WIAD Chicago 2015: Choice Architecture for Happier Decision-Making

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?

Source: policygenius.com

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

Thank you @jessability

about.me/jessica.peterson