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Choice Architecture for Happier Decision-Making
Jessica Peterson, Ph.D.
@jessability
February 21, 2015
Who am I?
@jessability
• Academic training in cognitive science • Freelance software design • Learned to apply research techniques to
early phase software design • Consulting experience
How I got here today
• What we know about choice and happiness
• What is choice architecture? How it is related to information architecture?
• How to use choice architecture for good
What I’ll focus on today
Who are you?
About choice
The more choice people have, the more freedom they have, and the more freedom they have, the more welfare they have. This is so deeply embedded in the water supply, that it wouldn’t occur to anyone that it’s not true.
—Barry Schwartz, Swarthmore College
http://www.ted.com/talks/sheena_iyengar_on_the_art_of_choosing?language=en#t-692012
Consumers have a choice of 40 different plans, on average, up from 31 in 2014.
New Hampshire shows how consumers may benefit from competition. In most of the state, the number of insurers is increasing to five in 2015, from just one this year. Prices for the lowest-cost silver plan have fallen by 14 percent.
—Pear, Abelson, and Armendariz; New York Times http://www.nytimes.com/2014/09/30/upshot/auto-renewing-your-health-plan-may-be-bad-for-you-and-for-competition.html
What is choice architecture?
If you influence the way people choose, then you are a choice architect.
—Richard Thaler, University of Chicago Booth School of Business http://www.url.com
• Marketers • Psychologists & cognitive
scientists • Information architects
You might already know quite a bit about choice architecture
• It’s unavoidable - there’s no such thing as neutral
• You can use it for good or evil • It’s your job as an IA to present
choices
Why choice architecture?
How is choice architecture related to
information architecture?
Core activities of information architecture
• Assess • Organize • Relate
Wodtke 2002
Core activities of choice architecture
• Assess • Organize • Present
Dan Klyn’s Model of IA (2013)
• Ontology • Taxonomy • Choreography
How can choice architecture be used for good?
• Cut • Concretize • Categorize • Condition for complexity (Iyengar 2010)
How can choice architecture be used for good?
Now, health insurance
Health insurance
• Show small(ish) set of choices • Focus on important attributes • Encourage comparison • Provide helpful cost anchors
Anchoring
Big picture here
In most states, spending 5% of your income on health insurance premiums will put you within range of a silver plan
What anchors matter?
Comparison
• Primary care provider copay • Rx copay • Emergency room visit copay • Whether you need a referral to see a
specialist
Which attributes are most important?
How to architect choice in health insurance
Cut: reduce the number of plans initially shown. Can be done by estimating preferences and medical services before choosing a plan
Concretize: Show total estimated out-of-pocket costs for each plan
Categorize: Reduce the impact of the number of choices by grouping them in categories (brand, tier, etc.)
Condition for complexity: Warm shoppers up by introducing difficult decisions one by one
Two additional C’s
Context: Use 'just-in-time' education: tutorial links and pop-ups that explain basic terms like “deductibles” that might not be known to a new buyer
Calculate: A calculator improves chances of choosing the right plan and reduces the size of errors
So does all this make choosers happier?
Not having the ability to see a doctor because of an inability to pay is a major and substantial source of unhappiness in the United States, even for people with high income.
—D. G. Blanchflower, Dartmouth College http://ftp.iza.org/dp4450.pdf
