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52. How to Make Better Choices

We spend our lives choosing: important things like our careers, our partners, our houses, but also much smaller, day to day choices, such as whether to have another potato, to walk upstairs or take the lift, to ring a friend or watch X-factor, to read a book or go to bed. Some of our choices are good for us, some neutral, some less good. This week's tip is about how we make choices and how we could improve our chances of making good choices. We are all Choice Architects, say American economists Thaler and Sunstein, in their book 'nudge'. This is a book from which David Cameron has drawn heavily for his policies on health and other areas of government, so well worth a read. It's interesting, the authors point out, that while we all have a pretty high opinion of our judgement, which is often based on gut instinct, our judgement is actually pretty poor much of the time. Take, for example, the following question: A bat and ball cost �1.10. If the bat costs �1 more than the ball, how much does the ball cost? What is the first answer that comes into your head? Now think about it more carefully - does your answer change or remain the same? We have two ways of making judgements, say the authors, those based on automatic responses and those based on careful reflection. Because many of our judgements take place outside of our awareness, such as our reactions to people and the way we choose the things we buy, we spend a lot of our lives in 'automatic'. Advertisers depend on this. Take the question above. Most people's instinctive answer is 10p. A moment's thought, though, reveals that if the ball cost 10p and the bat �1, then the bat costs 90p more than the ball, not �1. The answer, soon found on reflection, is 5p. Another dichotomy in the human experience is that we operate in two distinct ways - we have a 'doer' mode, and a 'planner' mode. Our planners are rational, sensible, and make decisions that are good for us, while our doers operate on how we're feeling right now. Our planners make New Year's resolutions, and our doers break those resolutions in the second week of January. Our planners decide that they will get up at six in the morning to go for a run. Our doers, when the alarm goes, reach out to turn it off, then turn over and go back to sleep. If we made decisions after careful reflection, and were always in 'planner' mode, we would make great decisions. Unfortunately we often don't and we often aren't. For example, how often have you made a decision in the morning not to eat sweet things only to find yourself munching biscuits at the department meeting a couple of hours later, just because they were there? Or maybe because someone passed the plate to you and you took one without thinking? Humans are also hugely affected by what other people do. Research has shown that university students work harder if they share a room with someone who works hard, and less hard if they share with someone who is out on the town every night. We have a herd instinct that makes us reluctant to stand out as different. Asch, in the 50s, did a series of experiments asking participants to do some very simple matching tasks. They did them perfectly until a plant started to give wrong answers, whereupon a third of participants started to make mistakes. They were able to show that people actually saw things differently when exposed to opposing views. Interestingly people were less likely to give wrong answers if they could give their answers anonymously. We all like to think that these things apply to other people, not us, but think, if you were in a meeting and someone powerful, whom you respected, said something you thought you knew was inaccurate, wouldn't you falter just a bit? And if they kept stating it, with absolute certainty, wouldn't you start to wonder if you'd got it wrong, and make a mental note to check it out after the meeting? Another defect in our decision-making is our tendency to gravitate to the default option. Although it's advisable to move your savings around, following the best interest rate, how many people do that? As a result, banks offer attractive rates for the first year, after which they drop like stones, knowing that very few people will go to the trouble of moving their money. Even the simple act of asking a question has a dramatic effect on what people choose to do. In one experiment, asking a group of people if they intended to buy a car in the next 12 months increased car purchases by 35%! So maybe we're not so hot at making sensible, rational choices after all. And that is why, the authors argue, people need to be 'nudged' to make the right ones. To do so, you use choice architecture. In other words, you arrange things in such a way that people are more likely to choose well . Here's an example. Inland Revenue usually write to people who have not paid their taxes in a rather aggressive, threatening way. They tell them that if they don't pay, they will pay a fine, and if they still don't pay, some other unpleasant measure will be taken. The response rate is usually about 50%. This year, the usual letter was withdrawn and replaced with one which said that 85% of people paid their taxes on time (playing on the herd instinct), and explained the importance of taxes and what they were used for (appealing to the reflector and the planner). Response rates rose to 75%. Try this: 1. Think of a behaviour that you would like to introduce or change in your life, preferably one you have been trying unsuccessfully to change for some time. You may want to do your admin regularly, meditate, get on top of your workload, practice a musical instrument, go out for more days in the country, drink less, take more exercise, see more of your friends. 2. What, in the design of your current environment, routines and resources, mitigates against you making this change? For example, if you want to drink less, it may be that there is a drinking culture at your workplace, or among your friends. Maybe your days are very stressful so you're gasping for a drink by the time you get home. Maybe you buy a week's supply when you go to the supermarket, so there's always drink in the house. 3. What could you change in your current environment, routines and resources, that would make it easier for you to make your preferred choice? For example, you might want to meet friends in places other than the pub, only buy one evening's worth of alcohol at a time, do a de-stressing activity after work instead of going straight home, find ways of making work less stressful. 4. Do the experiment and see what happens.... Have a good week!

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