What Is a Nudge?

We're trying something new here in the Simple Success pod.

Simple being the operative word.

I've been focused lately on making this pod simpler, too!

Hats off to Steve Jobs for that among many other things.

Yeah, wait, who’s Steve Jobs?

We’ll get there. For now, simple means, reducing the number of segments I have for you every week.

You already know that I'm pretty good at keeping to respectful timing constraints.

That was harder to write as well as harder for you to listen to – which was enough to make me change.

I thought, I can make this whole idea into a single story and that will make us calm about it.

Yeah, yeah, enough backstory.

Okay, here we go!

My motivation for doing this is as simple as the whole, everything.

I want this podcast to be the Single. Most. Captivating. Podcast. Ever.

Yeah, that's a great idea! I mean, there's only somewhere between 40,000 and a million or so pods out there. What's the big deal about being only the best? Right?

Yeah, well to get there in reasonably sized steps, we'll start with Interesting. That's our initial choice.

Sure. "Interesting". That's easy.

To be clear about that, I want to reinforce the idea, in case there was ever a question, that I am completely and always open to new things and new ideas, especially when they involve change.

I will not tell you that doing so is easy.

It's not.

Not even a little bit.

Sure again. Even though you told us in an earlier podcast that "Simple" and "Easy" should go together. Oh, just wing it, will you?

Oh, way better than that. Even when the goal is big and great and beneficial all around, like this one.

I've done most of these pods so far as what I call a "Talking Head", where there's me just holding forth on an answer of some sort.

But I'm looking at the idea of having one or more co-hosts,

Or even co-hosting myself by learning to play both characters.

Like you're trying to do right now. Is that where this is going?

Yep, and I've done that before with a book by Napoleon Hill, it’s lesser known than Think And Grow Rich, it’s called "Outwitting The Devil", in which Hill has what he rightly calls an imaginary interview with the devil in order to learn how to outsmart him.

That's really geeking out, but, you know, somebody has to geek.

It's how we get healthy choices regarding things, but it's not easy.

But really, you need an example if you're going to do an evaluation of actions.

Right before the break, I started to talk about using examples to evaluate our actions.

And that comes from the concept of the effectiveness of nudges, the whole idea of nudge.

Oh, I really can't wait for this. What an ethical nightmare that one is! The whole ethics of Nudge is quicksand, quicksand that tastes good!

Why do you say that? This is a well-known book!

University professors, you know what those are? They say it can take away people's agency, their ability to decide for themselves. It's a manipulation of choice.

Well maybe, but if it's good for society as a whole...you know, like being an organ donor or something...

But who decides that?

Everyone decides that for all of society, just like always, you Doubting Thomas.

Hey, I am what I am. Take that, you Libertarian Paternalist. If we’re gonna call names…

Oh, silly rabbit. This is not political. Let's define a few things to make this easier.

For example, what is nudging?

Well, as Thaler describes it himself a nudge is any small feature in the environment that attracts our attention and alters our behaviour.

The nudge concept comes from the field of behavioural economics.

And what is behavioural economics?

Well although behavioural economics is a science that has been studied for almost forty years, it was the book ‘Nudge' written by Richard Thaler with help from Cass Sunstein that got people to sit up and take notice. Its why universities have behavioural economists.

And what is a nudge?

As Thaler describes it himself a nudge is any small feature in the environment that attracts our attention and alters our behaviour.

Would you mind making it relevant for our listeners?

Oh sure, thanks. It's an inexpensive way to massively increase either the revenue of your project or at the very least the success of your project. As one of the choice architects, as they're called, you're using simple behavioural design to make choices easier. This is what behavioral science is all about.

BTW, I thought you were here to help me keep this all simple. Ethical issues are important, but ethics go hand-in-hand with success. Using behavioral economics does not prevent success. Success usually involves change, and nudging is fertile ground for that.

Easier said than done. But, in the spirit of a few of our forebears, "Oui je la ferai", and "Si, lo hare".

Actually, that’s how all of us should act with regard to the necessary breaks we all have. Like this short one:

So, let's get back to understanding this idea. The term itself came into use during World War II, when British economist Richard Titmuss wrote his famous essay titled: “Why Nudge?”

Doubting Thomas: Here comes the boring details!

Yeah, well, there’s always a little…In it, he describes a system of programs designed to encourage people to make better choices in better choice environments without forcing them to do anything against their own wills. They get to make their choice in terms they are already familiar with. They get the individual choices that we all treasure.

Where’s that flag-waving when you need it?

Oh come on, the idea goes this way…in order to reduce the resistance which we all naturally put up to such an idea if we only understand it in a limited way like most things.

You can think of it as a moral evaluation, but it almost always heads the default options for company 401(k)s.

Let's walk through what it looks like:

Oh, you mean give people a real picture?

Yes, what else is there?

Your usual fantasy world is what else there is.

Except that this is real understanding from examples which happen to real people!

Whatever. Go on.

Thanks. OK, picture yourself in this meeting.

Picture yourself. What an imagination.

Which we all need and can benefit from...

I said, go on.

Thanks again. So, this meeting.

Somebody there, probably the head of HR or someone they've picked explains how the whole plan is supposed to work.

Now as an experienced financial advisor, I've been in on planning meetings for this sort of thing as well as making the choices for myself.

There are a TON of distractions which go on.

And distractions aren't necessarily a bad thing in some cases, like this one...

What? Distractions are ALWAYS bad...

Not necessarily. Not when they keep you from overthinking. Not when they get you to do the right thing for you and your family.

Are you saying it's possible to think too much?

That's exactly what I'm saying. Especially when it keeps you from doing good because you just think about good instead of doing it.

So, THE. MEETING.

Yeeessss.

There are forms.

Some of the forms have checkboxes.

Some of them are questions for you.

It can all seem overwhelming, especially if you think you can't make changes later.

You can?

Of course. Just be patient and quiet for a second so you can recognize the nudge.

Finally

Quiet, I said.

Please.

Before Thaler & Sunstein published this idea and had it looked at by lots of people, including the White House, people would get this form, but it would be different.

Checking the checkbox would put people IN the program.

Not everybody wants in, though, right?

Well, true, and in a few cases that's the right choice.

It isn't the right choice most of the time.

When people have to check the box to get IN, that ignores our default human behavior which is...

Which is what?

To do NOTHING.

Okay, so how is nudging better? What is the definition of nudge? And by the way, why is it called that?

Nudging is better because it looks at our behavior instead of ignoring it.

Examples of nudges, smart guy.

Right.

Okay, you've got this same form.

But it's not the same.

No, good call, but it looks like it's the same.

And the difference?

The difference is that you would have to check the same box...

Or what LOOKS like the same box.

Right again, what looks like the same box, but in this case, it would be to get OUT.

Oh! You mean, an OPT OUT system, right?

Of course...a rational choice...who's being the smart guy now?

Applying this approach to behaviour change works in financial things just as well as in anything else.

But it benefits from the nudging idea, which I'll explain in a minute.

You mean, “but first”, like those ridiculous voice mail trees, right?

(Sigh), before I go there, I know that it is also important to stress, stress and then restress the idea that I completely support and believe in the idea of positive thinking, and especially the use of the imagination faculty that we all have in getting there.

You’ve said that before.

Yes, that’s correct: I’ve said that before, but another example is probably a good idea here.

James Allen said, "As a man thinketh, so he is." And that of course is a paraphrase from one of the Psalms and is more than likely present in one form or another in nearly every religion.

If only accurate thinking were among our most cherished public policies.

The meaning of that is central. What you believe defines what you can achieve.

Wait, did I just say that?

Yeah, I was going to ask that same thing.

And that said, I'm not ignoring the fact that we all often need a bit of help in that direction.

Author Napoleon Hill, in his classic Think and Grow Rich, talks about "invisible counselors".

I've used that idea to powerfully reinforce my vocal work, which I feature in my other podcast.

Here comes the sales pitch, or what Napoleon Hill called “the touch”.

No, no, no sales pitch. At least not this time. No, I do this at the suggestion of one of my Mastermind partners, that I hold in my mind an image of a great and commanding speaker when I speak.

For this podcast, I'm adding a self-imposed requirement to hold in my mind an image of a great and commanding writer.

We'll see where that goes of course, but for now, I'm happy to thank William Shakespeare for jumping into that role.

Nothing like picking someone easy to follow, huh?

It isn't about you, or me. It’s about our motivations. What would be the motivations that you could possibly have for this?

There are a lot.

Think about it, you are going to have to retire at some point. Oftentimes this is put forth as being something that just a fun exercise. And I say “fun” in gigantic air quotes.

How big is that gigantic?

Focus, John. It can also be a goal. Just change the thinking, change your approach, how you view things.

Instead of asking, when can I retire? Ask…

When do I not need to depend only on a single income source?

Everybody has to have a job working for the man, don’t they?

Noooo. Try this: When can I have two or three or 10 or 20, income sources? The exact number being whatever is right for me.

This is the motivational approach.

What you do by this is remove decision points and obstacles. Not that they're not important. They're things that we all have to face, but when you remove them, you can allow for bigger things to come into your mind.

Are you telling me that I shouldn’t decide anything?

No, I’m not. It's often put forth that people who are extremely rich have more choices in life than the average person, simply by being extremely rich.

Now, I'm not going to say that being rich doesn't help. Of course, it does.

But a basic philosophy that any of us can have, regardless of our wealth, is our attitude.

Oh, the “as you think” thing again.

You’ve got it! Our attitude can be to take some smaller problems off the table and allow bigger accomplishments.

Maybe this would take away the concerns of having an income.

Maybe then you can focus on getting across the Cameron line in outer space.

Yeah, get across the Cameron line in space. There's your motivation.

Now no one needs to feel like they have to do better without the benefit of those who went before them. Everyone instead can see the gain and begin to apply it.

Let's go back to the 401(k) example. Without nudging, our tendency is to let other things in our lives take priority, to rank higher.

Instead of thinking about retirement, we carry on instead with that feeling we all had when we were young that we were immortal.

But you say you’re going to live to 120 at least, isn’t that kind of immortal?

Well, it’s related, but what’s bad about this is that we never bother about retirement. It's more important to get the bigger house or the bigger car or the extra car or the whatever it is.

Keeping up with the Joneses.

Sort of, except retired people are older, have less hair, dumb clothes, whatever picture we have in mind when we're young.

With the nudge, we can have that future priority that we don't think of all the time necessarily when we're younger. We can have that addressed and taken care of.

So, isn't there some reason to be concerned about this kind of choice architecture? I mean, isn't there? Isn't there some? How do I grow effectively about this? How do I keep my freedom of choice? Could you show how much of a Doubting Thomas I am?

Sure, we'll call it future blindness. That could be created by not taking the right action now.

Well, of course, but that's something that I would not expect you to ever admit. You're here to tell me why I should do GOOD things. You're the one facing Doubting Thomas after all.

But we're going to do good things.

We're all in this group going to do good things. And you, Doubting Thomas, can do your best to try to talk us out of it.

But it's not gonna happen. We're gonna do good things.

Yeah, right. I would bet almost nobody does the right thing.

Well, you can bet that and there might be some payoff some way. But it's not a good bet.

Not in my opinion. I think betting on people and betting on them doing the right thing is the right way to go.

Encouraging them and helping them to do the right thing is the absolute way to go.

It’s the best to avoid…what did I call it? Future blindness. That's it.

Anything else?

Well, of course, there are always competing opportunities for everybody. I mean, think about it. What if money wasn’t my thing?

Sure, you could be more concerned about your physical fitness or your love life or your job, or who knows - lots of different things.

All of them are good and important. They're just different.

Yeah. Right. Like, like, everybody wants money, right. So how is this important?

To start, probably yes. And that’s fine. Wanting financial success, however you define that, is a very real thing.

Solving it with your attitude is without a doubt the most important thing that could ever happen in your life.

Yeah, well, I don't know about the most important thing - that's relative.

Yes, that's important to the, to the person that we're talking to - what a financial person would would call the client.

As an aside, to me you're not a client. You're not a thing. You're a person, and you have individual important priorities.

We’re going to focus on catering to that while making them successful. Making it all successful.

Yeah. I've heard people say all kinds of stuff like that, but it's just another competing opportunity. I just know it is. We'll see.

Now, one of the last things that people are probably interested in is whether or not there are any possibilities for disinformation or other complexities. Disinformation is anything on any topic that purports to be relevant information but is actually attempting to get you to believe something that you might not believe otherwise, whatever that thing is.

It can be a misdirection, or it can be an outright lie.

In this case, we'll say it was a lie, the lie would be that you're going to have more money taken out of your paycheck by committing to this 401k plan, for example, than you're going to reap in the long run.

And it'll hurt, and you won't be able to buy groceries…

Yeah, and all sorts of down the rabbit hole piling on top of each other things. That's kind of what disinformation is all about.

Doesn’t that make it more complex?

Yes, and it doesn't have to be.

How does this compare? Imagine having a coach who sees that you are on the verge of making something really good happen.

Good for yourself and maybe also for your team.

With your consent and understanding, that coach pushes you to exceed what you previously thought you could do.

That is the same thing as having a C Goal, which is another topic that we'll come to right here.

A-Goals, B-Goals, and C-Goals.

Which are probably still vague.

Maybe, but that’s the start of how we're going to compare.

A-Goals, B-Goals, and C-Goals.

Specific ones.

What do I mean by specific?

I’m pretty sure you mean “not vague”.

Yeah, and if you want more money, you have to be specific.

I mean, more money is $1 more than you’re making now.

But $1 more is probably not what you have in mind.

It’s an improvement, but it could be better. You make it better by setting goals and setting BIG ones.

Earl Nightingale tells us that we don’t get into trouble trying to reach goals…we can do that just fine. No, we get in trouble when we do not SET goals.

The really cool thing is, once you’re used to it, more specific is actually simpler!

And as I said at the top, this podcast is getting simpler, too! All thanks to you!

I call on Doubting Thomas to tell you what you must remember.

Remember, ALL YOU NEED TO DO IS PRACTICE, AFTER WHICH YOU’LL GET GOOD!