Nudging on Donations

Mostly Economics points to the new working paper by Dean Karlan and John List that suggests an innovative way for charities to signal their credibility nudge donors into increasing their donations. Karlan and List write,

We develop a simple theory which formally describes how charities can resolve the information asymmetry problems faced by small donors by working with large donors to generate quality signals. To test the model, we conducted two large-scale natural field experiments. In the first experiment, a charity focusing on poverty reduction solicited donations from prior donors and either announced a matching grant from the Bill and Melinda Gates Foundation, or made no mention of a match. In the second field experiment, the same charity sent direct mail solicitations to individuals who had not previously donated to the charity, and tested whether naming the Bill and Melinda Gates Foundation as the matching donor was more effective than not identifying the name of the matching donor. The first experiment demonstrates that the matching grant condition generates more and larger donations relative to no match. The second experiment shows that providing a credible quality signal by identifying the matching donor generates even more and larger donations than not naming the matching donor. Importantly, the treatment effects persist long after the matching period, and the quality signal is quite heterogeneous - the Gates’ effect is much larger for prospective donors who had a record of giving to 'poverty-oriented' charities. These two pieces of evidence support our model of quality signals as a key mechanism through which matching gifts inspire donors to give.

In this context, I have blogged earlier about studies by the same duo and others about how matching contributions and its magnitude can provide signals that can increase the amounts of donations made by prospective donors. Quality signals are powerful mechanisms to "crowd-in" funds from donors.

But there is nothing surprising about this finding since this underlying premise underpins much of modern financial markets. If Warren Buffet invests in a particular stock or fund, the chances are that it will attract a herd of investors! In fact, hedge funds raise private capital by playing up the credibility of their prior investors and using that to encourage prospective investors. Start-up firms which have atleast one big angel investor will find it much easier to raise additional capital.

This also has important longer-term lessons for the aid and philanthropy businesses. The powerful impact of credible lead donors, like Bill and Melinda Gates, should be leveraged to multiply the amounts of money that can be raised. For example, the Gates Foundation could work with a series of smaller non-government organizations (NGOs) within sectors where the Foundation is already active, provide small seed capital, and then encourage those NGOs to leverage it to solicit additional funds from other donors. I am sure this model is already being used by the larger foundations and their donees, though the share of their funds routed through such partnerships may be small.  

In fact, this is what multilateral agencies like the World Bank and the UNICEF have been doing for years. They provide the first tranche or seed funding for new initiatives and projects,, which is then leveraged to raise additional capital, both from private sector and other non-government agencies. The presence of the Bank or UNICEF provides the necessary reassurance to these lenders and donors that necessary due diligence has been done and the project is worthy of support and their investments and donations are less likely to go down the drain.

Therefore, is it time that the larger and more reputed private donor agencies leverage their brand name and reputational value to help smaller organizations raise more capital and thereby multiply the amount of money that can be mobilized to serve the same causes espoused by the larger donor?

The last-mile challenge in banking for the poor

It has always been thought that lack of access to formal bank accounts prevented poor people from saving more and once accounts were opened they would be able to more optimally manage their finances. But now that we have made some progress, albeit tiny (only 5.5% of 650,000 Indian villages have bank branches and half the adults in the country do not have access to bank accounts), with access through the campaign for total financial inclusion (TFI), have the desired outcomes been achieved for those people?

Surprisingly, it does appear that having a bank account does not automatically translate into its use, much less efficient management of personal finances. Livemint points to a study by Skoch Development Foundation which found that only 11% of 25.1 million no-frills accounts opened between April 2007 and May 2009 are operational mostly because of the high costs.

India Development Blog points to an IFMR study of the impact of TFI campaign in Gulbarga District of Karnataka (claimed to have achieved 100% financial inclusion), which found that 36% of sample households remained without access to formal and semi-formal savings mechanisms and more importantly, access to bank accounts did not translate into bank account usage. It was found that the accounts were used mostly to manage NREGS payments or SHG transactions. Critical to the lesser than expected account usage is the high transaction costs, especially by way of travel costs.

I am inclined to believe that even if access to formal banking systems, by way of opening a bank account, is increased, actual usage is likely to remain low unless bridge the last mile gap and take banking to the door-step of the people, especially in rural areas. The recent decision by the Reserve Bank of India to approve the deployment of mobile bank business correspondents, equipped with electronic terminals, to transact at the sub-branch level is certain to increase the quality of access. This will ensure that, unlike now, rural account holders are more likely to actively transact using their accounts.   

In this context, mobile phones have the potential to revolutionize banking and increase utilization dramatically. Mobile phones-based technologies offer the attraction of directly placing the bank account in the hands of the customer, thereby lowering transaction costs and increasing the likelihood of account usage. It may therefore be tempting to get carried away by this possibility, coupled with a campaign to increase financial literacy, and assume that it will ensure account usage.

However, dovetailing NREGS and other government cash transfers through TFI accounts, extensive use of business correspondents and mobile phone-bassed technologies, and financial literacy, while necessary are not sufficient conditions to ensure optimal account usage.In fact, unless complemented with other initiatives, mere increase in access to banking accounts, could be counter-productive. It could just as easily enable access to debt and other less than desirable financial products, whose extensive adoption could be detrimental to the interests of the poor people.

Behavioural science teaches us that even with access to their accounts and adequate financial literacy, human beings are cognitively constrained. This in turn means that despite firm commitment to save or spend on certain things, people tend to renege and fall short on achievement. People discount the value of later rewards by a factor that increases with the length of the delay. They are therefore tempted to spend on immediate needs as opposed to save for important long-term requirements. Further, drawing from theories of "mental accounting", it has also been found that people tend to save optimally when they they know what they are saving for.  

It is therefore necessary that the bank accounts are structured to address these cognitive biases. This assumes importance since we need to bear in mind that the ultimate objective is not to merely enable access to bank account, but to enable poor people with systems to more effectively manage their scarce finances. What can be done to ensure that poor people save more, optimize on their interest returns, manage their long-term needs like health care, children's education and pensions, make more effective purchase decisions, and so on? In simple terms, how do we ensure that people not only manage their finances effectively, but also overcome their cognitive urges which are often determental to their interests?

I have written about several examples of how innovative financial products can overcome such cognitive biases and increase the likelihood of optimal outcomes for poor people with management of their finances. In fact, bank savings accounts and financial products, with subtle commitment features, have the potential to dramatically increase not only usage but also effective usage of bank accounts. I have bloggged earlier about Save More Tomorrow, default pension savings, lottery savings products, products to increase fertilizer consumption, multi-tier accounts (also here), and budgeting family expenditures. See also this and this.

In this context, there is a big window of opportunity. Bill and Melinda Gates Foundation have just pledged $500 million to helping poor people learn to save money. They propose to fund research and project interventions in this area to emulate the examples like the hugely successful mobile banking for the poor — via cellphone in Kenya and Bangladesh and smart card in Mexico. Spurred on by the low domestic savings rate, this area has been the focus of considerable interest in the US too. It is appropriate that some part of this be leveraged into experimenting with financial products and structured accounts that help overcome cognitive biases.

It needs to be borne in mind that TFI and optimal utilization of bank accounts by the poor needs to go beyond mere door-step acceess to bank accounts.

Hawthorne Effect in RCTs

Angus points to this study by a group of researchers that appears to point to significant "pseudo-placebo effects" in RCTs. It can also be viewed as an example of the significant role of expectations in shaping the responses to various interventions.

In two separate RCT experiments in rural Tanzania, farmers were supplied better varieties of cowpea seeds. In the first traditional RCT, the control group were informed and supplied traditional seeds while the treatment group were similarly supplied modern seeds. In the second double-blind RCT, both groups (and experimenters) were unaware as to what type of seed they received, though they were aware of the experiment.

The traditional RCT showed a significant, over 20% increase in yields from the modern seed, whereas, the productivity increase due to seed effect in the double-blind RCT was virtually zero. Most interestingly, a comparison of the two control groups revelead that the production increased in the double-blind control group by as much as the two treatment groups. This is a measure of the pseudo-placebo effect - it captures the crop and harvest differential due to beliefs and associated behavioral responses, not to modern seed.

The researchers found that farmers responded to being supplied with modern seeds by planting in their most productive lands, increasing their plantation areas, and also by maintaining optimal spacing. Each of these, especially the last, contributed towards improving yields.

In other words, "the expectation of receiving the treatment can cause people to modify their behaviors in a way that produces a significant "average treatment effect" even if the actual intervention in not particularly effective". The double blind RCT showed that virtually all of that improvement comes from changed behavior, not from any improved effectiveness due to the use of the modern seed. They write,

The double-blind analysis learns us that the increment in output is not due to the quality of the seeds at all, but instead to a behavioral response of the farmer (who plants the – suspected – modern seeds further apart). Positive treatment effects evaporate when controlling for this. The main conclusion is not to shun RCTs — far from it. However, we should interpret the outcomes of RCTs with proper caution, especially when jumping from output to outcomes and impact. The magnitude of the pseudo-placebo effect depends on the participants’ subjective expectations with respect to the degree of complementarity of the intervention and privately supplied inputs.

They caution against drawing inferences from preliminary findings and advocate repeating the experiments to analyze the changes in responses as expectations evolve,

Biased assessments also occur when participants have the wrong set of expectations about complementarities. To attenuate this source of bias it would be advisable to repeat experiments over various production cycles, allowing participants to learn about the nature of the innovation offered to them. As knowledge accumulates, their response becomes better tailored to the innovation, enabling the analyst to obtain an estimate of the total impact of interventions that captures both the innovation effect as well as the optimized behavioral response.

Aside from the learnings about the interpretation of RCT results, this study is an excellent example of the power of shaping behavioural expectations and responses. It raises the possibility of shaping expectations of a target group - farmers, women, teachers, students, patients, poor etc - by nudging them through creative marketing and awareness creation initiatives. Atleast in certain areas, this has the potential to be cheaper and more sustainable than the convetional hard interventions.

Nudging to reduce fraud, error and tax defaults

The British Cabinet office's Behavioural Insights Team recently released a research study on the application of insights from behavioral psychology to (pdf here) reduce fraud, debt and error within public systems. The report points to seven behavioral insights that can enhance public policy and help achieve desirable outcomes.



The Behavioural Insights Team conducted RCTs on these eight interventions and found impressive results. They are summarized below.



The British government's taxation department, HMRC, sent out letters with a range of different messages to 140,000 taxpayers. Residents received either a control letter (which contained no social norm) or one of a number of different social norm messages. All of the social norm letters contained the statement that '9 out of 10 people in Britain pay their tax on time', but some also mentioned the fact that most people in the recipient’s local area (or postcode) or town had already paid.



The graph shows that there was a 15 percentage point increase from the old-style control letter which contained no social norm and the localised social norm letters. In fact, the phrasing of the letter is of great relevance. Saying that '9 out of 10 people pay their tax on time' is more effective if it is followed by 'you are one of the few people who have not paid yet'. Simply including a phrase with both these elements raised the payment rates achieved by a single letter from 36.8% to 40.7%.

The studies of the Team also found that letters which contain simple, clear messages about the issue at the beginning of the letter, clearly spell out the actions required (by underlining it or highlighting it) and underline implications of noncompliance, increases the likelihood of favorable responses.

As I blogged earlier, another study involved sending out SMS messages to defaulters on court fines. Personalized text messages were sent out to defaulters with varying messages - general message to pay the fine, message indicating the person's specific fine amount, and those giving his/her name. The results have been quite impressive.



This strategy poses two challenges for policy makers contemplating the same in developing countries like India.

1. Since compliance with rules are low and defaults very high, the marginal impact of these interventions could be considerable.

2. However, on the flip side, given the weaker social norms, the nudging impact of the messages could be attentuated in these social contexts. Since in many groups, deviation is the norm, the messages may not carry the same weight.

The ultimate effectiveness of these interventions in these societies will depend on the emergent dynamics of these two forces. If the former prevails, the intervention will be a success.

Nudging on enforcement

How do we get traffic offenders and other rule violators who have been delivered fine slips to pay up their fines? More importantly, how can we increase the likelihood of getting people to pay their taxes in time?

Tim Harford draws on the findings of the research studies conducted by the UK Cabinet Office's Behavioural Insights Team,

Let’s say somebody has been fined in court but has not paid. You could send in the bailiffs. Or you could send a text message explaining that if the fine isn’t paid quickly, the bailiffs will be on their way. The Behavioural Insight team and the courts service ran a randomised trial, sending no text message to some people and a variety of text messages to others to see which approach works best. It turns out that text messages are highly effective and even more effective is a text message that mentions the miscreant’s name. The difference between no message and a personalised message is that instead of one in 20 people immediately paying up, one in three people do. That adds up to 150,000 occasions on which the bailiffs need not be called in.

This is an excellent example of how small nudges can go a long way towards improving compliance with rules. Similar interventions that leverage the cognitive impulses of human beings can be powerful facilitators in increasing supervisory effectiveness and enabling adherence to prevailing rules.

Nudging to stay healthy!

As health care costs ratchet upwards, insurance companies have been experimenting with various strategies to keep them under control. The most interesting approaches involve the use of insights from behavioural psychology to nudge people into staying healthy so that their treatment expenditures are minimized.

The Economist points to the success of South African insurer, Discovery Group, with its "Vitality" program that applies the "air miles" model to health care. Discovery has risen from obscurity to become South Africa's largest health insurer in less than two decades.

"You earn points by exercising, buying healthy food or hitting certain targets. You rise through various levels, from blue to gold, as you accumulate points (rewards are adjusted to your starting level of fitness to give everybody a chance of making progress). And you are given a mixture of short- and long-term rewards ranging from reduced premiums to exotic holidays.

Discovery has formed alliances with a host of companies to provide rewards linked to your 'vitality level'. Pick ’n’ Pay, a South African grocery chain, provides discounts of up to 25% on 10,000 'healthy foods'. Airlines such as Kulula offer discounted flights. Discovery can measure whether people actually go to the gym, rather than just join, by swiping their membership cards. It says it has solid evidence that participation in the programme more than pays for the rewards: active participants are less likely to fall ill and, if they do, they spend a shorter time in hospital."

The "air miles" model of incentivization has been deployed in other industries, "including a credit card that offers discounts linked to well-being and car insurance that offers cheaper petrol to people who drive safely (a telemetric device installed in your car monitors aggressive driving, like harsh acceleration or sharp cornering)".

Nudging to use bicycles!

Excellent NYT op-ed on how Amsterdam has socialized and brought about a culture that accpets bicycle as the preferred mode of transport. The article drives home the point that such changes in public attitudes can be brought about through a series of small and often mundane interventions, all of which jointly work towards favoring bicycles and discouraging cars.

One such nudge, which revolves around the type of bread that is commonly sold in Dutch shops, is particularly cute.

"Cyclists can’t carry six bags of groceries; (so) bulk buying is almost non-existent. Instead of shopping for a week, people stop at the market daily. So the need for processed loaves that will last for days is gone."

Several such routine lifestyle decisions have contributed to a much greater accpetance of bicycles than in the US. The article also points to the deep-seated cultural socialization that European city residents have undergone which is reflected in internalization of bicycles into their regular daily routines.

"In Holland, public buses aren’t considered last-resort forms of transportation. And cycling isn’t seen as eco-friendly exercise; it’s a way to get around. CEO’s cycle to work, and kids cycle to school... Manhattan’s bike lanes seem to be used more for recreation than transport."

ECI nudges voter turnout in India?

The recent Assembly elections in five Indian states saw record voter turnouts. Political pundits promptly attributed it to anger among electorate against widespread corruption and misrule by the incumbent governments.



However, there is a strong likelihood that this increase was not merely because of discontent. After all, anti-incumbency factor is common in Indian democracy, and has rarely resulted in such uniform jumps in voter turnouts.

Incidentally, this was the first election where an electoral slip was delivered to all voters following a directive from the Election Commission of India (ECI). Accordingly, less than a week (most often 3-4 days) before the polling day, an electoral slip containing the date of polling, location of polling booth, serial number of the voter in the voters list, and his/her photo was delivered to all voters. Traditionally, voters slips were disbursed by political parties during the campaigning, especially to their potential voters, so as to encourage them to vote.

If the delivery of voters slips contributed to the inceases in voters turnout, then its transmission would have been through two routes.

1. The voters slips, delivered just before the polling day, may have served to remind voters about their voting obligation and generated a form of social pressure on the voter to turn up to vote. In other words, the slips may have primed the voters into voting.

2. The voters slips - especially the location of the polling station, date and time, and the reassurance about their names being on the voters list - may have served as "channel factors" that bridged the information asymmetry and nudged the voters into visiting the polling booth to cast their votes.

Either way, unwittingly, the ECI may have used a powerful insight from behavioural psychology to nudge citizens into voting. This may also be a powerful reminder to advocates of making voting mandatory that such subtle nudges are a more effective and sustainable approach to increase voter turnout.

PS: There is no confirmation that voters slips were responsible for the increase. The increases in turnout from 2006 to 2011, where voter slips were not used, does complicate drawing ready inferences. I am sure that in the coming days atleast some researchers would use constituency data to tease out effects, if any.

The global food loss and wastage problem

This story provided lighthearted amusement for some time recently, though its underlying message did not generate much debate. However, there are some interesting findings from a study released by the Food and Agriculture Organisation (FAO) on trends in food loss and wastage across the world,

"Roughly one-third of food produced for human consumption is lost or wasted globally, which amounts to about 1.3 billion tons per year... Food wasted by consumers in rich countries (222m tonnes) is roughly equal to the entire food production of sub-Saharan Africa (230m tonnes)."

The report makes the distinction between food loss - occurring at the production, harvest, post-harvest and processing phases - and wastage - retailers and consumers throwing perfectly edible foodstuffs into the trash. The study finds that though industrialised and developing countries waste or lose roughly the same amount of food each year – 670 m and 630 m tonnes respectively - there are important differences.

Rich countries waste food primarily at the level of the consumer and at the retailer level, especially for fruits and vegetables, by often unreasonable quality standards that over-emphasize appearance instead of safety and taste. For developing countries, the major concern is food loss due to weak infrastructure – including poor storage, processing and packaging facilities that lack the capacity to keep produce fresh. Further, on a per-capita basis, the per capita food waste by consumers in Europe and North-America is 95-115 kg/year, while this figure in Sub-Saharan Africa and South/Southeast Asia is only 6-11 kg/year.



Apart from strengthening food supply chains (by investing in storage, processing, packaging, and transportation), the report also advocates reducing reliance on retailers like big supermarkets, promotion of direct sales of farm produce to consumers, encourages retailers and charities to work together to distribute unsold but perfectly edible food that would otherwise go to waste.

These findings come at a time when the food prices have been soaring (overall cost of food in April was 36% higher than in 2010). Last month, the World Bank said that rising food prices had pushed 44 million more people into extreme poverty, and an additional 10 million people live at the margins of falling into poverty. There are two observations in this context,

1. It is ironical that while public policy explicitly tries to lower electricity transmission and distribution losses, we are, at best, ambivalent about reducing food wastage. This is despite, food wastage being a much bigger problem than the former. More unfortunately, this issue gets even less attention than issues like energy and water conservation.

2. There is some food for thought for behavioural economists and psychologists here. Apart from the hard policy and investment-driven (more storage facilities etc) choices required for cutting down on food loss, can we also nudge people into reducing their food wastage? Such subtle nudges could be incorporated into the processes undertaken at every level in the production-marketing-consumption chain, so as to reduce the likelihood of food being wasted.

For example, one way to nudge people into lowering food consumption wastage is to encourage the purchases of smaller packets of food materials from stores. Another option is some form of restrictions on promotional offers that encourage people to buy more food than they need. Given the amounts of food wasted in hotels, are there some nudges or strategies that could enable hotels more effectively manage their cooking demand schedules? In particular, what are the strategies that enable hotels to minimize wastage from buffet spreads?

But this nudge (or shove) may be one step too far!

Hospital infections - nudging on hand washing

Hospital infections are the fourth leading cause of death in America, with 2 million patients in America acquiring an infection in the hospital every year (about one in 20 patients) and 100,000 people dying of them. The ratios are certain to be much higher in developing countries.



The commonest source of such infections are unwashed hands of doctors and medical attendants. In fact, a recent study of several intensive care units in the US showed that hands were washed on only one quarter of the necessary occasions. The report claims that "hand hygiene (HH) is the single most important factor in the prevention of health care-acquired infections".



Though extremely trivial, hand washing by doctors and nurses before attending to each patient is one of the most vexatious of problems. Atul Gawande has documented the challenge posted by it and chronicled how some hospitals have tried to create a culture of hand-washing by using checklists and by redesigning hand hygiene systems to make hand-washing easier and automatic. However, the amount of efforts required makes such approaches difficult to replicate on scale. In this context, NYT Fixes points to a technological solution being piloted in a few hospitals in the US,

"Every health care worker wears an electronic badge. When she washes her hands or uses alcohol rub, a sensor at the sink or dispenser or her own badge smells the alcohol and registers that she has washed her hands. Another sensor near the patient detects when her badge enters a room or the perimeter around a patient that the hospital sets. If that badge shows that her hands were recently washed, it displays a green light or something else the patient can see. If she hasn’t washed, her hands, the badge says so and emits a signal to remind her to do so. The sensor also sends this information to a central data base. Information about the hand-washing practices of a particular unit, shift or individual is instantly available."

In other words, the sensors nudge hospital staff to wash their hands before they attend to their patients. They bridge the last mile gap by bringing in a point-of-care compliance monitoring system that nudges health care workers to follow hand hygiene standards.



Though these systems are largely in pilot phase, initial results are encouraging. Its prohibitive costs means that it will be some time before they become affordable for even the richer hospitals. However, the simplicity of the solution, RFID tags attached to sensors means that once its utility is established they could be quickly commercialized at affordable rates.



See Proventix's nGage, HyGreen's Hand Hygiene Recording and Reminding System, BioVigil's Health Care Badge and Alcohol Sensor, and Patient Care Technology System’s Amelior 360.



Update 1 (30/4/2011)



The second part of Fixes article by Tina Rosenberg is available here. Peter Pronovost's landmark paper in the NEJM (made famous by this New Yorker article of Atul Gawande) which chronicled the experiment of 103 ICUs in hospitals across Michigan that used a five-point checklist to prevent infections in central line catheters is available here.



The five-point checklist - wash hands; cover the patient with sterile drapes; clean the skin with chlorhexidine antiseptic; do not insert catheters into the groin area; remove catheters as soon as they are no longer needed - reduced the the median rate of infection to zero within 3 months and was sustained for the remaining 15 months of the follow-up.



Update 2 (2/9/2011)



A study of handwashing in the Journal of Psychological Science by David Hofmann and Adam Grant found that changing the messages posted in the hospital environment from "Wash Your Hands to Protect Yourself" to "Wash Your Hands to Protect Your Patients" could motivate some doctors and nurses to wash their hands more frequently.



They measured the change in soap use when they put up different signs by the dispensers. One sign read "Hand Hygiene Prevents You from Catching Diseases". Another read "Hand Hygiene Prevents Patients from Catching Diseases". And a third sign, which served as a control, had a generic message: "Gel In, Wash Out". The patient-focused sign produced a 33 percent increase in the amount of soap and disinfectant used per dispenser over a two-week period, compared with the other signs.



In a second phase of the study, trained observers recorded how often doctors and nurses physically washed or disinfected their hands. The sign urging doctors to think about patients produced a roughly 10 percent spike in hand washing compliance, a jump that was small but statistically significant.

Nudging with color changing bulbs!

This post is dated. But better late than never. One of the biggest challenges for electricity utilities with optimizing electricity usage is to get consumers to exercise demand-response and manage their consumption patterns in response to changes in load conditions and variations in tariffs. Standard solutions have involved massive awareness campaigns, and even more invasive e-mail and SMS messages and telephone calls to inform people about their consumption patterns. However, the results have been dismal, at best marginal.

In this context, the Southern California Edison electricity utility has developed a device, Ambient Orb, that seek to nudge consumers into optimizing their energy usage. The Ambient Orb is a glowing globe that changes color to represent changes in any streaming data. This device when linked to the local grid, becomes an Energy Orb, a device that can be used to represent current grid load and the relative price of electricity at any given moment.



The device signal changes in electrical rates, being programmed to glow green when the grid is underused — and, thus, electricity cheaper — and red during peak hours when customers pay more for power. An initial sample of 120 devices reduced peak energy consumption by 40%.

Unlike text messages, telephone calls, and other intermittent and invasive signals to remind people about their behaviours, Ambient Orb like devices are constantly in communication with its audience, forming a part of the natural environment in which those people live. Such devices help communicate dynamic information or address the problem of information over-load in a cognitively salient manner.

Such devices help bring to the immediate and direct notice of its target audience certain information they are not likely to observe (and therefore act on). The Orbs were apparently originally used to monitor financial portfolios - set it to shine a serene sky blue when your stocks were going up or pulse an alarming red when they were tanking. Its cognitive salience was thought to help investors overcome their inertia and actively manage their investments by selling off deadbeat stocks and buying better-performing ones.

The power of such devices, especially in areas like energy conservation, can be amplified if its users are networked and information on each other is made available to all. In this context, a design firm DIY Kyoto has been selling a device called the Wattson, which not only shows your energy usage but can also transmit the data to a Web site, letting you compare yourself with other Wattson users worldwide.

Other uses of such ambient devices include monitoring dynamic environments like monitoring water consumption, tracking weather changes, even tracking household grocery stocks. Here are a few other examples of where it could be used

1. Over-speeding - Orb device connected to the speed governors can remind drivers when they are over-speeding
2. Drunken driving - Orb device connected to an alcohol detection sensor can remind drivers about the fact that they have alcohol levels beyond permissible levels.
3. Monitoring pending files/issues - Orb device placed on the office table and attached to an Excel sheet (which contains information about file or other pendencies) can remind officials when their pendencies cross the limits.
4. Project monitoring - Project heads, especially those at the highest levels, or Government Heads of Departments could use such devices to keep an eye on the progress of execution of their Project. The device could be connected to the PERT/GANTT charts to generate the required color changes that indicates progress of work.

Here is a list of ambinet orb devices that are being sold by the firm Ambient Devices. The Ambient Umbrella looks the most interesting

If rain is forecast, the handle of this umbrella glows so you won't forget it. The Ambient Umbrella continuously displays forecast data for 150 US locations. Embedded in the handle is Ambient's wireless data-radio. This chip receives accuweather.com data and pulses when rain is forecast.

On changing human behaviour

Changing human behaviour, so as to get people to act in a manner that increases the likelihood of achieving certain social or environmental goals, is one of the most challenging areas of public policy. Standard approaches involving regulation and incentives (taxes, rewards, and penalties), while effective to certain extent, are increasingly becoming blunt instruments, especially on the more universal of social and civic problems.

In this context, Richard Thaler and Cass Sunstein's path-breaking book, Nudge offers several interesting insights into how human beings can be subtly nudged into performing specific tasks. And a series of small nudges could go a long way towards meeting important public policy goals.

An excellent summary of these techniques comes from Oliver Payne with his 19 ways to "ask" for sustainable change in human behaviour. He has three presentations (Summary, Part I, Part II, and Part III, this, this) form an excellent resource.

1. Simply Ask - eg. when asked nothing in a food Que, only 40% of students took a serving of fruit, but when specifically asked whether they will have fruit, nearly 70% took fruit; voters who were asked a few days before voting whether they will vote were more likely to turn up and vote etc. The "exposure effect" increases the likelihood of the desired outcome.

2. Ask using the right words - eg. carbon offsets are more acceptable than carbon tax; user charges are easier to push through than taxes (framing of the issue); nudge to prevent people from stealing wood from Arizona's Petrified Forest National Park ("Many past visitors have removed petrified wood from the Park changing the natural state of the Park" Vs "Please don't remove the petrified wood from the Park in order to preserve...", the latter was more effective) (reinforcement of social norms); describe carrots as "X-ray vision carrots" (to pre-schoolers) or soup as "Rich Vegetable medley Soup" increases uptake considerably (selective perception) etc.

3. Ask using the right images - eg. the dual image of a littered environment being changed to a clean one reinforces social norms and is more effective in driving home the message on littering than just a littered environment image (it ends up reinforcing the damaging message that many people do litter).

4. Ask using the right authority - eg. Don't Mess With Texas campaign (which did not work with fines) reduced roadside littering by over 70% over 5 years through a campaign with sporting and country-music heroes imploring people to not litter. Ads avoided the negatives of shame and guilt in favor of the positives of pride and group identity (reinforcement of social norms).

5. Ask using the right fake authority - eg. An office tea and coffee "honour box" (into which people dropped the charges) was more effective at boosting honesty and collecting money when a pair of eyes (Big Brother Eyes) was displayed beside it (authority effect - sensitivity to our actions being observed by others); smiley and frowny faces about your driving speed on electronic signboards in South Lanarkshire Council roads (instead of numerical speed information) was more effective at reducing speeds (social approval - smile, you're on camera!); smiley and frowny faces to represent electricity usage on consumers' electricity bills by South California Edison electricity utility's OPower Home Energy Reporting System etc.

6. Ask in the right order - eg. listing disadvantages followed by advantages of carbon tax was found to be more effective in getting public approval than the other way round (framing and anchoring effects)

7. Ask at the right time - eg. traffic light synchronization program in Texas which informed drivers (through digital signboards) about their optimal traffic speeds lowered delays by 25% (self-serving bias)

8. Ask with the right incentive - eg. RecycleBank has a program in many US and UK cities that weighs the amount you re-cycle and converts it into points which can either be redeemed for shopping coupons at local stores or brand outlets (partnership with eBay and Marks & Spencers) or informs them the equivalent numbers of trees saved and oil barrels conserved.

9. Add options - eg. using decoys to help people make choices between various options (by say, adding an additional qualification to the item we want people to purchase or not purchase); keep a non-recyclables (or trash) bin beside the recyclables so as to ensure more effective sorting (framing effect); also small hole for recyclables bin and a larger hole for non-recyclables bin etc

10. Take away options - eg. default options in computer programs nudges data entry operators away from making mistakes; mandatory fields and server clock times too reduces the probability of errors in data capturing.

11. Ask, but have a default option - eg. have a default menu option in school restaurant or conferences which is vegetarian (or healthy food) and provide non-vegetarian (or junk food) when asked (dramatically increases uptake) (framing effect); California's Ready Return tax filling form is pre-filled with last year's data was widely welcomed by assessees etc.

12. Ask a completely different question - eg. Piano staircase and calorie counters on steps (Goodnight Hostel in Lisbon) encouraged people to use stairs over the escalators (framing effect); Bottle Bank Arcade bins placed at strategic locations in Swedish cities that asks people to deposit used bottles and cans.

13. Let the feedback ask the question - eg. Ambient Orb device nudges people to optimize their electricity usage. Cognitively salient information helps people overcome inertia.

14. Don't Ask, Tell - eg. Inform tax payers that evasion is the exception and most people pay or put cards in the toilet to inform guests that most other guests re-use their towels. In both these cases, there is a reinforcement of a social norm.

15. Ask nothing, other than simply to measure - eg. Drivers become more mileage conscious with merely owning a car (say, a hybrid car) whose USP is mileage.

16. Don't ask anything - other than they go public - eg. grading restaurants in Los Angeles (reinforce social norms); Wattson household energy monitor whose data is displayed on the owner's Facebook page (Social norms - peer pressure) etc

17. Ask for a commitment - in the future - eg. shower timer to control water flow (temporal discounting or time inconsistent preferences); commitment contracts on exercising and eating habits on StickK.com etc

18. Ask Kinetically - eg. automatic light and AC on and off when key is inserted or taken off the slot in hotel rooms; square peg, compared to round peg, to hold lavatory paper (each tug is met with a resistance, which encourages people to optimize on their toilet paper usage) etc.

19. Make the question irrelevant - eg. smaller plates to reduce over-eating (selective perception); moving the clock backwards and forwards to make more optimal use of sunlight.

As can be seen from all these, loss-aversion, framing, and social norms are the commonest cognitive biases that can be targeted to formulate policies. People draw different conclusions and act differently based on how the information/data is presented - people are context dependent. People are much more averse to losses than to similarly sized gains - pain of loss is twice the pleasure of gain! People prefer to follow the herd and their actions to reinforce the social norms.

Nudging with mobile phones on behaviour change

One of the important requirements for achieving behaviour change is the salience of behaviour change causing triggers. Information, presented in the most cognitively salient manner and with some close-enough periodicity, can be a powerful trigger to achieving behaviour change.

Mobile phones, thanks to their near universal coverage even in many developing countries and ubiquitousness in daily lives of citizens, have the potential to delivering such information. They are an excellent channel for doctors and health care professionals to maintain a continuous dialogue with the patients.

In recent years there have been numerous studies on experiments that have used mobile phones to both generate optimal treatment response and more effectively manage disease incidence. They have relied on using reminders to people about medication and treatment schedules and management of their eating and lifestyle behaviours.

A randomized control study on adherence to antiretroviral therapy (ART) for AIDS using mobile phone SMS reminders in Kenya among 431 adult patients over 48 weeks found that "weekly text reminders increased antiretroviral drug adherence from 40% to 53% of participants". The authors write,

"In intention-to-treat analysis, 53% of participants receiving weekly SMS reminders achieved adherence of at least 90% during the 48 weeks of the study, compared with 40% of participants in the control group (P = 0.03). Participants in groups receiving weekly reminders were also significantly less likely to experience treatment interruptions exceeding 48 h during the 48-week follow-up period than participants in the control group (81 vs. 90%, P = 0.03)."

In a study about application of sun protection creams to reduce the risk of developing skin cancer, 70 patients in the 18-72 age group were sent cell phone text messages (along with weather report, at 7 AM) reminding them to apply their sunscreen daily for six weeks. The patients’ adherence to daily sunscreen usage was evaluated with a novel electronic monitoring device, which was strapped onto the tube of sunscreen - when the cap of the sunscreen tube was removed, the device sent a text message to researchers that was then recorded as evidence of sunscreen use.

The study found that text reminders increased the proportion of people who applied sun protection from 30% to 56%. Specifically, the 35 subjects who received daily text message reminders to apply sunscreen had a mean daily adherence rate of 56 percent compared to a mean daily adherence rate of only 30 percent by the 35 subjects who did not receive reminders.

A review of 12 RCT studies which examined the use of text messages to promote weight loss, get people to stop smoking and manage diseases like diabetes and asthma, found evidence to support text messaging as a tool for behavior change in eight of nine 'sufficiently powered studies'. The authors write,

"Twelve randomized controlled trials published between 2005 and June 2009 of interventions for disease prevention and management using text messaging were reviewed. Nine countries were represented, only one of which is a developing country. The majority of the studies (8) found evidence of a short-term effect regarding a behavioral or clinical outcome related to disease prevention and management. Of those that found no evidence of effect, only one had sufficient power to detect an effect in the primary outcome. Evidence for text messaging in disease prevention and management interventions was observed for weight loss, smoking cessation, and diabetes management. Effects appeared to exist among adolescents and adults, among minority and non-minority populations, and across nationalities."

The NYT reports of a mobile phone messaging service in the US, text4baby, "that sends free text messages to women who are pregnant or whose babies are less than a year old, providing them with information, and reminders, to improve their health and the health of their babies". Registration can be done from your cell phone by simply texting the word BABY (or BEBE for Spanish) to 511411. The sender will be asked to enter the baby’s due date or baby’s birthday and zip code. Once registered, the sender will start receiving free messages with tips for pregnancy and caring for baby. These messages are timed to the due date or the baby’s birth date.