Nudge theory
Change the setup, and people change what they do.
Richard Thaler won the 2017 Nobel Prize in economics for his contributions to behavioral economics, the study of how real people decide. With Cass Sunstein he turned that work into nudge theory. Here are his ideas in plain words, the evidence behind them and how Journey puts them to work.
Humans, not Econs
Economics assumed a person nobody has met.
Textbook economics was built on a creature Thaler calls an Econ. An Econ weighs every option, never misses a deadline and treats a dollar as a dollar wherever it came from. The rest of us are Humans. Thaler spent decades collecting the evidence, and tells the story in his book Misbehaving.
We simplify
Thaler's theory of mental accounting shows how people keep money in separate accounts in their heads and judge each decision on its own, not by its effect on the whole. Aversion to losses explains the endowment effect: the same thing feels worth more once it's ours.
We care about fairness
Customers object when a store raises prices because demand spiked, and accept a rise that follows higher costs. Thaler and his colleagues also devised the dictator game, an experiment used around the world to measure attitudes to fairness.
We put things off
New Year's resolutions are hard to keep, and Thaler's planner-doer model explains why. He also showed how nudging, a term the Nobel committee credits him with coining, can help people keep their own plans, starting with saving for retirement.
The three themes the Nobel committee named in 2017: limited rationality, social preferences and lack of self-control.
| Day | An Econ | A Human |
|---|---|---|
| Mon | Outlines the paper. | Opens the document. Closes the document. |
| Tue | Writes the first section. | Means to start after practice. |
| Wed | Writes the second section. | Tells a friend it's basically done. |
| Thu | Finishes and proofreads. | Starts at 10 PM. |
| Fri | Submits at noon. | Submits at 11:58 PM. |
A student who meant to email an advisor on Monday and still hasn't by Friday isn't lazy. They're Human, and the setup should expect it.
The planner and the doer
Inside every student, a planner and a doer.
In 1981 Thaler and Hersh Shefrin described each of us as two selves at odds. The planner cares about the long run. The doer lives in the moment and runs the day. The planner sets the alarm for seven. The doer hits snooze.
Giving in to short-term temptation, the Nobel committee wrote, is an important reason plans to save for old age or live healthier so often fail. The planner's best move is to decide ahead of time, and to make the right step easy for the doer when the moment comes.
Journey's demo week has the same shape. On Monday the student names what matters this week. On Tuesday, when the doer is stuck, Journey offers one small step toward it.
Monday 8:00 AM planner
start ur week with clarity. what's your intention this week?
chem presentation
Tuesday 4:18 PM doer
my thoughts won't slow down and i keep procrastinating
name what's loudest. one thing. then we work the next 10 min.
chem presentation friday
open the deck. slide one. 10 min. timer's mine.
…ok one slide. that's it
that's it. then walk the loop. 12 min. no phone.
Choice architecture
There is no neutral way to set up a choice.
Someone decides which food sits at eye level, which box on a form comes ticked and what happens if you do nothing. Thaler and Sunstein call that person a choice architect. Nudge opens in a school cafeteria, where rearranging the food changed what the children chose. Every layout pushes some way. The only question is which way.
The toolkit
Six tools for setting up a choice.
In a 2010 paper, Thaler, Sunstein and John Balz set out the tools a choice architect works with. Here is each one, and where it shows up in Journey.
Defaults
Many people never change the setting they start with, so whatever happens when they do nothing decides a lot. Choose it with care.
Texts arrive a few times a week, inside the windows the student chooses, never during a class or in quiet hours. A plain text changes any of it, like “only 2 nudges a week.”
Expect error
Humans forget, misread and slip. Good design plans for the slip instead of blaming the person. An ATM that hands back your card before your cash is the classic case.
A nudge carries its next step with it, like a one-tap link to book, so nobody has to remember where the booking page lives.
Give feedback
People improve when they can see how they're doing, and when something is going wrong.
Check-ins are answered with a single letter. The student gets a moment to notice how the week is going, and the campus team sees who might need a person.
Understand mappings
Help people see what each option means for their life, in terms they already use.
“Go to counseling” is hard to picture. “CAPS does same-day slots through Sheffield 3rd floor. want tomorrow 2 PM or later this week?” is a choice (from Journey's demo). Campus questions are answered from the university's own information.
Structure complex choices
The more options there are, the more the setup has to do the sorting: fewer choices at once, in an order that makes sense.
Questions come with lettered choices, one to a line, and the reply is one letter.
pulse check. how's the week landing? a) good b) fine c) roughIncentives
Ask who chooses, who uses, who pays and who profits, and make sure the costs people feel match the real ones.
Every text costs a student a little attention, so Journey spends it carefully: no more than one proactive text a day, and “pause my nudges for a week” works.
Save More Tomorrow
A savings plan built for the doer.
Ask people to save more today and the doer feels the pay cut. So Thaler and Shlomo Benartzi asked for something easier: commit now to save part of your future raises.
- Decide early.Employees sign up well before their next raise, while saving more still costs them nothing.
- Save from the raise.The saving rate goes up when pay does, so take-home pay never drops.
- Let inertia help.The increases repeat with each raise, up to a cap. Anyone can leave at any time.
The plan's first use at a company, reported by Thaler and Benartzi in the Journal of Political Economy, 2004. Employees chose whether to join, so it was not a randomized trial.
The lesson travels: ask for the decision when it's easy, and make the follow-through automatic. Journey asks students what matters once, then brings the small step to them.
Sludge
The opposite of a nudge is sludge.
In 2018 Thaler gave a name to the friction that makes it harder to do what's good for you. Think of a subscription you can start with one click and cancel only by phone. Writing in Science, he put the goal plainly: “Less sludge will make the world a better place.”
With sludge
- Find the counseling page.
- Find the booking link.
- Sign in.
- Pick a type of appointment.
- Fill in the intake form.
- Choose a time.
- Confirm by email.
7steps, and seven places to stop
With a nudge
- Tap the link in the text.
- Choose a time.
2steps
Campuses have sludge too, like a hold nobody mentions until registration opens, or a help page four clicks deep. Journey's part is small and practical: answer the question by text, and send the link that skips the hunt.
Nudging for good
Three tests for a good nudge.
A nudge can push toward a bad choice as easily as a good one. In a 2015 column for The New York Times, Thaler proposed three tests. His example of a failure was a month of The Times of London for £1 that renewed on its own unless you phoned London, in British business hours, with 15 days' notice. By his account it failed all three.
Transparent, never misleading.
Students know they're texting Journey. When a person steps in, they know that too. When AI reads between the lines, we call it a read, not a fact.
As easy as possible to opt out.
Students can text STOP at any time to opt out, or PAUSE to take a week off.
Good reason to believe it helps the person nudged.
Students choose to hear from us, and when, and they pick the goals the texts are about. Our own test is close to his: does Journey make it easier for a student to do what they already wanted to do?
In a paired survey of 19 students, the share who said Journey made it easier to do what they already wanted to do rose from 14% in the fall to 71% in the spring.
Honest limits
What a nudge can't do.
Thaler doesn't oversell nudges. Asked about climate change, he called for a price on carbon instead.
“We're not going to win this battle with nudging.”
Richard Thaler, quoted by UChicago News, 2021
The same is true on a campus. A text can make the next step smaller. It can't shrink a class, lower a bill or make a hard week easy. So Journey's job is to get a student to a person, a plan or a place on campus, and to stay quiet the rest of the time.
For what studies of college nudges have found, including where they fall short, read Nudge Theory in Higher Education: What the Research Says.
Questions
What people ask about nudge theory.
What is nudge theory?
Nudge theory is the idea, set out by Richard Thaler and Cass Sunstein in their 2008 book Nudge, that the way a choice is set up shapes what people do. A nudge changes behavior in a predictable way without forbidding any option or significantly changing economic incentives, and it is easy and cheap to avoid.
Who came up with nudge theory?
Richard Thaler, an economist at the University of Chicago, and Cass Sunstein, a legal scholar, in Nudge (2008). Thaler won the 2017 Nobel Prize in economics for his contributions to behavioral economics, and the Nobel committee credits him with coining the term nudging.
What is an example of a nudge?
Putting fruit at eye level in a cafeteria, so it is the first thing people see, while every other food stays on offer. On a campus, a text with a one-tap link to book an appointment, sent inside the hours a student chose.
Is nudging manipulation?
It can be, which is why Thaler proposed three tests: a good nudge is transparent and never misleading, it is as easy as possible to opt out of, and there is good reason to believe it helps the person being nudged. Friction that works against people is what he calls sludge.
What is the difference between a nudge and sludge?
A nudge makes a good choice easier. Sludge makes a good choice harder, with extra steps, forms and waits. Thaler named sludge in the journal Science in 2018.
How does Journey use nudge theory?
Students choose the goals and the hours. Journey sends a few texts a week, inside the windows the student chooses, and each one makes a single next step small: a lettered choice, a one-tap link, ten minutes on the hardest thing. Students can text STOP at any time to opt out, or PAUSE to take a week off.
Sources
Read Thaler himself.
Books
- Richard H. Thaler and Cass R. Sunstein, Nudge: Improving Decisions About Health, Wealth, and Happiness. Yale University Press, 2008.
- Richard H. Thaler and Cass R. Sunstein, Nudge: The Final Edition. Penguin Books, 2021.
- Richard H. Thaler, Misbehaving: The Making of Behavioral Economics. W. W. Norton, 2015.
Papers and articles
- Richard H. Thaler and Hersh M. Shefrin, “An Economic Theory of Self-Control.” Journal of Political Economy 89, no. 2 (1981): 392–406. doi.org/10.1086/260971
- Richard H. Thaler, “Mental Accounting and Consumer Choice.” Marketing Science 4, no. 3 (1985): 199–214. doi.org/10.1287/mksc.4.3.199
- Daniel Kahneman, Jack L. Knetsch and Richard H. Thaler, “Experimental Tests of the Endowment Effect and the Coase Theorem.” Journal of Political Economy 98, no. 6 (1990): 1325–1348. doi.org/10.1086/261737
- Richard H. Thaler and Cass R. Sunstein, “Libertarian Paternalism.” American Economic Review 93, no. 2 (2003): 175–179. doi.org/10.1257/000282803321947001
- Richard H. Thaler and Shlomo Benartzi, “Save More Tomorrow: Using Behavioral Economics to Increase Employee Saving.” Journal of Political Economy 112, no. S1 (2004): S164–S187. doi.org/10.1086/380085
- Richard H. Thaler, Cass R. Sunstein and John Balz, “Choice Architecture.” Working paper, 2010. papers.ssrn.com/abstract=1583509
- Richard H. Thaler, “The Power of Nudges, for Good and Bad.” The New York Times, October 31, 2015.
- Richard H. Thaler, “Nudge, Not Sludge.” Science 361, no. 6401 (2018): 431. doi.org/10.1126/science.aau9241
- The Royal Swedish Academy of Sciences, “The Prize in Economic Sciences 2017.” Press release, October 9, 2017. nobelprize.org
- “How much can you ‘nudge’ for good? Richard Thaler explores possibilities, limits.” UChicago News, December 1, 2021. news.uchicago.edu
See nudge theory at work on your campus.
Journey texts each student the right nudge at the right moment, reads every reply, and gets students to the campus office or person who can help.