A nudge in the right direction: can companies make their customers more responsible?

Nick Jackson explores how behavioural economics can play a part in companies encouraging more responsible behaviour from their customers.

One of the foremost challenges facing us today is the fact that we don’t act in our long-term interests. From resource scarcity and climate change to global poverty, rising food prices and enormous food waste, we simply don’t factor these issues, and our influence on them, into our day-to-day decisions enough. Why is it we make decisions counter to long-term sustainability? What can be done to influence people to act in line with their own and society’s longer-term interests? Step forward behavioural economics.

Behavioural economics helps us understand why people make the decisions they do and, particularly, why people willingly make choices that they know are counter to their long-term interests. These decisions are a factor behind unsustainable consumer behaviour patterns. If we can understand the habits of consumers and the systems that make these decisions rational, then we should be able to understand how to direct them towards sustainable consumer behaviour.

Ideas influenced by behavioural economics are all around us. If you’re driving through a small village you may well come across a sign that smiles at you for being within the speed limit and frowns at you for going too fast. When buying food you might see the nutritional information traffic light system. Luton Town Council even had its very own ‘Gum Target Chewing Gum Initiative’: the council’s tongue-in-cheek campaign put up gum target boards which allowed people to respond to polls or answer questions (by sticking their chewed gum on a certain part of the board), whilst disposing of their gum in a more socially conscious manner. The idea underlying these initiatives is that engaging individuals through positive reinforcement can be the most effective means of achieving positive social outcomes.

The world has recognised the importance of behavioural economics in policy circles. All of the above examples are some form of government initiative. Indeed David Cameron and Barack Obama both have their own behavioural insights teams. What interests me more however is the role that consumer facing businesses can have in getting individuals to make consumption choices that are in their own, and ultimately society’s, long-term interest.

One strand of behavioural economics, nudge theory, goes beyond understanding how and why people make certain decisions, to developing ways to push people towards making certain decisions. The idea is that through influencing the ‘choice architecture’ of individuals we can lead people towards taking the ‘right’ decision for themselves rather than legislating, banning or punishing alternative decisions. The ‘right’ decision being, for our purposes, the decision of a responsible consumer looking after their own and society’s long-term interests.

‘Choice architecture’ can be created in a number of ways. All the necessary information needs to be available to consumers. It needs to be easily understandable, accessible and engaging. The choices available need to be framed appropriately: consumers are unwilling to budge on price, quality, or enjoyment. The long-term sustainable choices for consumers need to meet these criteria, and companies need to invest heavily to ensure this. This is all part of making sustainability mainstream rather than the reserve of the enthusiast, the environmentalist and the odd concerned citizen.

Consumer-facing businesses are perfectly placed to instil responsible, sustainable consumption habits. Malcolm Gladwell, in The Tipping Point, describes three different types of people who have big impacts on social trends as: those with expert knowledge that people listen to; those with a large number of connections meaning information they have can be distributed to a large number of people; and those with the power to get us to change our behaviour. A multinational consumer facing business can act as a hybrid of all three, through its research base, its customer base, and its influential reach through its marketing and the ubiquitous presence of its goods.

Indeed, there are already a good number of examples of consumer-facing businesses trying to change consumer behaviour for the social and environmental good. Consumer behaviour change forms a fundamental part of Unilever’s Sustainable Living Plan. Johnson & Johnson recently launched a campaign to encourage more people to recycle bathroom products once finished. Patagonia’s Don’t Buy This Jacket campaign aims to increase consumer consciousness of the environmental effects of what they do, and how rethinking your way of consumption can create a more sustainable world.

Consumer facing businesses are in the ideal position to push people towards sustainable and responsible consumption habits. Businesses also stand to gain – they can position themselves as the responsible choice, create a greater rapport and understanding with customers, and help future proof their operations and bottom line. But changing habits is not a short-term project. Keeping customers engaged requires commitment from the company in the long-run. Otherwise the responsible choice will be pulled from the shelf before it’s even had the chance to influence consumers.

Nick Jackson is a Senior Researcher at Corporate Citizenship.