What is Nudge Theory?
There is a science behind subtly leading people to the decision you want them to make, and it has a name: Nudge Theory. The concept was born out of an understanding of how people think, how they make decisions in day to day life and how they behave.
Richard Thaler won a 2017 Nobel Prize in economics for his work on the Nudge Theory. Focusing on ‘nudging’ people through changes that are in their self-interest to help guide them to a positive or helpful decision. Nudge Theory has been applied to explore, understand and explain how people behave and the choices they make, with a view to altering them. So far, the theory has been applied successfully in both advertising and government policy in the UK.
The UK Government has a Behavioural Insights Team specifically tasked with implementing the theory into its policies to encourage positive change. The most successful piece of work that has come out of this team so far is the workplace pension scheme, Nest.
Here, the 2012 policy of auto-enrolment for pensions saw people having to opt-out rather than opt-in. This led to higher participation and is hailed as a highly successful nudge policy. A simple yet effective change!
How to Make it Work for You
When implementing Nudge Theory, it is key that it maintains freedom of choice rather than manipulating behaviour through enforcement or other means. The main concept is that encouragement and enablement should be at the heart of any concept using Nudge Theory, to make sure it is ethical and effective.
For businesses that have spent time observing their client or customers behaviour, collecting data on user intent and identifying behaviours that need changing, nudges can be added to your overall marketing strategy in a successful way.
At MTM, the majority of our services start by looking at big data. This informs you of the interests, behaviours, and actions of your audience and enables you to make changes throughout your marketing strategy to best suit them and the way they interact with your brand and business.
You will have come across Nudge Theory in your day to day life without giving it much thought. You may have picked up a food item that says it contains 1% fat and replaced it in your trolley for the same product that says it is 99% fat-free instead. This nudge makes you perceive the product that you’ve chosen as being better for you than the one you discarded.
Other nudges rely on motivation to instil a change or to encourage people to make a change. Virgin told their pilots that they were going to conduct a study on fuel conservation. In doing so, they found that during the study, pilots ‘significantly increased the implementation of Efficient Flight and Efficient Taxi by nearly 50 percent from the pre-experimental period.’
These changes saved more than 6.8 million kilograms of fuel, saving the company $5.37 million in total. Virgin published their findings, which you can read here in full.
Nudge theory can also be applied to making labourious tasks seem simpler and requiring less effort. For example, at MTM, it is often used in the form of auto-fill forms on websites. They pre-populate data when you fill them out which makes it much more likely to be completed than long forms that require manual data entry.
Whilst the idea of Nudge Theory can feel invasive or intrusive, it is important to recognise that it functions entirely on the free-will of the individual. The theory is about guiding people to a decision rather than manipulating or forcing them to take a certain action. As a result, it allows the influencer to install and encourage change in an ethical and valued approach.