Questions in behavioural economics - How can framing be used to influence public decisions?

James Spicer discusses whether how choices and decisions are framed impacts on our decisions.

During the recent media frenzy over the social networking site Facebook’s privacy settings, debate has raged over the growing lack of personal privacy in the digital age, and whether legislation adequately protects consumers’ rights. The Internet is such a vast, multinational network, and has evolved so fast, that there is no international organisation to police it, or even watertight laws to govern the data that is stored online. It is against the law for a website to sell details such as browsing history or personal information to third parties without the person’s consent, and this raises the question: how have so many of the public been duped into giving away personal information, and therefore being surprised when they get personally-tailored emails, embarrassing search queries hit the public domain, or in extreme cases, their identities are stolen?

Part of the answer can be explained by behavioural economics. Many online companies, anxious to maximise the number of customers are contacted in the future by other firms (these third-party firms will pay the online company astronomical sums for the addresses of those customers who wish to be contacted, so it is in the company’s interest to dupe as many visitors to its website as possible), will use opt-out contact details, rather than opt-in. This means that when a customer is filling out his personal details on the site, the default position is ‘yes I DO want to be contacted by third parties’, and the consumer must physically switch it off in order to stay private. Far fewer people would elect to send their details of their own accord if the situation was reversed. This is a classic example of the behavioural economic concept of ‘framing’ where wildly different public responses are elicited by the same question asked in different ways.

Another example of this has been in the field of organ donation. Every member of the public has to make the decision as to whether to let their organs be removed after death and given to other people. Researchers Johnson and Goldstein found that in European countries, rates of donation were either around 20% or 80%, with no other values in between. The researchers found that in those countries with presumed consent, (i.e. where citizens are presumed to want to donate their organs unless they explicitly say otherwise) hardly anybody opted out of the scheme, dramatically improving healthcare in the country. However in the rest of the countries (including the UK) where consent is not presumed and citizens have to make the effort to sign up, only a fifth of the public give their consent, leaving hospitals with a chronic shortage of donations.

Presumed consent?

Many prominent doctors and politicians argue that the UK should switch to a presumed consent method of organ donation. They argue that increased donation is a merit good, providing more benefits for society due to the greater number of people that can be cured of life-threatening diseases through higher levels of donations. It is not as if the donors will be needing the organs any more, so they should be put to good use elsewhere. However many argue that the decision to donate organs after death is such a complex and morally demanding one, especially for those with religious views, that it should not be presumed for all members of the population, no matter how many of the living would benefit.

Rules of thumb

The reluctance to donate organs in the UK can also be put down to heuristics, rules of thumb that enable us to make decisions without thinking. There is a built-in, irrational reaction to the thought of mutilation after death, and the thought of an unknown surgeon taking parts of a corpse away for reuse is not a pleasant one, hence the large number of people who like the idea of organ donation in principle, but decline to consent to the scheme as don’t want to imagine it happening on their own body. Classical economics would say that perfectly rational humans would all consent to the scheme: they lose nothing from it themselves, and stand the chance of benefitting from others’ consenting should they fall ill themselves. The fact that behavioural economics goes against the classical view shows the limits of the latter, and that small irrational decisions can have huge consequences, and a large opportunity cost in terms of lives wasted when they could have been saved.

A political dimension

Framing is widely used in politics, especially the lobbying industry, by using the phrasing of speeches and letters to twist the public’s view of issues and debates, and allow politicians to make simple choices on what otherwise would be difficult moral issues. Framing can be a huge help in simplifying tough decisions for the public to make, for instance the example of organ donations, but it can also be used to blind consumers to make decisions they would otherwise not have taken, such as over online privacy. For really important, complex issues for the public to make decisions over, transparency is essential. A petition by the All-Parliamentary Communications Group has recently called for the government to draft and implement new laws against behavioural advertising, and recommended simple yes/no choices rather than tick boxes which can be presumed or not presumed. It will be up to the government to take the world lead in banning the use of explicit behavioural psychology in online commerce, and hope that the international community, already more aware of companies’ underhand tactics after the Facebook scandal, follows suit.