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Posts tagged behavioral economics

choice architecture and transit

I recently moved to the Seattle suburbs after living more than 25 years on Capitol Hill in Washington, DC. My wife and I love the Pacific Northwest’s natural environment but we’re less enamored of the time we spend in the car; especially sitting in traffic. For Seattle, and most solvent big cities, traffic vies for a top spot among the most pressing metropolitan issues. The solution to traffic, we know, isn’t more lanes and freeways, but better transit, carefully planned higher residential density and more jobs within walking distance. Even so, this involves a lot of expensive infrastructure, difficult policy making and ultimately time – generally years. In the meantime while we’re grinding away on big infrastructure, what can be done more cheaply, easily and faster, that can still make a dent in traffic congestion?

This is where behavioral economics and choice architecture enter the picture. Behavioral economics examines the effects of social, psychological and affective factors on the economic decisions of individuals and institutions. The objective of choice architecture, which is basically an applied subset of behavioral economics identified by Richard Thaler and Cass Sunstein, is to influence outcomes by the way a choice is presented to the the decision-maker. Of course this can work both ways. Advertisers and merchants use choice architecture to get us to buy more, and more expensive, stuff. But choice architecture can also be employed to help us be more healthy, more financially stable, and to increase social/environmental benefits, such as reducing traffic congestion.

Venture capitalist, Vinod Khosla, who has invested in a number of clean technology initiatives, has asserted that he is dubious of initiatives and technologies that requires people to change their basic behavior. Choice architecture’s premise runs counter to that. That is, with the proper presentation and framing of information people’s behaviors can change. In this case the change would be increased transit use.

For example, what if people’s choices about transportation were as carefully crafted as the way Amazon designs, tests and deploys the shopping process on its website? Amazon knows the impact of a menu button change on its sales volume, having previously tested proposed changes in side by side comparisons with existing pages. In the case of transit use, what modifications in the way transit use is presented to the public could result in measurable increases in ridership and concomitant reductions in traffic congestion.

As a prospective example of choice architecture, I received car registration renewal in the mail a few days ago. Along with the new license tags, came a letter from the local King County Metro transit agency offering me 8 free transit passes if I filled out a short form, put a stamp on it and mailed it back. This is a great promotion, but I wonder if the decision could have been presented in more compelling fashion. How many drivers take up Metro on this premium? The promotion is headlined “Free Bus Tickets.” Could another header such as “Save $20″ (the value of the tickets) have been more effective? What else can be done to improve transit use by framing transit choices more effectively, without adding another bus or paving another lane. Should the tickets have been included with the offer; should a postage paid envelope been included? There are a lot of soft variables impacting choices that could ultimately result in less congestion, more productivity, and cleaner air.

will “seeing” our travel and transactions make us smarter consumers and commuters?

travel and transaction week map

I chatted with a computer scientist colleague last week about an open transaction platform he’d like to build that would bypass the major vendors and give consumers and small merchants alike access to the type of data retail giants now use to sell us even more stuff. One of the benefits of this open platform, among others, would be that we, as consumers, could see current records of our transactions on our handhelds by category. Moreover, I have been thinking, what if we could also place these transactions in geographic space. Would a picture of our goings and purchases make us smarter consumers, and more energy conscious, perhaps. I’ve recently read Richard Thaler and Cass Sunstein’s book, Nudge http://nudges.org/, and have been thinking how some of the precepts of behavioral economics could be applied to more thoughtful energy use.

As a test of the hypothesis that “seeing” a record of transactions and travels might make me more thoughtful about them I logged my commerce and movements here in Washington, DC for part of this past week and built the 3D model of them that you see at left. I think this tells quite a lot about me - perhaps more than I might want a vendor to know. But  it also shows me I could be more considered in my use of transportation. For example, a couple of my car trips could have been accomplished using the subway and walking – but I wanted to save time; the age old conundrum involving time and or money.

mission

We develop and market energy efficiency strategies and technologies. We focus on the building and transportation sectors, which account for more than two thirds of the energy budget.

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