Part 4 of the TED Radio Hour episode Decisions Decisions Decisions.
About Dan Ariely's TED Talk
We often think that our decisions are our own. But Behavioral Economist Dan Ariely explains how our environment — even something as simple as how a question is framed — can affect what we choose.
About Dan Ariely
Dan Ariely is the James B. Duke Professor of Psychology and Behavioral Economics at Duke University. He is also the founding member of the Center for Advanced Hindsight — where he studies the forces that influence human behavior and the irrational ways humans behave. Ariely is the author of Predictably Irrational, The Upside of Irrationality, and The Honest Truth About Dishonesty.
GUY RAZ, HOST:
So Ruth Chang was just saying that she used to be terrible at making decisions. How about you? Are you good at making decisions?
DAN ARIELY: Some - I'm really good about giving other people advice about how to make their decisions.
RAZ: This is Dan Ariely.
ARIELY: Officially, I'm the James B. Duke professor of psychology and behavioral economics at Duke University.
RAZ: And this entire show, we've been talking about how to make decisions. But Dan says, even though we think we are making decisions, a lot of decisions are actually made for us in ways we don't even realize and can't control. It's an idea called choice architecture.
ARIELY: Choice architecture is the idea that the decisions we make are a function of the environment that we're in.
RAZ: And on the TED stage, Dan explained one example. He showed the audience a chart. It's a chart that plots the percentage of Europeans who signed up for organ donation.
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ARIELY: And this is one of my favorite plots in social sciences. And these are different countries in Europe. And you basically see two types of countries - countries on the right, that seems to be giving a lot, and countries on the left, that seems to be giving very little, or, you know, not much less. The question is, why? Why do some countries give a lot and some countries give a little? When you ask people this question, they usually think that it has to be something about culture, right? How much do you care about people? Giving your organs to somebody else is probably about how much you care about society, or maybe 'cause about religion. But if you look at this plot, you could see that countries that we think about as very similar actually exhibit very different behavior.
For example, Sweden is all the way on the right. And Denmark, that we think is culturally very similar, is all the way on the left. Germany's on the left, and Austria is on the right. The Netherlands is on the left, and Belgium is on the right. And by the way, the Netherlands is an interesting story. You see the Netherlands is kind of the biggest of the small group. Turns out that they got the 28 percent after mailing every household in the country a letter begging people to join this organ donation program. Right, so you know the expression, begging only gets you so far. It's 28 percent in organ donation.
ARIELY: But whatever the countries on the right are doing, they're doing a much better job than begging. So what are they doing? Turns out, the secret has to do with the form at the DMV. And here's the story. The countries on the left have a form at the DMV that looks something like this. Check the box below if you want to participate in the organ donor program. And what happens? People don't check, and they don't join. The countries on the right, the one that give a lot, have a slightly different form. It says check the box below if you don't want to participate. Interestingly enough, when people get this they, again, don't check, but now they join...
ARIELY: ...The program. Now, think about what this means. You know, we wake up in the morning and we feel we make decisions. We wake up in the morning. And we open the closet, and we feel that we decide what to wear. And we open the refrigerator, and we feel that we decide what to eat. And what this is actually saying is that much of these decisions are not residing within us. They're residing by the person who's designing that form. When you walk into the DMV, the person who designed the form will have a huge influence on what you'll end up doing.
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RAZ: So most or all of the decisions we make are made for us?
ARIELY: Absolutely. It's kind of a very stressful thought.
ARIELY: But this is choice architecture, this notion that we make decisions as a function of the environment that we're in. So if I put you in one kind of buffet, you would eat in this way. If I put you in another kind of buffet, you will eat very differently. If I'll set up your phone with some kind of notifications, you'll end up spending much more time on Facebook. If I set it with another kind of notification, you will spend much more time reading the news or something else.
But this example with organ donation has a couple of important things. Imagine the following study. We have a group of people. We send them to the Department of Motor Vehicle, half of them get the opt-in form, half of them get the opt-out form. And then, you stop people when they come out. And you say, excuse me, can you tell me - I see that you didn't donate, I see you donated - you - and I say can you explain to me why - why you did what you did? Does anybody says I have no idea, this was the default choice? I didn't - anybody says I was too lazy? No. What happens is that people tell stories about why they made those decisions. They portray them as - as if they spent the whole week on that decision.
ARIELY: So people who were in the opt-in form say things like, you know, I'm really worried about the medical system and whether some physicians will pull the plug a little too early if I do this. And people in the opt-out form says, you know, my parents raised me to be a caring, wonderful human being.
And what happens - we don't make the decision, but we tell up story about why we do it. And the stories are so good that we even convince ourselves that the decisions we make are actually because of our preferences and not because somebody else made something.
RAZ: Most decisions are unconscious. Like, I woke up this morning and I took a shower and I made breakfast and coffee. And I didn't think about - I mean, I thought about what breakfast to make for my kids and - but these were things that I had already decided even before I started to do them.
ARIELY: Yes. And, you know, we have to make lots of decisions all the time, and we don't have the capacity or the resources to do it, so we make the easy decision. And I'll tell you a story about a company called Express Scripts. They manage pharmaceutical benefits. They do all kinds of things. But one of the things they do is they send people with chronic illness medication over the mail every 90 days.
And what Express Scripts tries to do is to switch you from taking branded medication to generic medication. And they write you a letter, and they say, dear Guy, you're going to save money, your employer will save money, we will save money if you only switch to generic. And people don't switch. And they try all kinds of approaches, and people don't switch. So for one year, they offer people zero co-pay. Less than 10 percent of the people switched, right?
So they said, look, you give people free medications, free generic medication, and even with free, they're not getting it. And they say could it be that people really hate generic medications so much that even free is not helpful? And the answer was to say, look, it could be that people hate generic medication, but it could be that people hate doing anything. I said, let's look at the detail, the choice architecture of what you're doing.
Right now people start with branded. They can do nothing and stay with branded, or they could do something and move to generics. So the first thought was to say, let's reverse it. Let's send people a letter and say, we are going to switch you to generics. This is the path of least resistance. You don't have to do anything. It turns out this is illegal in this domain. But instead, what they did was they sent people a letter and they say, if you don't return this letter, we will be forced to stop your medications.
But when you return this letter, you could choose branded at this price or generic at this price. What happened now? Between 70 and 80 percent of the people switched depending on the employer. So what does it tell you? Do people like branded or generics? Well, it tells people don't care.
ARIELY: Right? People don't care so much. And the big issue in the whole thing was returning a letter. Now, when we set up the decision, we think it's a decision about branded versus generic. But the reality is it's a decision about choice architecture. And as long as we understand this, we could re-engineer the environment in a different way.
RAZ: Yeah, so really, I mean, the person doing that engineering, like, the form designer - right? - they have a lot of power to kind of shape our decisions to their own advantage. I mean, companies that are trying to sell us stuff, certainly they must know this, right?
ARIELY: Yeah, you know, and think about the following. Think about this notion of choice architecture. Every store, every restaurant, every kiosk, every app is an actor in our environment. Now, you can say what is the goal of these actors? Are they working in our long-term best interest? Or are they working in their short-term best interest? And the answer is, of course, that they're working in their short-term best interest, right?
All of them want our time, money and attention right now. And because they control our environment, we fail. Now, do we fail all the time? No, but we certainly fail a lot.
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ARIELY: I'll give you one more example for this. This was an ad from The Economist a few years ago that gave us three choices - an online subscription for $59, a print subscription for 125 or you could get both 125.
ARIELY: Now, I looked at this and I decided to do the experiment that I would have loved The Economist to do with me. I took this and I gave it to a hundred students. I said, what would you choose? Most people wanted the combo deal. Thankfully, nobody wanted the dominated option. That means our students can read. But now if you have an option that nobody wants, you would take it off, right?
So I took - I printed another version of this when I eliminated the middle option. And I gave it to another hundred students. Now the most popular option became the least popular and the least popular became the most popular. What was happening is that option that was useless was useless in a sense that nobody wanted it. But it wasn't useless in the sense that it helped people figure out what they wanted.
In fact, relative to the option in the middle, which was you get only the print for $125, the print and web for $125 looked like a fantastic deal. And as a consequence, people chose it. The general idea here, by the way, is that we actually don't know our preferences that well. And because we don't know our preferences that well, we're susceptible to all of these influences from the external forces, the defaults, the particular options that are presented to us and so on.
RAZ: So if we wanted to - right? - like, how could we resist those external forces that clearly influence our decisions?
ARIELY: Yeah. So, first of all, I think we have to admit that we can't resist all forces. And it's true that we don't make our own decision. The environment does. But it's also true that we have a choice of what environments we want to create for ourselves. So think about something like doughnuts.
ARIELY: Imagine I came every morning to your office and I layered your desk with fresh doughnuts and croissants. What are the odds that at the end of the year you'll be as trim and healthy as you are right now?
RAZ: Very low - very low odds.
ARIELY: And human will - right? - our ability to make decisions is not in resisting the doughnuts when they're there. It's about deciding not to have doughnuts on the desk. So, you know, it's very sad that we really are influenced dramatically by the environment, but each one of us is really a choice architect. And this is the strength and the importance of choice architecture, that the environment that we put people in matters a great, great deal, much more than we understand.
ARIELY: Very few kids grow up and say when I grow up I want to be a form designer, but I want to be a form designer. They are the place where we make decisions, and if we think about those forms and we say how do we design those forms to help people make the best decisions, there's lots of room there for improvement.
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RAZ: Dan Ariely is a professor of psychology and behavioral economics at Duke University. He's given many, many TED talks. You can find all of them at ted.com.
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THE CLASH: (Singing) Should I stay or should I go now? Should I stay or should I go now?
RAZ: Hey, thanks for listening to our show on Decisions this week. If you want to find out more about who was on it, go to ted.npr.org. To see hundreds more TED talks, check out ted.com or the TED app. Our production staff at NPR includes Jeff Rogers, Brent Baughman, Sanaz Meshkinpour, Neva Grant, Casey Herman, Jinae West and Rachel Faulkner, with help from Daniel Shukin. Our intern is Thomas Lu. Our partners at TED are Chris Anderson, Kelly Steotzel, Anna Phelan and Janet Lee.
If you want to let us know what you think about the show, you can write us at email@example.com. And you can follow us on Twitter. It's @tedradiohour. And if you haven't already done so, be sure to subscribe to our podcast on iTunes. I'm Guy Raz, and you've been listening to ideas worth spreading right here on the TED Radio Hour, NPR.
(SOUNDBITE OF SONG, "SHOULD I STAY OR SHOULD I GO")
THE CLASH: (Singing) So you got to let me know, should I stay or should I go? Transcript provided by NPR, Copyright NPR.