Are you morally permitted to nudge your employees? :

Abstract:

In this essay I will be discussing the idea of nudging and if it is ultimately morally permissible to nudge your employees in a certain direction. I will explain the theory of nudging, look at the positives and negatives associated with it as it pertains to employees and I will conclude if nudging should be morally permitted to use on employees. For me, I believe we are morally permitted to nudge our employees.

Nudge Theory:

Nudge theory is rooted in a multidisciplinary field which takes inspiration and research from psychology. Economist Richard Thaler is responsible for the popularity of the theory and drew his research from the ideas of Israel psychologists Daniel Khaneman and Amos Tversky. “It involves human responses to information via two processing systems: automatic and reflective” (Cai, 2019). Khaneman called these system one and system two in his best selling book ‘Thinking, Fast and Slow’. System one is responsible for our intuition and instinct where as system two is responsible for our rational and logical thought. Nudges are basically interventions that steer people in a particular direction but also allows them to choose not to do so. Nudges play on our system one thinking. Thaler mentions that to count as a nudge, “the intervention must be easy and cheap to avoid” (Thaler and Sunstein, 2017). Something like a reminder or a warning is a nudge and we encounter these kinds of things every single day. It must not impose material incentives or disincentives otherwise it is not a nudge. For example, subsidies, taxes and fines are not nudges. What is important, especially going forward in this essay, is to note that, to constitute as a nudge, an intervention must preserve freedom of choice. Thaler likes to call this ‘libertarian paternalism’. Some systems which are put in place to use nudge theory require coercion to some extent which puts the ethical nature of nudging into question. For example, a government could require restaurants to display calories to customers. Here, the customers are being nudged, however, the restaurants are being coerced. “This point should be kept in mind in evaluating ethical objections, because coercion raises distinctive concerns, and sometimes government coerces the private sector to nudge consumers” (Sunstein, 2015). This is an interesting dichotomy as there is a possibility that behind every nudge there could be some form of coercion from an individual or group that forces another individual or group to apply nudge theory. This raises big ethical questions behind nudge theory, which we will look at.

The Positives And Negatives Of Nudge Theory:

Positives:

Many advocates of nudge theory, including Thaler and Sunstein referenced in this paper, point to the cost efficiency of implementation of nudge tactics and policies compared to alternative options such as subsidies, taxation and fines. An experiment conducted by the White House social and behavioral sciences team illustrates this perfectly. “This experiment was intended to increase savings among military personnel in the defined-contribution retirement plan offered to federal government employees, a program in which the government already offers monetary incentives for saving”. Nudge emails were sent to those who were not contributing to the plan and a control group was also used. To summarise, the nudge policy increased enrollment by about 1% which increased savings in the program by eight million dollars with a cost to the government of a meer five thousand dollars in admin fees. “This case study demonstrates that nudge policies do not need to produce a large impact in absolute terms to be effective” (Benartzi et al., 2017). So how can this theory be used to benefit employees?

According to research by Ebert and Freibichler, “nudge management can improve the efficiency of meetings, long term planning, task performance and knowledge sharing” as well as have many other benefits to employees (Beaufils, 2019). Taking the example mentioned above, any cost saving a company may create due to nudge policies may be passed down onto the employees through increased profits and therefore increased pay or benefits in kind.

Equally, employees are just humans and humans never have access to all the available information that may sway their decisions in the workplace due to bounded rationality.

As we do not always have enough time to analyse information and are also limited by our cognitive capacities, nudge theory suggests that it is better to let experts direct us in the right direction (Ebert and Freibichler, 2017). A favourite story of mine is one where, in the late eighteen hundreds, Charles Schwab, then manager of Carnegie Steel, would write on the floor of his factory, in chalk, the number of units produced of steel by the night shift. Of course, when the day shift people arrived, they saw this as a challenge and set out to beat it, and therefore increasing their productivity, without their manager having to say one word (Carnegie, 2010). This is a perfect example of nudging in play and how it can benefit employers to nudge their employees. Another example of nudge theory in action is the possibility of reducing the time employees spend in meetings. By changing the default time of meetings from, say sixty minutes to forty-five minutes, corporations can nudge employees into spending less time discussing and deliberating about things which just are not that important but are discussed to fill the allocated time. Doing this can save them and their employers thousands of work hours each year (Ebert and Freibichler, 2017).

Negatives:

Morally speaking, many have also raised concerns over nudging and how it manipulates people into doing something they may otherwise not have done. In financial markets, for example, artificial intelligence robots are now starting to provide financial advice based on algorithmic machine learning. A concern with this is that we cannot predict how these robots will respond to every given situation and therefore investors may be nudged in a way that is not beneficial to them (Cai, 2019). This equally applies to none machine advisors who can nudge their customers into making poor financial decisions as well. The housing market crash of two thousand and eight is a great example of this. When Thaler signs copies of ‘Nudge’ he always signs it off with “nudge for good”, however, people do not always take this advice. Uber are one of many companies to use this technique to get drivers to “work longer hours, sometimes at hours and locations that are less lucrative for them” (Albrecht, 2018). Uber will load the next available passenger up for their drivers before the current ride is even finished to create the illusion of one continuous task. Sports gambling companies also do the same thing with complex betting. “Soccer fans routinely overestimate the probability of complex bets, but not simple ones, Newhall found, so they’re far more likely to lose money on them”. The reason being for this ties back into Daniel Khaneman and Amos Tverksy’s work on human ability, or more so their inability, to weigh probability correctly and therefore may lead them to overestimate their chances of winning a bet. Couple this with the use of heavy marketing and we can be nudged into making bets that we may not have made otherwise.

Moral Implications Of Nudging:

From the above examples, we can see that there are of course great reasons and also not so great reasons for an employer to nudge their employees. Maybe people would argue that because nudging has a negative side to it that it therefore should not be used at all. Employees instead should be left to make their own choices and not be nudged in certain directions, even if it may benefit them. The chance that we could nudge employees, or anyone for that matter, into doing something that may not be in their best interest is morally unacceptable. This does not work as an argument for me however. Firstly, morality is subjective and inaccessible without the use of some mysterious intuition. To know what is best for an employee, we first have to know for sure what is the ‘right’ thing to do. “Behavioural economics is a way of looking at why people don’t make the decisions that would be best for them. There has to be some prior determination that this is the right thing to do. There’s a sea of moral dilemmas” (Bradshaw, 2015). Moral dilemmas have shown to be almost impossible to solve and can lead to never ending moral debates. What is morally right then becomes hard to pinpoint exactly.

Secondly, whether we think it is morally acceptable or not, nudging is happening all of the time, even without our deliberate input. For example, supermarkets can be laid out in a specific way to alter the type of choices we make when buying produce. However, even if the layout is a result of chance and makes no effort to steer people, “it will likely have consequences on what people end up choosing” (Sunstein, 2015). This can be applied to the work environment for employees also. The way their desks, computers or canteen area are set up could influence their work ethic and productivity anyway, even if there has been no effort made by their employers to do so. Choice architecture is inevitable and the world around us influences us every day whether we like it or not. Making the argument that it is not morally permitted to nudge employees is a pointless exercise therefore as they are probably being nudged in a negative sense in their personal and professional life everyday anyway by the environment around them. Finally, like previously mentioned, nudging is not coercion of itself. It is using human behavioural traits which exist in us already to persuade action. Whether or not people are pushed in a good or bad direction should not affect the idea of nudging. Humans use their knowledge of social dynamics to influence, change and persuade people all the time. We do it to our children, spouses, friends, employers and everyone else around us every minute of every day. Social dynamics is a subtle chess match being played between everyone everywhere and we are all aware, at least, even a small percentage of the time, that the things we do or say can affect others in both a positive or negative way. I see nudging as just a part of this system of human communication. It is up to us, or in this case employees, to notice when they may be being nudged. For me, it is morally permissible for netflix to “automatically queue up the next episode of whatever series you’re watching” and therefore nudge you into using their service for longer the same way it is morally permissible for the government to change their organ donor requirements which led to a larger amount of organs being available to save people’s lives. As Philip Ebert, lecturer at the University of Stirling said, “there will no doubt be certain uses of nudges that are not acceptable. There are difficult and complex debates ahead of us about the ethics of nudging” (Cali, 2019) . Like I mentioned at the start, there may be some action of coercion to begin with in order to implement nudging, like the government and restaurant example. However I feel like these arguments circumnavigate this issue as, ultimately, the coercion leads to nudging and nudging of itself, in any capacity, is morally permitted in my eyes. For me, nudging is the use of clever human communication techniques which are hard wired into us. To say nudging is morally impermissible is to say wishing someone a nice day is morally impermissible. It is all apart of the human communication web we use everyday to illicit reactions and feelings from other human beings. It is up to ourselves to make ourselves aware of anything being said or done, like nudging, that may not be in our best interest. Of course, this is not an easy perspective to agree or concur with and I understand that however, ultimately, I see no moral issue with nudging employees in the workplace.

References:

Albrecht, L. (2018). How behavioral economics is being used against you. [online] MarketWatch. Available at: https://www.marketwatch.com/story/nobel-prize-winning-economist-richard-thalers-nudge-theory-has-a-dark-side-too-2017-10-17 [Accessed 4 Dec. 2019].

Beaufils, A. (2019). Can nudge management make your employees happier?. [online] Medium. Available at: https://medium.com/mti-review/can-nudge-management-make-your-employee-happier-e86ccfcdc7e5 [Accessed 4 Dec. 2019].

Benartzi, S. et al. (2017) ‘Should Governments Invest More in Nudging?’, Psychological Science, 28(8), pp. 1041–1055. doi: 10.1177/0956797617702501.

Bradshaw, D. (2015). How a little nudge can lead to better decisions | Financial Times. [online] Ft.com. Available at: https://www.ft.com/content/e98e2018-70ca-11e5-ad6d-f4ed76f0900a [Accessed 4 Dec. 2019].

Cai, C. (2019). Nudging the financial market? A review of the nudge theory. Accounting & Finance.

Carnegie, D. (2010). How to win friends and influence people. London, United Kingdom: Ebury Publishing.

Ebert, P. and Freibichler, W. (2017). Nudge management: applying behavioural science to increase knowledge worker productivity. Journal of Organization Design, 6(1).

Khaneman, D. (2012). Thinking, Fast and Slow. 1st ed. London: Penguin.

Nudge, Nudge, Nobel (2017) Planet Money [Podcast]. 1 Nov. 2017. Available at https://www.npr.org/sections/money/2017/11/01/561421807/episode-803-nudge-nudge-nobel?t=1570211545664 (Accessed: 2018).

Sunstein, C. (2015). The Ethics of Nudging. Yale Journal on Regulation, [online] 32(2), p.Article 6. Available at: https://digitalcommons.law.yale.edu/yjreg/vol32/iss2/6/?utm_source=digitalcommons.law.yale.edu%2Fyjreg%2Fvol32%2Fiss2%2F6&utm_medium=PDF&utm_campaign=PDFCoverPages [Accessed 3 Dec. 2019].

Thaler, R. and Sunstein, C. (2017). Nudge. 1st ed. New York, United States: Penguin Putnam Inc.