Transparency Effect

With bot-driven fake news influencing public decision-making and murky info wars undermining existing democratic processes, there’s never been a more poignant time to discuss the role of transparency in how information is presented.  

And yet, despite its success in improving societal outcomes, be they in increasing organ donations (Johnson, 2003), rates of saving (Thaler & Benartzi, 2004) or charitable giving (Zarghamee et al., 2017), there's a constant question asked of applied behavioural economics:

“Aren’t we manipulating people into doing things they wouldn’t otherwise do?”

Previous research does little to counter concerns. In fact, Bovens (2009) confirms it, stating that nudges "work best in the dark".

But does this this have to be the case? Well, perhaps not. Let’s look at some new research highlighting what happens when you’re actually open and honest with people about such nudges.

Principles at play

To begin, let's explore the two opposing principles that lie at the core of this research: 

Defaults

The first involves the setting of defaults, an effective nudging technique where a choice is set up as a pre-selected reference point (Dinner et al., 2011), opt-out (Johnson & Goldstein, 2004) or anchor (Dhingra et al., 2012) which affects the user’s final decision.  Sunstein & Reich (2016) have done a great review on defaults that you should check out.

Reactance Theory

Against this, we have Reactance Theory: a negative feeling where we sense our freedom of choice to be threatened in some way (Brehm, 1966). Beyond mere uncomfortability, we may also experience anger and a burning desire to act against  what we feel is being imposed upon us in protest (Dillard & Shen, 2005; Arad & Rubenstein, 2017). And this is shown to be the case even if the threat's subtle (Chartrand et al., 2007). 

So defaults and reactance look to be in direct battle here. But what does this mean for their impact on nudges?

Effectiveness vs transparency

Well, what transpires is that you get this awkward tension between nudges being effective and the possible triggering of reactance by being transparent about them. Because even though it makes ethical sense that being upfront and honest with people about why you're defaulting them to a given choice, it may well also trigger painful reactance which therefore kills off the desired effect.

But then, in the absence of transparency, by keeping nudges covert and not telling people, we then risk conveniently sidestepping the ethical quagmire of possible manipulation. Even though we know that people often can't tell they're being nudged (Sunstein, 2016), the vicious circle and common complaint of nudges as covert and unethical (House of Lords Report, 2011) will continue to turn, despite the growing body of evidence highlighting their effectiveness.

Effective transparency?

Wouldn't it be good practice then to consider how better to achieve successful behavioural change in an open, honest way that avoids unecessary reactance? Going further, could we seek to use purposeful transparancy to encourage broader, unselfish, longer-term decisions? 

If you're nodding, then you'll be happy to know that the following research starts to answer this question. 

On to the lab!

Experiment

498 people were randomly assigned to computer terminals, told to sit in silence (no conferring!) and given €10.

They were told about the environment, and the importance of reducing one’s carbon footprint in order to protect it. They were then informed of a Climate Protection Fund run by thecompensators.org that allows them to offset their own personal emissions (!) by paying a small amount. 

Finally, they were shown a table highlighting how much CO2 they could offset based on how much of their €10 was contributed.

On the computer, they were then shown the all-important question asking them how much of this money they’d like to contribute. They’d keep what was left.

Now, how this question was presented was greatly dictated by which one of the 5 groups the person was assigned to. Those in the first, a control group, were just asked the question without any nudging or messaging. 

However, the other four all offered the question along with a default suggested amount of €8 and a message relating to transparency. 

Each default group also had the ability to choose an amount other than the €8 shown. The on-screen question was presented to our wilful participants as follows:

Messaging for transparency

The supporting transparency messaging for each Default group differed considerably. In terms of transparency, three different types were offered:

1. ‍Info: a more basic "hey, you're being nudged" type of message
2. Purpose: one that highlights the higher, more broad societal aspirations of the nudge; and
3. Info + purpose: A combination of both of the above that aligns with the ethical wording set out by Steffel et al. (2016)

Results

When boiled down, there were two key findings of interest:

1. Defaults raised contributions

The mere use of a default boosted average contributions from around €1.80 to at least €2.85. This appears to be driven in part by the default value acting as an anchor on subsequent decisions. 

For those who express a care for the environment, it's also boosted by our desire to remain consistent with social norms and maintain a positive self-image. So even though people didn't end up paying €8, any movement towards what could be percieved as the social norm value would help reinforce one's rosey sense of self.

But more importantly...

2. Transparency didn't lower contributions

Being open and honest with people about why they were being nudged with a default didn’t reduce the amount of money given to the fund. 

Regardless of which type of transparent message they were shown: simply informing that the default might affect their decision, or the more purposeful environmental reasons for the default, contributions were pretty much the same. 

Check out the graph below:

Limitations

There are a number of important boundaries to mention:

• The research, defaults and messaging all focused on a pro-social environmental context, which may result in lower levels of reactance than being transparent about nudging people to buy more burgers. Transparency messaging such as "We've supersized your meal deal because we know you'd do it anyway" is a most entertaining possibility, but certainly not recommended.

• The research only tested one type of nudge: defaults, as opposed to social norms, framing and so on. How are these sorts of nudges affected by transparency? We don't yet know.

• The design of the experiment could be promoting cognitively-lazy decisions by people seeking to reduce effort to complete the task (one mouse click vs two clicks and an inputing of numbers).  

Key takeaways

1. Being transparent about your nudges needn’t kill their effect. This research shows that it’s possible for Decision-Makers to work around the tension between manipulation and effectiveness by being honest about why they’re nudging people.

"Transparent nudges offer up a powerful opportunity to align and work towards shared goals"

2. Focus explanations on reinforcing pro-social aspirations. The nudge in this research focused on addressing environmental concerns and so it remains to be seen whether the uncomfortable feeling of reactance is as low for aims that aren’t as pro-social. An airline opting you in by default to travel insurance whilst stating that it’s done for your wellbeing might not be received as well as one for broader social concerns, for example. Hagmen et al. (2015) look at this in more detail, dividing different nudges into pro-social and pro-self groups.

3. Use transparent defaults to highlight your brands' core purpose. Consider a takeaway sandwich shop, shown below, with a core purpose to "craft healthy, tasty food that leaves a smile on the face". They default to using wholewheat over white flour for their bread. The decision is explained transparently, and it's also framed around looking after customers' aspirational needs. Importantly, autonomy of choice isn't taken away, but more effort has to be made to exercise it. Incidentally,  research on effective wholemeal bread nudging has just been released (Kleef, 2018). Worth a toast!

4. Encourage aspirational opt-ins to future nudges. Consumer brands may be better placed to selectively highlight particular nudges that reinforce users’ aspirational goals. Setting these up-front goals with customers’ needs in mind will assist with any attempts at transparency and work around brands’ own fears of triggering perceived manipulation.  
5. Be transparent about resultant nudges. Below is an example of a bank first asking customers about their own goals, followed by a later prompt to use a particular banking product that helps them achieve this goal. The important aspect here is the transparent reminder of why the product has been shown to the customer, and how it ties back into their goals.

6. From opt-ins to nudges, to eventual aspirational defaults. Recent research around transparent nudging to improve a person's health has shown it to be effective (Kroese et al., 2016). 

Consider then an online supermarket, that seeks to assist in this way. Following a shopper's aspirational opt-in goal to purchase less sugary food, transparent suggestions are made during product choices that refer back to this earlier opt-in.

This example goes even further than the bank, offering the ability to switch all basketed products to a healthier substitute by default. It's important that such a powerful feature also still offers the customer the ability to easily revert to the original, more indulgent choice on a product-by-product basis.

Concluding thoughts

This research shows that nudges needn't only be effective in the dark. In this age of misinformation, championing transparency and rebuilding trust will be a difficult but necessary act.

But as a Decision-Maker, how do you know when to be transparent?

Well, a good place for brands to start is to align nudge transparency around their core purpose. Doing so forces you to adopt a good practice of surfacing your authenticity, presenting it clearly to customers. 

Knowing why they buy here and what they’re buying into at a deeper level will only foster a stronger, more emotional connection that breeds greater loyalty.

So, from a personal desire to be environmentally-minded, a corporate purpose to “not waste the earth’s resources” to a broader societal goal to “reduce carbon emissions”, transparent nudges offer up a powerful opportunity to align and work towards shared goals.

Being more open about the nudges we design - far from being a concern - may help reduce the distrust that will hold us all back, whatever our agenda.