Ethics of Nudges and Choice Architects

I hope all remain healthy. This week we are discussing the ethical issues surrounding nudges and choice architects.

Nudges

Touching on the notion of nudges, I agree with Sunstein (2015) that nudges are everywhere and unavoidable. They may not be effectively formulated by a choice architect but rather a random event. For example, when I drive to the office, I take a certain route to get there on a daily basis. But on days when it is raining heavily, I choose to take a different and longer route (under normal circumstances). I do this on rainy days because one of the roads I normally take floods and causes traffic. I am therefore nudged by Mother Nature to change my pattern. I think there isn’t a case of unethical or nefarious intentions in this example.

There are also System 2 type of nudges that do not fall into the category of unethical influence as long as all available options are presented and a distinct set of choices are available. Another example, my kids wanted to color Easter eggs the other day (a tradition in my household). They haven’t left the house in weeks and as you can imagine the house is a little more messy than normal, i.e. kids’ toys all over the den. My wife told them, “if you want to color eggs, then you’ll have to clean the den and put your toys away” There were very clear choices and outcomes here…clean up the den and color eggs, or don’t clean up and you will not color eggs. She ultimately nudged them into cleaning up. I don’t see the ethical dilemma in this action.

Choice Architects

If the intentions of a choice architect are to assist an individual to overcome their innate behavioral biases to arrive at a better decision, and it is done so in a way that doesn’t hinder freedom to choose, and all the options are presented properly, then I don’t see a problem with it. These are System 2 decisions that will lead to the best outcome. I suppose where it can get tricky is if the choice architect are themselves succumbing to their own biases or face bounded rationality. In this case the intentions may be sincere but the outcome is undesirable.

It is my opinion that nudging our System 1 thinking in a way that isn’t in the best interest of the “nudged” is where the ethical questions start.

Ethics of Choice Architects

Nudging is therefore a double-edged sword. The wielder of the power to intentionally nudge should be held accountable for their actions and certainly respect a code of ethics. Unfortunately, this isn’t always the case and I believe is the core for the libertarian paternalism ethics debate.

The advertising profession is solely there to nudge. So, connecting community to sugar water (Coca Cola) or fast-food to mom’s home cooking (if you look at the Wendy’s logo, Wendy appears to wear a necklace that spells out “MOM”) can be portrayed as a violation to the true intentions of nudging. True these ads do not hinder our choices. Rather it is more about coercion and manipulation to steer the recipients towards a choice that may not necessarily be the best decision for the “nudged” but for the ultimate benefit of the choice architect.

One last anecdote about how a nudge has failed. My son was watching TV a while back and saw a commercial for the Outback Steakhouse restaurant. In the commercial they showed this perfect, juicy steak with large succulent shrimp on the side. My son likes steak and shrimp and was lured in by the commercial. He asked us to take him there. We have never been there but figured what the heck, let’s try it.

Ariely (2009) pointed out the importance of presenting a situation to alter the experience. My son went to the restaurant with high expectations of the food through his visual connection with the advertisement. I wish I could share with you his face when they brought his meal out to the table. A tiny charred piece of meat with small, sickly gray shrimp on the side. It looked nothing like the commercial.

He was so disappointed with the outcome, that he didn’t even want to try it. His experience has jaded him in believing any food commercials and he says he will never go back to the Outback Steakhouse. As Sunstein (2015) points out, this nudge may have intruded negatively on my son’s dignity and he may have felt insulted by the entire experience.

Stay safe everyone.

Joseph S. Kalinowski, CFA

Ariely, D. (2009). Predictably Irrational: The Hidden Forces that Shape our Decisions. New York, N.Y.: Harper Perennial Modern Classics.

Rebonato, R. (2013). A Critical Assessment of Libertarian Paternalism. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2346212

Shewan, D. (n.d.). 6 Examples of Subliminal Advertising, from Spooky to NSFW. Retrieved from https://www.wordstream.com/blog/ws/2017/10/24/subliminal-advertising

Sunstein, C. (2015). The Ethics of Nudging. Yale Journal on Regulation, 32(2), 413-450.