Nudging – the Tool of Choice to Steer Consumer Behavior? Or What?

By Dirk Helbing (ETH Zurich/TU Delft/Complexity Science Hub Vienna)

Back in 2008, Thaler and Sunstein suggested “nudging” would be a great new way to improve health, wealth and happiness. The method was euphemistically called “liberal paternalism”, i.e. the nudger would be like a caring father, while the nudged one is claimed to have all the freedom to decide as preferred, even though he or she would often not notice he or she was tricked.

People would be helped by companies or the state with subconscious nudges to correct their so-called “misbehaviour”. This earned Richard Thaler the Nobel Prize – but not Cass Sunstein, who had written a critical book in the meantime, entitled “The Ethics of Influence”.

Let me say upfront that I don’t see a problem with putting the ecological energy mix on the top of a choice list or to label it “green energy”. This is pretty harmless. People understand the trick, but they will often anyway agree.

However, nobody ever told us that we would be nudged every day, all the time, with personalized information that is tailored to us with personal data that was collected about us mainly without our knowledge and agreement – effectively by means of mass surveillance.

This “big nudging”, which combines nudging with big (personal) data, must be criticized, as it undermines the very basis of our democracy, self-control, and human dignity.

Let us look back for a moment.

Already in the 60ies, the first climate studies by oil companies pointed out that there is a negative effect of carbon-based energy on climate. But for a long time, it seems nothing was done to change this.

Then, in the early 70ies, the Limits to Growth study warned us that, in a world with limited resources, we would sooner or later run into an economic and population collapse. No matter how the model parameters were changed, the predictions said humanity was doomed.

The Global 2000 study commissioned by then US president Jimmy Carter basically confirmed these predictions. However, it was again assumed that we would not change the system of equations, i.e. the socio-economic system we live in.

Finally, the United Nations established the Agenda 2030, pressing for urgent measures towards a sustainable planet.

So, 50 years after our sustainability problem was diagnosed, is “big nudging” really the best solution to our sustainability problems? Should companies digitally steer the behaviours of the people?

This kind of assumes that companies would be the good guys, who do the right things and should therefore have all conceivable freedoms: in particular, they should develop, produce and sell products as they like. The people, in contrast, would be kind of the bad guys, who show “misbehaviour”, as Richard Thaler would call it, and whose behaviours would therefore have to be corrected and controlled.

What would this mean? Let me give two examples:

• The above approach foresees that producers of sweet lemonades would sell unhealthy products and advertise for more consumption, while our health insurance would give us minus points for buying and drinking lemonades, and charge us higher tariffs. 
• The car industry would go on selling as many cars as they could, but politics or some citizen score would forbid most of us to use them most of the time. The Diesel scandal, which will forbid many car owners to use their cars in central parts of many cities, would be just a glimpse of what is to come.

Does such a model make sense? I am not convinced. Are you?

So, is the proposed solution, which comes under names such as profiling, targeting, neuromarketing, persuasive computing, big nudging, and scoring, really our saviour?

Unfortunately, as advanced as these technologies may be, they tend to be totalitarian in nature.

The Chinese Citizen Score, for example, has been heavily criticized by all major Western media.

But the situation in Western democracies is not so much different. Tristan Harris, who worked in a “control room” at Google, where public discourse was shaped, recently exposed the mind control of billions of people that a few tech companies exert every day.

Moreover, if one traces back the actors and history of the underlying technologies and science, we end up in the 1930ies with their infamous behavioural experiments. This link to fascist times and thinking doesn’t make things better.

How could things come that far?

We are living in a society, which thrives on the combination of two very successful systems: capitalism and democracy.

Unfortunately, this model is not good enough anymore. It hasn’t created a sustainable future, and so, as I have pointed out before, our world is heading for a doomsday scenario, if we don’t change our system.

Unfortunately also, neither the public nor scientists were informed well enough that – in the past 50 years – we should have done nothing else than re-invent society.

Furthermore, unfortunately, democracy and capitalism today do not have aligned goals. Capitalism tries to maximize profit, i.e. a one-dimensional quantity, while democracy should continuously increase human dignity, i.e. strive for multiple goals, including knowledge, health, well-being, empathy, peace, and opportunities to unfold individual talents.

Everyone should have understood that, if we did not manage to align the goals of both systems, one system would sooner or later crush the other system. It recently often appears it is democracy that would be crushed.

Let me shortly talk about the new kind of data-driven society that was created:

We now have a new monetary system, which is based on data. Data is the new oil. This data is mined by what we call “surveillance capitalism”, where people are the product.

We also live in a new kind of economy: the attention economy. People are flooded with information. Attention became a rare good, which is marketed among companies. This allows them to influence people’s consumption, opinions, emotions, decisions and behaviours.

We further have a new legal system: “code is law”. Algorithms decide what we can do and what we can’t. They are the new “laws of our society”. “Precrime” programs are just one example for this. The algorithmic laws, however, are usually not passed by our parliaments.

Altogether, this has also lead to a new political system: where companies such as Cambridge Analytica, Facebook and Google manipulate the choices of voters, and thereby undermine democracies and the free, unbiased competition of ideas.  

A digital sceptre, enabled by the combination of big data and nudging, would now allow to steer society and correct the claimed misbehaviours of people, as it is currently tested in China.

This “brave new world” was created without asking the people. It hasn’t been passed by parliament – at least not openly. While these developments have gone on for more than 15 years now, probably for decades, the public media have not informed us well and in advance.

We have been sleep-walking – and for a long time, we have not noticed the silent coup that was going on. But now we are discussing these developments, and that’s why democracy will win.

What do we need to do?

We must build “democratic capitalism”. This means to democratically upgrade capitalism and to digitally upgrade democracy.

We need information platforms and technologies, which have our constitutional, societal, cultural and ecological values in-built. We call this approach “design for values”.

And it’s coming. The IEEE, the biggest international association of engineers, is already working on standards for ethically aligned design.

What does design for values mean for our society? That the democratic principles, i.e. the lessons that we have learned over hundreds of years in terrible wars and bloody revolutions, would have to be built into our technologies.

This includes: human rights and human dignity, freedom and self-determination, pluralism and protection of minorities, the division of power, checks and balances, participatory opportunities, transparency, fairness, justice, legitimacy, anonymous and equal votes, as well as privacy in the sense of protection from misuse and exposure, and a right to be left alone.

How to enable informational self-determination in a big data world? Assume every one of us would have a personal data mailbox, where all the data created about us would have to be sent. The principle to be legally and technologically established would be that, in the future, we decide who is allowed to use what data for what purpose, period of time, and price. An AI-based digital assistant would help us administer our data according to our privacy and other preferences. Uses of personal data, also statistics created for science and for politics, would have to be transparently reported to the data mailbox.

With this approach, all personalized products and services would be possible, but companies would have to ask in advance and gain the trust of the people. This would create a competition for trust and eventually a trust-based digital society, in which we all want to live in.

Furthermore, we would have to upgrade our financial system towards a multi-dimensional real-time feedback system, as it can now be built by means of the Internet of Things and Blockchain Technology. Such a multi-dimensional incentive and coordination system is needed to manage complex systems more successfully and also to enable self-organizing, self-regulating systems.

So, assume we would measure – on separate scales – the externalities of our behaviour on the environment and other people, for example, noise, CO2 and waste produced, or knowledge, health, and the re-use of waste created. Suppose also that people would give these externalities a value or price in a subsidiary decision-process. (Some people would call this a tokenization of our world.) Then we could build our value system into our future financial system. I call this system the socio-ecological finance and coordination system (or finance system 4.0+).

People could then earn money with recycling. Companies could earn money for environmental-friendly or socially responsible production. In this way, new market forces would be unleashed that would let a circular and sharing economy emerge over time.

Personally, I don’t think there are not enough resources for everyone in the world. We don’t have an over-population problem. Our problem is rather that the organization of our economy is outdated.

I think we are living in a time, where we have to fundamentally re-organize our society and economy in the spirit of democratic capitalism, based on the values of our society.

I am also convinced that energy won’t be the bottleneck. But we will have to take new avenues. In the past, the focus was often on big solutions, which would produce energy for a lot of people. I propose that we should focus more on solutions, which are oriented at decentralized, local and more democratic energy production.

Modern physics knows that our universe is full of energy. In fact, it is totally made up from energy. It wouldn’t be plausible to assume we could not learn to use it.

I expect that a more democratic production and use of energy, goods and services will lead our society to an entirely new level. It is high time to focus on this transition, and how we can accomplish it together.

The instrument of City Olympics, i.e. of competitions of cities for sustainable and resilient open-source solutions to the world’s pressing problems could help us find the way.