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The Ethics of Nudging

For my Behavioural Sciences for the Manager elective individual assignment, I chose to explore the arguments around the Ethics of Nudging and its Applications in Promoting Dietary Supplements within the Food Retail and Consumer Healthcare industries. This was the first elective that I took, and absolutely loved all the topics covered, such as Rationality of System 1 & System 2, Anchoring effect, the Regression Bias, Risk Taking and Prospect Theory, Preference Reversals, and so much more! I was so glad to take this elective because there were theories I learnt here that I applied to my Project & Dissertation around the context of decision-making and consumer choices.

This was also the first online module that we had to take as a result of the pandemic. Like everyone else, I was apprehensive in the beginning, but after the very first morning session, I realised that I was worried about nothing. Of course, technological challenges are a part of online learning, however these were short-lived and we were able to enjoy a dynamic learning session comprising of lectures, seminars, videos, readings, and group work – including discussion and reflection. The fact that the content of the elective was so engaging complemented the diverse information delivery and learning methods. The group work was largely a reflective piece of work, which I found very beneficial to help me digest the day’s readings and teachings effectively.

For my individual assignment, in this essay, the main arguments surrounding the ethics of nudging will be critically analysed and applied to the food retail and consumer healthcare industries’ approach to promoting health-benefiting products, such as vitamins and dietary supplements.

Chapter 1: Introduction

The essay kicks off with the introduction chapter, which I break into three further sub-sections, starting with the basics of ‘nudging’. This section sets the scene, clarifies definitions and starts to indicate where the essay is headed.

A nudge is a concept within the field of behavioural economics that intends to alter and influence individual decision making and behaviour, also called choice architecture, whilst retaining freedom of choice.

A nudge is not a legal enforcement, such as a mandate or a ban, nor a bribe or coercion. It simply aims to steer decision-making towards a direction that is in greater public interest, by presenting options in a favourable manner. The theory is largely based on the notion that individuals are not good at favouring their own self- interests, and make poor long-term decisions.

The next section describes various nudges in action, such as advertisements, disclosures, information, warnings, product placement and defaults. For example, when looking at improving food choices for kids at school canteens, strategically placing healthy options, such as fruits, at eye level is a nudge in action. Whereas, banning junk food would be a mandate. In this way, libertarian paternalism uses nudges to help individuals make better economic, financial and social decisions, without restricting their freedom of choice. In particular, this is used by governments and institutions to implement nudges that serves in the public’s long-term interests, such as a default pension plan, with an option to opt-out.

The final section of this chapter explores the deeper facets of cognitive psychology that nudging relies on in order to be effective, such as the two thinking systems of the human brain – System 1, the automatic and no effort decision- maker, and System 2, the executer of effort-requiring and complex mental computations. The literature argues that nudges look to trigger System 1, which generates the initial quick response and ideas, as our brains strives for efficiency. In this section, I start to build on the concept of heuristics, i.e. short-cuts in decision-making, and the ‘law of least effort’, which sometimes leaves humans vulnerable to be exploited by unethical uses of nudging such as, fine-print or complex language in contract drafting.

I conclude the chapter by setting out what will be covered and analysed in the rest of the essay – i.e, a quick thesis statement.

Chapter 2: Literature Review

A good literature review starts off by outlining the main arguments for and against the topic, and critically evaluates each of those arguments. The first two of the 4 sections in this chapter addresses this. The last two section picks up on further deeper arguments and theories around the topic, thoroughly and critically exploring all facets of the literature.

I start with the main arguments against nudging, which is that it diminishes volitional autonomy, i.e. an individual’s decisions and actions are a result of their own authentic choice and decision-making process. Some theorists view nudge architects as those who intentionally manipulate behaviour, and therefore individual decisions cannot be considered solely their own. This main argument can then be critically analysed with perspectives that both support and contradict it. So for example, I also propose that contradictions to this argument suggests that choice architecture cannot be imposed in a neutral way and will involve some level of influence regardless of the context.

Therefore, if defaults are going to exist anyways, then they should be orchestrated to encourage better decision making and optimal choices.

The next section addresses the main argument for nudging, which is a low-cost method of promoting significant long-term public welfare by encouraging better legal, financial, environmental, and health behaviours. However, even this argument has contrasting views that suggest that regardless of the well-intentions behind public policy, ethical considerations are raised around the abuse of power and manipulation within this field.

The third section puts forward another argument against nudging, by further exploring how nudges operate through our individual cognitive thinking systems – System 1 vs. System 2. The section starts by highlighting theories that claim that nudges inherently manipulate our cognitive processes, taking advantage of the unconscious, uncontrolled and automatic functions of System 1. The section further goes on to critically analyse this claim, presenting an alternative perspective that suggests that nudges actually work to stop System 1 from making irrational and poor choices, controls human automatic tendencies to divulge into unhealthier choices, and engages the System 2 thinking.

The final section of this chapter explores the effectiveness of nudges, again, presenting arguments that support and contradict, therefore performing a thorough critical review. Not all nudges are effective, and the way nudge success is measured is not straightforward. For example, if healthy foods were placed at eye-level in a cafeteria, and only 10% of individuals chose the healthier option – this would be considered a good result, albeit 90% of individuals resisting that nudge (Arno and Thomas, 2016). This has a huge impact on the perception of the actual effectiveness of a nudge. However, we could go on to argue that there isn’t enough evidence of this to discount the use of nudges as a whole, especially if ineffective and effective nudges can be separated.

Chapter 3: Applications to Food Retail and Consumer Healthcare Industries

The literature review and arguments proposed so far are all directly relevant to the use of nudges for promotion of dietary supplements, such as vitamins, in food and beverage retail and consumer healthcare industries. As this is the main context and application that I will be making, all previous arguments need to lead up to this.

Using the arguments previously presented, I start to explore how the application of nudges to vitamins and dietary supplements benefits public interest and welfare. Most, if not all, dietary supplement and vitamin brands vouch for the use of nudges to ‘educate consumers about dietary deficiencies’, and therefore justify promotional nudging activity. From a public health perspective, humans are thought to make health decisions that are not in their best interest and tend to disregard warnings and nutritional information. Therefore, nudges are thought to be an ideal solution to encourage better behaviours, without having to pass stringent laws.

The next section of this chapter applies the inevitability of choice architecture to the use of vitamins and dietary supplements. Facing claims of violating individual authentic choice or volitional autonomy, many continue to argue that the unavoidable orchestration of choice architecture is also applicable in retail and consumer healthcare, whereby the environment design influences individual decision making. Therefore, given this inevitability, it seems that the wider public would benefit from healthier products being placed in these sections, versus unhealthy, even if it potentially goes against distributive justice.

Finally, the ethical concerns are summed up in the last section, stating that ultimately there are two main areas of ethical doubt when considering the use of nudges for promotion of dietary supplements by profit-making companies. First is the intentional configuration of nudges, used for generating profits and the potentially greater benefits to the organisation, rather than to public health and well-being. Secondly, nudges used by big brands promote good health education mostly amongst white-collar, higher-income individuals, discounting the most needy and vulnerable groups of people, raising equal access concerns.

Chapter 4: Conclusion & Recommendations

The final chapter of the essay wraps up all that has been discussed above, where it proposes that whilst there is significant evidence to suggest that nudges are not only inevitable within choice architecture but are deemed beneficial when it comes to public policy making, there are also a series of valid ethical concerns with regards to authentic choice, diminishment of human rationality, and manipulation in order to further organisational profits. Based on the critical analysis above, the following recommendations were proposed:

  1. The first recommendation would be to present nudges whereby individuals are fully, consciously and intently aware of its influence and any further decision impacts. For example, opt-out schemes need to provide simple and transparent information that explains the cause and effects of the default, as well as that of opting-out.
  2. The second recommendation would be to create a focus area for research within nudging that explores the effects of low socio- economic status on long-term health. A more detailed focus would be taking into consideration the influence of nudges in promotion of low-priced supplements and its role in consumer purchase decision.
  3. Finally, there should always be a valid and justified reason behind nudge implementation, and the steered behaviour should improve the welfare of those nudged. Therefore, future research needs to look into potentially establishing more stringent regulations that oversees and approves nudges that organisations, such as within food retail and consumer healthcare, plan to use.

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