. Though the book is focused on the newer (and older) legal structures of the EU, from ‘Nudge and the Law’ comes this quote:

“Just like laws of other jurisdictions, EU consumer protection law predates the behavioural awareness that characterises our time.”

We can see this lag in the specific area of pricing. Though our own consumer laws address aspects of variable pricing, it now sits within the context of dynamic pricing.

The issue is compounded by the ubiquity of nudging. Weather is a nudge, so is the feeling of carpet under our shoes. How do we legislate around the height of a shelf, or the reasons behind the inclusion of a dish on a specials board? This revised set of understandings about the human condition is so completely imbued within every aspect of our existence.

There is an interesting case being fought out in the US between Linkedin and HiQ. HiQ was scraping information from the publicly-accessed profiles of Linkedin members, and using it to created a database predicting those most likely to leave their job. A US District Court judge has recently ruled in HiQ’s favour, but Linkedin plans to challenge the decision.

If upheld in the higher courts, it paves the way for large data-scraping entities – some that could be focused on consumer awareness of online nudging-type practices.

Kind of like ‘The Checkout’ meets virus security.

At the moment, though, it seems to come down to the individual to protect themselves with knowledge. I recommend reading ‘Nudge’, as well as ‘Thinking Fast and Slow’ by Daniel Kahneman and ‘The Power of Habit’ by Charles Duhigg, before diving into the deep pool of peer-review literature.

I’d also like to suggest another title, quite different from the above.

It’s called ‘Never Split The Difference’ by Chris Voss, a former FBI hostage negotiator. Voss has written this book to apply his learnings into everyday negotiation scenarios, such as asking for a pay rise or getting your child to eat their vegetables.

In contrast to the other readings, his lessons are borne of direct experience. Voss spent years refining his methods in the most extreme of situations before going to business school and discovering how to systematise this material.

Within his book he refers to Kahneman’s dual-process model that underpins much of behavioural economics, as well as other psychological studies, and breaks down his negotiating technique into small packages – or nudges.

This book is a great introduction to the idea of nudging for someone who doesn’t really read about psychology much, and its learnings can quite easily be made self-evident.

Ultimately, it’s up to you alone to figure out how to respond to nudging. If you can be bothered.

And if you’re a business, you’re already using it.

But is your competitor using it better?

Antony Giorgione is a freelance creative strategist.

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