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Posts Tagged ‘Richard Thaler’

I don’t always agree with John Tierney, but I have to thank him for pointing me in the direction of ‘Nudge‘, a new book by University of Chicago professors, Cass Sunstein and Richard Thaler.

The authors agree with economists who’d like to reduce greenhouse gas emissions by imposing carbon taxes or a cap-and-trade system, but they think people need extra guidance.

“Getting the prices right will not create the right behavior if people do not associate their behavior with the relevant costs,” says Dr. Thaler, a professor of behavioral science and economics. “When I turn the thermostat down on my A-C, I only vaguely know how much that costs me. If the thermostat were programmed to tell you immediately how much you are spending, the effect would be much more powerful.”

It would be still more powerful, he and Mr. Sunstein suggest, if you knew how your energy consumption compared with the social norm. A study in California showed that when the monthly electric bill listed the average consumption in the neighborhood, the people in above-average households significantly decreased their consumption.

Meanwhile, the people with the below-average bills reacted by significantly increasing their consumption – not exactly the goal of the project.

That reaction was avoided when the bill featured a little drawing along with the numbers: a smiling face on a below-average bill or a frowning face on an above-average bill. After that simple nudge, the heavy users made even bigger cuts in consumption, while the light users remained frugal.

Mr. Sunstein and Dr. Thaler suggest applying those principles with something more sophisticated than smiley faces. A glowing ball called the Ambient Orb, programmed to change colors as the price of electricity increases at peak periods, has been given to some utility customers in California, who promptly reduced their usage by 40 percent when the ball glowed red in peak periods.

Another gadget, the Wattson, which changes colors depending upon how much electricity a house is using, collects data that can be displayed on a Web site. Clive Thompson, a columnist for Wired, has suggested that people start displaying the Wattson data on their Facebook pages, an excellent idea that I’d like to take a little further.

I have written before about the need for people to be recognized for their good deeds, and what that means in terms of behavioral strategies for the climate fight. At heart, we remain little children. No matter how grown up I may pretend to be, there is this place inside my heart, that smiles whenever my efforts get acknowledged . . . I call that the ‘sticker effect‘. The other insight deals with the ‘lemmings‘ phenomenon, a behavior I have often observed in myself! Both behavioral tendencies are interrelated and stems from our inherent nature as social beings.

Nudge‘ is behavioral psychology at its best. Maybe not as appealing to the big boys as fancy technology, but potentially just as effective to fight climate change.

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