People hate being told what to do. We like to believe we’re the masters of our fate and that all decisions rest in our hands.
But the truth is that many of our daily decisions — from menu options at restaurants to investments in retirement funds — are shaped by others. That’s because our decisions are influenced by a process known as choice architecture.
What Is Choice Architecture?
The term choice architecture was coined by economist Richard Thaler and legal scholar Cass Sunstein (authors of Nudge: Improving Decisions About Health, Wealth, and Happiness) and refers to the ability to influence other people’s decisions. And it’s a particularly great tool for companies looking to market their services and products to older adults.
Choice architecture has its positives and negatives:
The Positive Side of Choice Architecture
Positive choice architecture reduces the likelihood that consumers will make irrational decisions that are counter to their interests. It does that by making the default choice the one that’s most beneficial to the largest number of consumers.
You’ll see this when you sign up online for a large retirement investment plan such as a 401(k). Everything from the specific investment instruments to the method for fund withdrawal will offer a default that will be the optimal choice for most investors (though it may not be the right option for you).
Reducing Options
Having too many choices can feel overwhelming to the majority of consumers, and lead to poor decision-making. For instance, the Medicare Part D plan has so many options, it can be hard to find the one that will best serve your needs. This often leads people to choose sub-optimal plans. A choice architect could mitigate Medicare Part D choice overload by either offering fewer choices or by providing decision-making support tools (such as comparison tools or reviews).
Swaying Decision-Making
Companies can also deliberately set up systems that sway consumers in a particular direction. For instance, CVS pharmacy wanted to encourage patients to take their medications as prescribed. (Research shows that patients with chronic diseases such as diabetes and coronary artery disease adhere to their ongoing medication regimen about half the time, which increases hospitalizations and illnesses.) So CVS decided to change the process for automatically refilling prescriptions on its website.
Originally, CVS asked patients if they would like to automatically refill their prescription after filling out an online order. But they changed it to place the auto-refill question before the order form. This simple change made patients twice as likely to opt into the automatic refill program, which also increased their likelihood of complying with their prescription.
No one forced patients to enroll in the automatic program, but CVS did nudge them toward a decision that was likely to be in their best interest.
The Negative Side of Choice Architecture
With so much competing for our attention every day, a choice architect can subtly steer consumers toward the choices he wants them to make — for better or worse. For instance, restaurants design their menus to highlight foods that are major profit-makers. If you look at the seniors’ menu in a restaurant, it may highlight chicken wings (which are almost pure profit) in bold font, or distinguish it in some way. Your attention will be drawn to the highlighted item, making it more likely you’ll order it.
On the other hand, less expensive or healthier menu options, such as salads or a veggie sandwich (which may be less profitable), are often more difficult to locate on a menu.
How to Ensure You Make Your Own Choices
Keep in mind that someone is subtly directing most choices you make each day, and it’s hard to know if they have your best interests and health at heart. So next time you’re faced with a choice, consider which option seems to be the easiest to take. It’s likely a choice architect is nudging you toward it, and it’s up to you to decide if that option is right for you.
