Friday, June 3, 2011

Who Will be a Choice Architect?

Who Will be a Choice Architect?

I have been reading some Richard Thaler on choice architecture. Thaler, you may know, is the co-author with Cass Sunstein of the book Nudge: Improving Decisions About Health, Wealth, and Happiness. The things I’m reading now describe how choice architecture works in the market but it got me thinking about politics and other things.

Briefly, choice architecture is the obvious idea that decisions are influenced by how the choices are presented. We rarely bother to change the default settings on software and so the manufacturer “nudges” us to use it in a certain configuration (Microsoft nudges us toward Internet Explorer by including it on PCs). Thaler uses the example of an MP3 player. When the market first emerged, we made purchasing decisions based on size, storage capacity, and features – we usually chose the one that gave us the most storage and features within our budget constraint. Then Apple came along.

The Apple IPod changed the choice architecture by presenting a product that has less functionality and fewer features. By conventional measures, they are inferior products; but we all have one – why? Very simply, Apple singlehandedly changes our evaluative framework by making a product that is so unlike the others that we think of it differently when we make a choice of what to buy. Apple products are elegant, almost sexy; just listen to Stephen Fry go on about Apple products. All purchases are decisions about value; Apple changed how we defined value from functionality to aesthetics. Sometimes, creative people change the way we make decisions.

Another example: Thirty years ago, there was only one kind of home mortgage; 30-year fixed rate. The law said that home loans had to be reported in a uniform way – the APR and associated values. That made choosing the best mortgage very easy. Now, we have many types of mortgages and APR is no a longer sufficient metric. The bankers changed the choice architecture to include all sorts of features that made home loans more complex and rendered APR just one of many parts within the evaluative framework. Sometimes, consumer confusion and eventual market failure is the result.

Here is how this might work in politics. President Obama will not be contested from his own party; at least by any serious candidate, so that choice is easy. On the Republican side, there are multiple declared and quasi-candidates that are all running on the same message. There is variance of course between Gingrich, Palin, Bachman, and Romney but their message is the same – vote for me because I’m Not Obama. Within this choice architecture Obama wins hands down because the intraparty competition among the Republicans will so weaken the winning candidate they will be unable to recover and present a coherent political message. Incumbents win frequently for multiple reasons but one of them is that voters received a coherent message throughout the campaign.

The strongest Republican candidate may be the one who takes political risk and presents a new choice architecture. I do not know what that might be yet but I am watching to see not only who emerges but also how them frame themselves. A good example of this is a recent article by Joshua Green in this month’s Atlantic that suggests how Sarah Palin could have run as a legitimate reformer given her track record in Alaska. The implication is that had she made that decision rather than to build an identity as an entertainer, she could be a viable and credible candidate.

With all the above being said, I am not anticipating a true choice architect emerging in the next campaign. Like most people in positions of leadership (or want to be leaders), risk aversion is the default strategy. The political system and the media seem incapable of assimilation of a nontraditional candidate like a Palin or Bachman; they are much more comfortable with a Romney. Let’s remember, for all his apparent differences, Obama ran a very traditional campaign on a very traditional theme – change. In short, there may be no nudge toward a new choice architecture in the upcoming Presidential campaign and until there is, it is rational to expect the candidates and election of 2012 to resemble those of the past.

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