Nudge Theory

The Nudge Theory is a flexible and modern concept in behavioral science. It is used to understand how people think, make decisions, and behave. The concept helps people to improve their thinking and decisions, manage all kinds of changes, and identify and change existing influences.

Central to the Nudge Theory is that people can be helped, both to think in the right way and to make better decisions, by offering them choices that have been designed to have that effect. It is thereby applicable in any situation that involves someone or some group trying to influence a person or group.

The key to the Nudge Theory is maintaining the freedom to choose. Instead of trying to alter people’s behaviour through enforcement or penalties, the focus is on encouragement and choice. To create nudges, it’s important to observe people’s current behaviour, before determining which behaviour has to be altered.

Nudges generally fall into three categories –

Perception Nudges: Focus on the underlying perceptions of organizational behaviour for a change of understanding, leading to a change of behavior. Example, everyone responds differently to the same information, depending on how it’s interpreted. Food that’s described as 99% fat free is seen as better for you than food that’s described as 1% fat.

Motivational Nudges: These are necessary if you want people to care about a change. One way to achieve that is to refer to other people’s behaviour to emphasise what’s acceptable and desired. Example, power company A and power company B use information collected by smart meters to tell their customers how their energy consumption compares to that of their neighbors. It has been proven that telling people they consume more energy than their neighbors motivates them to reduce their usage.

Ability and Simplicity Nudges: These are needed when people feel it’s very difficult to behave as desired. It’s important to tell people that changing and changes are simple. The easier it is, the higher the likelihood that people will implement changes. Example, you might be hesitant to take action because of certain obstacles. Company A increased revenue by making it easier for people to pay. Instead of directing people to a website with the form, they were taken immediately to the form. This increased the relative response rate.

Applying the Nudge Theory isn’t very complicated, but it is different from conventional methods that try to alter people’s thinking and behavior. Conventional methods to change people use direction and enforcement, often under threat of penalties. The nudge theory on the other hand is about altering people’s environment and choices, to make them more likely to make decisions that are useful and positive.

You can use the Nudge Theory as a complete approach, but the elements of nudge theory can also be used separately or in smaller, tactical sets for specific situations. The Nudge Theory is not limited or separate; it’s highly adaptable, which means the methodology can be developed in concordance with and to support other methods, theories, and techniques.