How Governments Nudge Us

California decided on a nudge rather than a ban.

Since New Year’s Day, full service (sit down with staff taking food orders) restaurants in California can provide a single use plastic straw only if a diner requests one. Eating establishments that violate the law will at first get a written notice and then a $25 fine. For the year, fines cannot exceed $300.

While California is the first U.S. state, other places have a similar straw law:

Where are we going? To other government nudges.

The Nudge

Including the U.K. and Australia, more than 12 nations have “Nudge” Units that use psychology to shape our decisions. Essentially a nudge is an easier alternative. They make life simpler. They can convey a social norm. You don’t have to listen to the nudge. But you choose it because it involves less hassle.

Nudge examples:

• Diminish electricity usage: Researchers sent letters that let the recipients see how much power neighbors used. It worked.
• Encourage flu shots: People were asked to select a date and time for the shot. Some also got reminder letters. More people were vaccinated.
• Increase college applications: High school students could select auto-fill sections on college enrollment forms. The goal was to make it so easy that more people would apply. They did.

 Our Bottom Line: Transaction Costs

A nudge can work because it diminishes transaction costs. Defined as the time, effort, and complexities a task requires, transaction costs can range from money to time to travel. Documents that use auto-fill can lessen our transaction costs.

Also though, nudges can increase transaction costs. And that returns us to plastic straws. We have to ask for that plastic straw. We wait for it to arrive. We are violating a social norm. All three transaction costs decrease our straw demand.

My sources and more: This paper provides a dry summary of some nudge experiments and their results. For the facts it was fine. More interesting, this article on the California straw mandate and this Washington Post article on nudges are possibilities. However, what I really enjoyed was this podcast on nudges from Australia’s The Money. And of course, we have the Sunstein and Thaler classic, Nudge.

Our featured image is from Pixabay.