Persons who design and arrange the shelving of items in a supermarket or in a cafeteria or books in a library can affect the choices people make. Such persons are choice architects and they have the opportunity of nudging people to make choices that may be good for them. The position of items can affect the choices that people make.
Whenever choices are made by individuals there is an opportunity for choice architects to affect individual decisions. For example, in organ donation some nations have a very high participation rate by requiring a negative choice on drivers’ licences. That is, the default choice is to donate organs. Choice architects know that people have a strong tendency to go along with the status quo or the default option.
Choice architecture is the subject of a book titled Nudge by Richard H. Thaler and Cass R. Sunstein, published by Penguin in 2009. Daniel Kahneman, the Nobel prize winner in economics in 2002, states that the book Nudge is the basic manual for applying behavioral economics to policy.
A lot of people make choices that are not in their best interests, such as smoking tobacco and overeating resulting in obesity. Some choice architects try to design incentives and nudges that result in the improvement of people’s lives. Such designs are referred to as Libertarian Paternalism. The libertarian aspect is that people should be free to do as they like and the paternalistic aspect lies in the claim that it is legitimate for choice architects to try to influence people’s behavior in order to make their lives longer, healthier and better.
However, there are some important aspects of life where choice architects may be of little or no help at all. Consider choosing a career or a spouse or investing one’s savings or searching for a mortgage loan for a house. The stock and bond markets are notoriously complex and chaotic. Many marriages end in disaster. Also choosing a mortgage loan requires multiple choices (such as a fixed rate mortgage or a variable rate mortgage) plus one must decide which type of lender to approach because fees and rates may vary among lenders.
Consider the fine print contracts that we all accept when opening a bank account or when logging on to an Internet browser. The clauses in such contracts are drafted to protect the seller’s interests. Many years ago when I was practicing law I was acting for a bank in connection with a mortgage loan to a person who was a friend. I reminded the friend that I was acting for the bank and he replied that surely I would advise him of anything in the contract that was against his interest. I told him that the terms of the contract were drafted by the bank to protect the bank’s interest and not his. My friend was forced to rely upon the reputation of the bank.
Therefore, there are many areas of individual choice that can be like minefields and therefore require caution and a great deal of thought and in such areas choice architects may be of little or no help.